Freelancers: how to calculate and set your rates (hourly rate or fixed price)?
Introduction
Have you just started freelancing or are you looking to revise your pricing structure? The question of freelance rates always comes back to the forefront: how much should you charge to be profitable without scaring off potential clients?
Many freelancers set their prices by gut feeling, looking at what others are doing or dividing their former salary by the number of hours worked. Result: they end up working more to earn less, without understanding why their business isn't taking off financially.
The reality is simple: setting an hourly rate or fixed price requires a precise method. You must first identify all your costs (social security contributions, insurance, equipment, training), calculate your actual billable time, then add a margin that values your expertise.
This guide takes you step by step to structure your pricing professionally. You'll discover how to calculate your minimum viable rate, how to position your offer in the market, and which pitfalls to avoid so you don't undervalue your work. Once your rates are defined, you can invoice efficiently with the right tools to simplify your administrative management.
📌 Summary (TL;DR)
To set your freelance rates, start by identifying all your costs (social security contributions, insurance, equipment) and calculate your actual billable time. Then apply the formula: (total annual costs + desired margin) ÷ billable hours = minimum hourly rate. Adjust this rate according to your expertise, your market and the value brought.
Avoid classic pitfalls: underestimating yourself, forgetting hidden costs, not providing a margin for unexpected events. Regularly review your rates upwards according to your experience and client results.
📚 Table of contents
- Why setting your rates correctly is crucial for a freelancer
- The two main approaches: hourly rate vs fixed price
- Calculation method: identify all your costs
- Formula for calculating minimum hourly rate
- Add your margin and position your rate
- How to calculate a fixed price (project or package)
- Pitfalls to avoid when setting your rates
- Adapt and increase your rates over time
- Invoice efficiently with the right tools
Why setting your rates correctly is crucial for a freelancer
Your rates directly determine the financial viability of your business. A rate that's too low leads you towards burnout: you multiply assignments to reach a decent income, without covering your real costs.
Conversely, a rate that's too high without justification excludes you from the market. You lose potential clients to better-positioned freelancers.
Setting the right rate means finding the balance between profitability and competitiveness. It's also about asserting your professional positioning and valuing your expertise at its true worth.
The two main approaches: hourly rate vs fixed price
Two pricing models dominate the freelance market: hourly rate and fixed price. Each responds to different needs.
The hourly rate suits assignments where the scope changes frequently. You invoice the time actually invested, without surprises.
The fixed price values the final result rather than the time spent. It allows you to better remunerate your efficiency and expertise.
Most experienced freelancers combine both approaches depending on the type of project and client.
The hourly rate: simplicity and flexibility
The hourly rate offers total transparency: the client pays for the time actually worked. It's the simplest model to implement when starting out.
Main advantages: easy calculation, suited to evolving assignments, no risk of underestimation.
Disadvantages: your income remains capped by your available time. The more efficient you become, the less you're remunerated. This model values time spent rather than the value created for the client.
The fixed price: valuing the result
The fixed price sets a global price for a defined deliverable. The client knows their budget in advance, you're remunerated for your expertise.
Advantages: higher margin potential, rewards efficiency, preferred by clients who want a controlled budget.
Disadvantages: real risk of underestimating the time needed. Modification requests can eat into your margin if the scope isn't clearly defined at the outset.
Calculation method: identify all your costs
Before setting your hourly rate, list all your annual costs. This step is fundamental: it determines your break-even point.
Divide your costs into three categories: mandatory social security contributions, fixed professional costs and variable costs. Then add the net salary you wish to pay yourself.
Without this precise analysis, you risk invoicing below your break-even point. Many freelancers discover too late that they're working at a loss.
Fixed costs and social security contributions
In Switzerland, self-employed people pay mandatory social security contributions: AVS/AI/APG (approximately 10% of net income), health insurance (400-600 CHF/month), optional LPP pension provision, recommended loss of earnings insurance.
Add your fixed professional costs: workspace (coworking or home office), software and subscriptions, accounting or fiduciary, professional insurance.
Count between 15,000 and 25,000 CHF annual fixed costs for an established freelancer in Switzerland, excluding personal salary.
Variable costs and investments
Variable costs fluctuate according to your activity: client travel, continuing education, marketing and communication, equipment and materials, occasional software licences.
Don't forget to depreciate your investments: computer, phone, furniture. A MacBook at 3,000 CHF depreciated over 3 years represents 1,000 CHF per year to integrate into your rates.
Also provision for quiet periods and unexpected events. These costs must be spread over your billable hours.
Real billable time
Classic mistake: confusing working time and billable time. Out of 220 annual working days, deduct holidays (25 days), public holidays (10 days), sickness (5 days), training (5 days).
175 days remain. Deduct again the non-billable time: business development, administration, accounting, marketing. Count 25-30% non-billable time.
Realistic result: 130 to 150 billable days per year, or 1,040 to 1,200 hours at 8h/day. It's on this basis that you must calculate your hourly rate.
Formula for calculating minimum hourly rate
The basic formula: (Total annual costs + Desired net salary) / Billable hours
Concrete example: Freelancer with 20,000 CHF annual costs, wanting a net salary of 60,000 CHF, with 1,200 billable hours: (20,000 + 60,000) / 1,200 = 67 CHF/hour.
This is your minimum hourly rate to reach your goal. Below this, you're losing money. Then add 20-40% margin depending on your positioning, or 80-95 CHF/hour in this example.
