How to price a service as a freelancer in the UK

Step 1: work out what you need to earn

Start with the take-home income you need each year to live on, then add your business costs. Typical costs include software subscriptions, equipment, insurance, accountancy, a phone, training, travel and a pension contribution. Then allow for tax and National Insurance. As a sole trader you pay Income Tax and Class 4 National Insurance on your profits through Self Assessment. Through a limited company the picture is different again. Use the current rates on GOV.UK, or ask an accountant for a rough figure, rather than guessing.

Add these together and you have your annual revenue target: the amount your clients need to pay you in total.

Step 2: count your real billable days

This is where most freelancers go wrong. Start with the working days in a year, then subtract:

• Holidays and bank holidays (employees typically get 28 days including bank holidays; give yourself at least that).
• A buffer for illness and life.
• Time spent finding work, writing proposals, invoicing, bookkeeping and learning. For many freelancers this is a day a week or more, especially early on.
• Gaps between projects.

Example (your figures will differ):
Working days in a year: about 260
Minus holidays and bank holidays: 28
Minus illness and life buffer: 10
Minus admin and marketing (1 day a week): about 44
Billable days: about 178

Revenue target ÷ billable days = minimum day rate

Step 3: choose a pricing model

Many freelancers work out a day rate internally, then quote fixed project fees or retainers based on it.

• Hourly: simple and familiar, but it punishes you for being fast and invites clients to watch the clock. Best for open-ended support work.
• Day rate: common in UK consulting, design, development and contracting. Easier to manage than hourly, and clients understand it.
• Fixed project fee: you quote for a defined outcome. If you are efficient you earn more per hour, but you carry the risk of overruns, so write a clear scope.
• Retainer: a monthly fee for an agreed amount of work or availability. Great for steady cashflow; be specific about what is included.
• Value-based: priced on what the result is worth to the client. Powerful when you can clearly link your work to revenue or savings, but it needs confidence and good discovery questions.

Step 4: sense-check against the market

Your minimum day rate is a floor, not your price. Look at what comparable freelancers in your field and region charge. Useful sources include public rate cards, job boards, freelance platforms, professional bodies and conversations with peers. If your floor is above the market, you need to narrow your niche, add more value, or reduce costs. If it is well below, you have room to charge more.

Remember who you are selling to. A large company comparing you to an agency will often accept a higher rate than a small business paying out of the owner's pocket.

Step 5: write a quote that protects you

• Describe the outcome and deliverables, not just hours.
• State what is not included, and how extra work will be charged.
• Set the number of revision rounds.
• Set payment terms, for example a deposit up front and the balance on delivery, or monthly in arrears for retainers. Say when invoices are due.
• Say whether prices include VAT. If you are not VAT-registered, you do not add VAT. Check the current registration threshold on GOV.UK.
• For business clients, late payment legislation lets you claim statutory interest and compensation on overdue invoices. GOV.UK explains how.

Step 6: raise your prices sensibly

Review prices at least once a year. Raise them for new clients first, which is the easiest place to start. For existing clients, give notice (a month or more is courteous), explain briefly what has changed, and thank them. Some may leave. That is often fine if they were your lowest-paying or most demanding clients, because it frees time for better work.

A good sign that your price is too low: almost nobody hesitates when you quote it.

Common mistakes

• Forgetting tax until the Self Assessment bill arrives. Set aside a share of every payment in a separate account.
• Quoting a fixed fee without a written scope.
• Discounting to win the first client, then struggling to raise the price later.
• Pricing by what you would pay, rather than what the result is worth to the client.
• Not charging for travel, rush jobs or out-of-hours work.

Test your offer before you commit

Before you publish prices, write your offer in one clear paragraph: who it is for, the problem it solves, what they get, the price and how they pay. Solopreneur Protocol will score how clearly that description works, free for your first idea. It checks clarity, not whether the price is right, but a vague offer is usually the reason a good price fails to sell.