How to Set Your Hourly Rate as a Freelancer

Many freelancers undercharge because they only think about what they want to earn per hour. A better approach is to work backwards from the income you actually need.

Step-by-step method

1. Decide your target annual income: Example: TZS 18,000,000 per year (after tax).
2. Add business expenses: Tools, software, internet, transport, marketing, equipment, etc. Example: TZS 3,000,000 per year.
3. Add tax buffer: Set aside money for taxes. Example: 20–30% of income depending on your situation.
4. Calculate billable hours: Most freelancers cannot bill 40 hours every week. A realistic number is often 20–25 billable hours per week. Example: 22 hours × 48 weeks = 1,056 billable hours per year.
5. Calculate your rate: (Target income + Expenses + Tax buffer) ÷ Billable hours.

Common mistakes

• Using only “desired hourly rate” without calculating real costs.
• Forgetting non-billable time (admin, marketing, learning).
• Not reviewing the rate at least once a year.
• Charging the same rate for every type of work.

Use our free Hourly Rate Calculator to run your numbers quickly.