Guide

How to price freelance work in the UK

Most freelancers undercharge, and it's rarely because they don't know their value — it's because nobody showed them the maths. Here's a repeatable way to turn a salary into a day rate, price projects fairly, and build in the costs everybody forgets.

Updated 23 September 2026 About 6 minutes to read

Key takeaways

  • Start from your target salary, not what you think "freelancers earn".
  • Divide by ~220 billable days, then multiply by 1.5–2x to cover tax, overheads, holidays and empty gaps.
  • Time-priced work is safer on fuzzy scope; fixed fees win clients but need explicit inclusions and exclusions.
  • Quote exclusive of VAT and add it only if you're VAT-registered.
  • Raise rates for new clients first; it's low-risk money.

The day-rate maths, step by step

1

Name the salary you're replacing

A freelancer's income has to replace a salary and cover costs an employer used to absorb. Say your skillset would pay £50,000 employed. That's your baseline, and it's usually higher than people first guess — write the honest number, not the modest one.

2

Divide by the days you can actually bill

Nobody bills 260 days a year. Between holidays, sickness, admin, marketing and gaps between contracts, a realistic freelancer bills about 200–220 days. So £50,000 ÷ 220 ≈ £227 a day — but that's only the "salary equivalent", before you've paid for everything else.

3

Multiply by 1.5–2 to cover the hidden costs

Your day rate also has to fund your pension, your own National Insurance and tax, the laptop you replace every few years, insurance, software, an accountant, and the weeks there is no client. Multiplying by 1.5–2 is the standard ballpark. £227 × 1.75 ≈ £400 a day — a defensible starting point for a role that pays £50,000 employed.

Day rate, fixed fee or retainer?

  • Day rate: safest when scope is fuzzy. Bill by the day or half-day, and define what "a day" means so nobody argues it later.
  • Fixed fee: wins the work when the client wants a number up front. Write in scope, inclusions, exclusions and what "done" means, then bill in stages (typically deposit, milestone, completion).
  • Retainer: a fixed monthly fee for a fixed number of hours or a standing service. Great for cash flow; the risk is scope creep, so pin the hours and the refresh cycle.

Whatever structure you pick, our freelance invoice template handles hourly lines, day-rate lines and fixed fees — and the consultant template adds the engagement and PO references bigger clients expect.

Does VAT go on top?

Only if you're VAT-registered — either because your turnover passed the £90,000 threshold or you registered voluntarily. If you're registered, your quoted rate is normally "exclusive of VAT", and you add 20% on the invoice. If you're not registered, never add VAT; the rate you quote is the rate they pay. (See our guide to the VAT registration threshold if you're close to it.)

The anti-undercharging checklist

  • Raise rates for new clients before existing ones — you're least anchored there, and it compounds fast.
  • Put a floor on every enquiry: "the smallest job I take on is X" removes the tiny favours that eat your month.
  • Track real hours on your first few fixed-fee jobs; if you made £25/hour on what felt like £80/hour, that's data, not failure.
  • Quote in writing, always. A price agreed by email is a price agreed.

Put your agreed rate on a real invoice

Hourly, day rate or fixed fee — generate a clean UK invoice in under a minute.

Create an invoice

Frequently asked questions

How do I work out my day rate as a freelancer?

Take your target salary, divide by about 220 working days for your baseline, then multiply by 1.5 to 2 to cover tax, overheads, holidays and gaps between contracts. That's your starting rate, and you adjust up for scarcity and specialism.

Should I charge a day rate or a fixed project fee?

Day rates are safer when scope is fuzzy; fixed fees win work when the client wants a number up front. If you quote fixed, define what's included and what's extra, and bill in stages.

I keep undercharging. What is a quick fix?

Raise rates for every new client, put a floor under the smallest job you'll take, and measure your real hourly take on one fixed-fee job so the data overrides your instincts.

Do UK freelancers add VAT on top of their rates?

Only if VAT-registered (over £90,000 turnover or voluntary registration). Registered freelancers quote ex-VAT and add 20%; unregistered freelancers never add VAT.

Should I bill a deposit before starting?

For new clients and larger projects, yes — 25–50% up front protects cash flow and filters out non-serious clients, and it's standard practice among freelancers.

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General guidance only — not financial, legal, tax or accounting advice. Last reviewed 23 September 2026.