How to Set Your Freelance Hourly Rate (And Actually Track It)

Why your hourly rate is just a starting hypothesis

When you set a freelance hourly rate, you're making a prediction: "If I charge X per hour and work Y hours, I'll earn Z." The rate you choose is based on market research, what you think you can get, and what you need to cover your costs and goals.

But here's the thing: a rate is only as good as your tracking of the hours it's applied to. If you bill 20 hours on a project but actually worked 30, your effective rate is 33% lower than you thought. You set a $100/hour rate and actually earned $67/hour. That gap compounds over time into a serious problem.

This is why setting a rate and tracking time are inseparable. The rate is your plan. The time tracking is how you verify the plan is working — and how you catch it when it isn't.

How to calculate your minimum viable rate

Start with what you need to earn — your target annual income. Add your business expenses (software, equipment, insurance, taxes, professional development). This is your required gross revenue.

Then estimate your billable hours. As a freelancer, you don't bill for all the time you work. Admin, sales, marketing, learning — all of that takes time without generating revenue. Most freelancers find that between 60 and 75% of their working hours are actually billable. If you work 40 hours a week and take two weeks off, that's roughly 1,920 working hours a year. At 65% billable, that's about 1,250 billable hours.

Divide your required gross revenue by your estimated billable hours:

Required Revenue ÷ Billable Hours = Minimum Hourly Rate

For example: $90,000 required revenue ÷ 1,250 billable hours = $72/hour minimum. Add a margin for underestimating hours, unexpected slow months, and the fact that you'll sometimes want to raise rates. Most experienced freelancers add 20–30% to their minimum to get their working rate.

Market rate research: what are others charging?

Your minimum rate is the floor, not the ceiling. What the market will bear is a separate question. Research what other freelancers in your field, with your experience level, are charging.

Sources for rate research: freelance community forums, annual surveys from industry organizations, job boards that list hourly rates, and direct conversations with other freelancers. The data is often imprecise, but even a rough range tells you whether your minimum rate is realistic or whether you need to either reduce costs, increase specialization, or target a different market.

If the market rate is well above your minimum, that's a good sign — you have room to charge what the work is worth and still hit your targets. If market rates are below your minimum, that's a signal that something needs to change: either your cost structure, your target market, or the type of work you're doing.

Why accurate time tracking is what makes or breaks your rate

Once you've set a rate, you need a feedback loop to know whether it's working. That feedback loop is time tracking.

Specifically, you need to track time accurately enough to answer two questions at the end of every month:

1. How many hours did I actually work on each client?
2. How much did I earn per hour, accounting for all the time I spent (including un-billed work on that project)?

If you can answer those questions accurately, you can see whether your rate is delivering what you need. If a client is consistently requiring more time than their budget covers, you know to renegotiate, adjust scope, or price the next engagement differently. Without this data, you're guessing.

The hidden cost: all the time you're not billing

One of the most important uses of time tracking for freelancers isn't billing — it's understanding where your time actually goes. Many freelancers find that they're spending far more time on low-rate or un-billed work than they realized.

Client communication that runs long. Revisions beyond scope that you absorb rather than charge for. Projects that require more research than estimated. When you track all of this, the picture of your actual effective rate becomes clearer — and often more sobering.

This doesn't mean you charge for every email. It means you have data to make better decisions: which clients are profitable, which engagements consistently run over, and where you're losing hours to work that doesn't pay.

How to track time against your rate with Tidst

If you use Todoist to manage your client work, Tidst provides a direct link between your tasks and your billing records. Connect Todoist to Tidst, set an hourly rate per project, and every completed task becomes a time entry. At the end of any period, you can see exactly how many hours went to each client and what that work was worth at your rate.

Tidst also lets you set monthly hour or revenue budgets per project, so you can see in real time whether you're on track to hit your targets. If a project is consuming more hours than planned, you'll see it before the month is over — while there's still time to address it.

The time labels feature makes logging fast: add @30min or @60min to a task in Todoist before completing it, and the duration is auto-filled when it appears in The Queue. For freelancers who want to keep their rate calculations accurate without adding overhead to their day, this is the lowest-friction option available.

When to raise your rate

Your rate should increase over time, and time tracking data is the clearest signal for when. Look for these signs:

• You're consistently booked out weeks in advance — demand exceeds supply, which means your rate is below market.
• Your tracked hours show you're regularly delivering more value than your billing reflects.
• Your costs have increased (inflation, new tools, taxes) and your current rate no longer covers your minimum.
• New clients are accepting your rate without negotiation — a sign you have room to go higher.

None of these signals are visible without accurate time tracking. The data you collect with tools like Tidst isn't just for invoicing — it's the raw material for making better business decisions about your freelance practice.

Related reading: how to track billable hours as a freelancer and going from time tracking to invoice.