How to price your freelance work: hourly, project or retainer (in naira and dollars)

Most freelancers set their price by guessing what feels safe. Then they find out three months later that they are working a lot and still cannot cover rent, data, power and tax. A better way is to work backwards from the life you want to pay for.

This post shows that method with real numbers. The examples are made up to show the maths. They are not market rates, and we do not claim what anyone should earn. You can run the same steps in the free rate calculator.

Work backwards from the income you need

You need five numbers.

1. Your target take-home pay per month. The money you want in your pocket after everything else.
2. Your business costs per month. Data, electricity or generator fuel, co-working, software, equipment you replace over time.
3. A set-aside percentage. A share of every payment you keep aside for tax and savings. We do not know your tax position, so choose a number you are comfortable with and confirm it with an accountant.
4. Hours you can bill per week. Not hours you work. Hours you can charge for.
5. Weeks you will really work per year. Take off holidays, public holidays, sick days and slow weeks.

Then the formula is:

• Monthly revenue needed = (take-home + costs) divided by (1 minus your set-aside)
• Billable hours per month = hours per week x weeks worked per year, divided by 12
• Hourly rate floor = monthly revenue needed divided by billable hours per month

Example 1: a freelancer in Nigeria, in naira

Say you want ₦600,000 a month take-home. Your costs are ₦100,000 a month. You set aside 10%.

• Revenue needed: (₦600,000 + ₦100,000) divided by 0.9 = about ₦777,778 a month
• You can bill 20 hours a week and will work 46 weeks a year. That is about 76.7 billable hours a month.
• Hourly floor: ₦777,778 divided by 76.7 = about ₦10,145 an hour

If your client pays in dollars and you use ₦1,500 to the dollar for this example, that is about $6.76 an hour. Use the real rate on the day, not ours.

Example 2: a freelancer in the USA, in dollars

Say you want $4,000 a month take-home, with $500 of costs and a 25% set-aside.

• Revenue needed: ($4,000 + $500) divided by 0.75 = $6,000 a month
• You can bill 25 hours a week for 46 weeks. That is about 95.8 billable hours a month.
• Hourly floor: $6,000 divided by 95.8 = about $62.61 an hour

Both numbers are floors. They are the lowest rate that keeps your plan working. Skilled work, urgent work and work that earns the client a lot of money can go above the floor.

Hourly vs project vs retainer

You can turn your floor into three kinds of price.

Hourly. Good when the scope is unclear, like “help me with my website”. Weakness: the client watches the clock, and getting faster lowers your income.

Project price. Estimate the hours, multiply by your floor, then add a buffer for changes and surprises. A 20% to 30% buffer is common practice, though you should pick one that fits how often your clients change their minds. In Example 1, a project you expect to take 12 hours is 12 x ₦10,145 = ₦121,740. With a 25% buffer that is about ₦152,000. Round to a clean number like ₦150,000 and write down exactly what it includes.

Retainer. A fixed monthly fee for a fixed amount of work or availability, such as “8 hours of design support a month”. The client gets predictable cost. You get predictable income. Write down what happens to unused hours.

Day rate. Multiply your hourly floor by the hours you will really deliver in a day. If that is 6 billable hours, Example 2 gives about $376 a day.

Charging foreign vs local clients

You will meet two situations.

• A local client who pays in naira. Your floor in naira is what matters. Check that your price does not fall below it after you have paid any transfer or platform fees.
• A foreign client who pays in dollars, pounds or euros. Convert your naira floor into their currency with a rate you choose, then add what it costs to get the money to you. Fees depend on how you are paid, so read our guide on how freelancers receive money and, if you work through a marketplace, how Upwork and Fiverr fees change what you keep.

We are not going to tell you what the market pays. We do not have verified rate data for every skill, and made-up numbers would hurt you. Look at what similar freelancers publish, ask former clients what the work was worth to them, and test a higher price on your next quote.

Raising your rates

• Review your rate at least once a year.
• Raise it when you are fully booked for a month or two. That is the market telling you the price is too low.
• Give existing clients notice, with a clear date, and honour your old rate for work already agreed.
• Raise your floor, not just your price: if your costs went up, re-run the formula.

Quote it

A price is only useful once it is in writing. A good quote has four parts: what you will deliver, what is not included, the price, and how long the quote is valid. Our guide to writing a freelance proposal and quote walks through it, and when the work is done you can send a clean invoice with the free invoice generator.

One honest note about a2lance

a2lance does not set your price and does not find clients for you. It gives you one place to keep your clients, send quotes and invoices, and see what has been paid. Your client pays you directly, and a2lance never holds your money.