An experienced freelancer with 30,000 CHF costs and 80,000 CHF target salary over 1,000 billable hours gets: (30,000 + 80,000) / 1,000 = 110 CHF/hour minimum, or 130-150 CHF/hour with margin.
Add your margin and position your rate
Your minimum hourly rate covers your costs. The margin remunerates your expertise, your positioning and secures your business against unexpected events.
A margin of 20-40% is standard. A beginner will apply 20-25%, an intermediate profile 25-35%, a recognised expert 35-50% or more.
This margin also finances your development: new tools, advanced training, marketing, building a financial reserve. Don't neglect it.
Analyse the market and competition
Benchmark the rates practised in your sector in Switzerland. Indicative ranges: web developer 80-150 CHF/h, graphic designer 70-130 CHF/h, consultant 100-200 CHF/h, copywriter 60-120 CHF/h.
Information sources: professional networks (LinkedIn, sector associations), salary surveys, discussions with other freelancers.
Position yourself within this range according to your experience and specialisation. Don't systematically align yourself with the bottom of the range out of fear.
Value your expertise and specialisation
The more specialised you are, the more you can charge. An expert React developer charges more than a generalist web developer.
Your expertise reduces risks for the client: fewer errors, deadlines met, better quality. This value justifies a premium rate.
Clearly communicate your specialisation and results. Your rates reflect the value you bring, not just the time spent. An expert solves in 2 hours what a beginner does in 10.
How to calculate a fixed price (project or package)
Start from your hourly rate. Estimate the number of hours needed for the project. Systematically add a safety margin of 20-30% for unexpected events.
Example: Creating a showcase website. Estimate: 40 hours at 100 CHF/h = 4,000 CHF. With 25% margin: 5,000 CHF fixed price.
Also integrate the value brought to the client. A website that generates 50,000 CHF turnover is worth more than the time spent. Create standardised packages (Starter, Pro, Premium) to facilitate choice and increase your efficiency.
Define the scope precisely: number of pages, revisions included, deadlines. Any request outside the scope is subject to an additional quote.
Pitfalls to avoid when setting your rates
Several classic mistakes compromise freelancers' profitability. Identifying them saves you months of financial difficulties.
Impostor syndrome pushes you to undercharge. Forgetting hidden costs eats into your margins. The absence of buffer in fixed prices turns every unexpected event into a loss.
These pitfalls are avoidable with a rigorous methodology and good knowledge of your real costs.
Underestimating yourself through impostor syndrome
Many beginner freelancers doubt their value. They slash their rates for fear of not finding clients.
Result: they attract clients looking for the cheapest, not quality. These clients are often the most demanding and least loyal.
Charge your fair value from the start. Your skills have value. A client who refuses your rate isn't your target client.
Forgetting hidden costs
VAT if you exceed 100,000 CHF turnover (standard rate 8.1%). Income and wealth taxes. Provisions for quiet periods (summer, year-end).
Equipment replacement: computer every 3-4 years, phone, software. Bank charges, late payment interest on unpaid invoices.
Integrate all these costs into your initial calculation. They easily represent an additional 15-20% of your costs.
Not providing a margin for unexpected events
The client requests an additional revision. The scope gradually expands (scope creep). Exchanges take longer than expected.
Without a buffer, every unexpected event reduces your real margin. On a fixed price, always allow 20-30% additional time.
Clearly define what's included in the fixed price. Beyond that, charge extra. Protect your profitability.
Adapt and increase your rates over time
Your rates must evolve with your experience. Increase them each year to follow inflation (1-3% in Switzerland), and significantly when you acquire new skills or certifications.
For existing clients, announce the increase 2-3 months in advance. Explain the reason: increased expertise, training investments, inflation. Most accept a reasonable increase.
Create pricing tiers: standard rate for new clients, preferential rate for loyal clients or large volumes. Systematically apply your new rates to new projects.
Review your rates at least once a year. A freelancer who never increases them loses purchasing power and devalues their expertise.
Invoice efficiently with the right tools
Setting the right rate isn't enough: you must invoice professionally and get paid quickly. In Switzerland, QR-invoices have been mandatory since 2020.
A good invoicing tool generates compliant invoices, tracks your payments automatically and follows up on delays without effort on your part. This maintains healthy cash flow.
BePaid offers a solution adapted to Swiss freelancers: compliant QR-invoices, payment tracking, automatic reminders. Check our pricing: free version to start, then 20 CHF/month for complete management.
An efficient invoicing system saves you time and reduces unpaid invoices. It's a profitable investment to secure your income.
Setting your rates isn't an exact science, but a structured approach that combines rigorous calculation and strategic positioning. Start by identifying all your real costs (social security contributions, insurance, infrastructure, non-billable time), calculate your minimum hourly rate, then add a margin that reflects your expertise and the value you bring. Whether you opt for an hourly rate or fixed price, the essential thing is to cover your costs, remunerate yourself properly and remain flexible in the face of market changes.
Don't forget that your rates aren't fixed: review them regularly according to your experience, specialisation and demand. Avoid classic pitfalls like underestimation or forgetting hidden costs. And above all, invoice professionally with adapted tools. BePaid allows you to create invoices compliant with Swiss standards in a few clicks, with integrated QR-code and automatic payment tracking. Discover our free version and devote your time to what really matters: your expertise.
