Pricing walkthrough: from $40 to $85 an hour (an illustrative example)
A hypothetical freelancer raises their effective rate in four steps. The numbers are illustrative, not a case study, but the method is real.
This is a made-up example to show the method. “Sam” is not a real person and the numbers are illustrative. Your results will differ.
Meet Sam, a hypothetical freelance designer charging $40 an hour. Sam works hard but feels broke. Here is how a four-step review could change things.
Step 1: Calculate the real minimum
Using the hourly-rate formula, Sam wants $50,000 take-home, has $5,000 in expenses, sets aside 25% for tax and bills 55% of a 40-hour week over 47 weeks.
- Gross needed: ($50,000 + $5,000) ÷ 0.75 ≈ $73,333
- Billable hours: 47 × 40 × 0.55 = 1,034
- Minimum rate: ≈ $71 an hour
At $40, Sam would need about 1,833 billable hours, which is more than a full-time schedule. The gap explains the stress.
Step 2: Fix the leaks
Sam finds two problems: unpaid revision rounds and slow proposals. The fixes:
- Add two revision rounds to every quote, with extra rounds billed.
- Use a template proposal so quotes go out in 20 minutes, not two hours.
Step 3: Move from hourly to project pricing
Sam bundles the most common work into three fixed packages, as in productize your service. A logo and brand kit that takes 12 hours is priced at $1,000. The effective rate is about $83 an hour, and faster work now means more profit rather than less pay.
Step 4: Raise prices for new clients first
Following raise your prices without losing clients, Sam applies new prices to new customers immediately and gives existing clients 60 days’ notice with a small loyalty discount. A few price-sensitive clients leave. Most stay.
The result (in this example)
| Before | After | |
|---|---|---|
| Pricing | $40 per hour | Fixed packages |
| Effective rate | $40 | about $85 |
| Revision rounds | Unlimited | Two included |
| Quote time | 2 hours | 20 minutes |
The change came from four steps, not from working more hours.
Try it on yourself
- Calculate your minimum in the calculator.
- List where your hours leak.
- Package one repeatable service.
- Apply new prices to the next new client.
- Know your real minimum rate before you quote.
- Plug leaks like unlimited revisions and slow proposals.
- Fixed packages reward speed.
- Raise prices for new clients first, existing clients with notice.
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