How to calculate my hourly rate
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You have decided to leave the corporate world and become a freelancer. You will have the freedom to choose who you work for, what hours you work, and you will earn so much more.Yeah right. If only it was that easy.

Read why Freelancer is a bad term for the work you will be doing as a Skilled Provider of Professional Services.

If you want to survive the self-employment jungle out there, you need to ensure that you charge the correct hourly rate. Frequently when starting out, we take on any work to build our portfolio.

Even though you may be desperate to earn an income, spending your time working for "exposure", trade exchanges or totally unacceptable rates leads to the poverty trap that it is almost impossible to escape. It is a lesson I have learned far too late in life.

We teach people how to treat us. Every time you are tempted to do that freebie or low paid job, take a deep breath and ask yourself the following question:

"Could my time be used more productively marketing myself to clients who will value my services?"

How do you determine your rates?

Research average salaries for a full time employee doing the same job in the same location. 

Here are links to salary scales in South Africa.


You are a qualified Software Programmer with 8 years experience and you wish to provide these services working remotely to a client based in Johannesburg, South Africa. The average salary per your research indicates a full time employee earns R30 000.00 per month.

Step 1: Calculate your initial hourly rate.

8 hours per day @ 20 days per month = 160 hours which equates to 1920 hours per year.

But, as a full time employee you get BENEFITS which you will wave goodbye to as you don your Freelancer hat. No work = no pay in this wonderful FREE new world.

Annual leave: 15 days | Sick leave: 10 days | Family leave: 3 days | Public Holidays: 12 days

= 40 days (320 hours) for which the full time employee is paid but is not compelled to work.

Total hours worked in a year: 1920 - 320 = 1600 hours per year or 133 hours per month.

BASE HOURLY RATE : R30 000 / 133 hours = R225 per hour

Step 2: What other benefits do full time employees enjoy?

If you are setting up your own workspace for the first time you will have a good idea of how expensive it is.

  • Office space, desk, chair, filing system, lighting (because you will be probably working all night)
  • Tech hardware: Computer / printer  .....
  • Telecommunications - mobile phone and data
  • Stationery and consumables
  • Admin support - Accounting / Legal fees to set up your business, manage your accounts etc.
  • Pension / Provident Fund / Medical Aid contributions / UIF
  • Business cards / Marketing material / networking events / set up and maintain website and social media accounts.
  • Those numerous cups of coffee to keep you going
  • Fuel and vehicle maintenance allowances
  • Training courses - time and cost of courses

Set up a spreadsheet and input all these costs that are relevant to you. Average them over a year and factor into your hourly rate.

Step 3: SOB! RANT! RAVE! about how you have been undercharging for your services

Now read "How To Build Professional Relationships"