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# How to Decide Rates You Have To Charge as a Freelancer

Most freelancers charge by the project, while the others charge an hourly rate. Both methods require you to understand how much you need to achieve your income goal and also have to determine how long the project would take you to complete and you have to decide rates you have to charge as a freelancer.To find out your hourly rate, at first, you have to figure out how much you need to earn a year along with the annual business expenses, then divide it by the time you can commit to working a year.

Now take your income goal and the amount you expect to be able to work and fill in the following equation.

Annual Income Needed=Annual Income Goal + Annual Business Expenses

Calculate the hourly rate needed to achieve your goal with the following equation.

Hourly Rate Needed=Annual Income Needed/Annual Billable Hours

Where, annual billable hours is the workable hours a week multiplied by the number of workweeks in a year with subtracting time away for vacation, illness, public holidays and day to day business.

Here is a sample example for calculating your hourly rate needed using the methods given above.

Let’s say that, if you have to determine that you want to make a minimum of \$10,000 per year and your business expenses are roughly \$5,000 for the year. If you are going to work six days per week and three hours a day then the total billable hours will be (18 hours/week X 52 weeks) 936 hours. For your understanding, calculations are given below.

\$10,000 is your annual income goal
=\$15,000 is the total revenue needed

If the total revenue needed is divided by total billable hours, your hourly rate will be calculated as given below.

\$15,000 is your annual revenue needed
÷ 936 is your annual billable hours 