How Many Clients Can You Actually Afford to Lose? Most Freelancers Never Do This Math
Freelancer pricing questions come up in Facebook groups almost every day, and honestly they’re always some version of the same thing.
How much should I charge for a logo.
Is $50 an hour too low for web design.
Should I give this client a discount.
Different words, same problem underneath. People are pricing their work based on a feeling instead of a number. And I get why. Nobody teaches this stuff. You don’t learn day rates in art school or coding bootcamp. You just start freelancing, someone asks “how much,” and you throw out a figure and hope it doesn’t sound stupid.
Most of the answers people get back are things like charge what you’re worth or just look around at what other people charge. That’s fine advice I guess, but it’s not really a number. It’s a guess with more confidence attached to it.
So I want to walk you through three specific pieces of pricing math that I think every freelancer should know how to do.
Not theory…
Actual numbers you can run on your own rate today. No product needed for any of this part, just a calculator and five minutes.
The number nobody actually calculates: your real day rate
Most freelancers back into their rate. They think “well, other designers charge $75/hour, I’ll do $65 because I’m newer.” That’s not pricing, that’s copying, and copying someone else’s rate means you’re also copying their expenses, their income goals, and their idea of how many days a year they actually work. Which are probably nothing like yours.
Giving you a cleaner way to think about it. Your day rate needs to cover three things:
- The income you actually want to take home in a year
- The expenses your business racks up (software, insurance, a portion of your internet bill, whatever)
- A margin on top, because things go wrong, clients pay late, and you’ll want a cushion
Let’s say you want to take home $60,000 this year, and your business expenses run about $10,000. That’s $70,000 you need to clear before you’ve made a dime of actual profit.
Now add a margin…
Let’s say 15%, just as breathing room. You don’t just add 15% on top, you divide by (1 minus 0.15), because you want that margin measured against your final rate, the same way any business measures profit against revenue, not against costs:
$70,000 ÷ 0.85 = $82,352
Now here’s the part almost nobody does honestly: how many days a year can you actually bill a client for? Not “days I work.” Days you can invoice someone. Out of roughly 260 weekdays, take out vacation, sick days, holidays, and the hours you spend doing admin, writing proposals, chasing invoices, or just trying to find your next client. For most solo freelancers that lands somewhere around 150 to 190 billable days. If you’re telling yourself 240, I’d gently push back on that.
Let’s use 180.
$82,352 ÷ 180 = about $457 a day
If you bill in six focused hours (because let’s be real, an 8-hour “workday” rarely means 8 billable hours), that’s about $76 an hour.
Run your own numbers through this. Income goal, expenses, margin, realistic billable days. It takes two minutes and it’ll tell you more than any “what should I charge” thread ever will.
The trap that’s quietly costing people money: margin vs markup
This one genuinely surprised me when I actually sat down and did the math, and I think it trips up more people than they realize.
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Markup and margin sound like the same idea. They’re not. They’re measuring the same profit against two completely different numbers, and that difference matters more than you’d think.
Markup = your profit divided by your cost. “How much did I add on top of what this cost me?”
Margin = your profit divided by your sale price. “What percentage of what I actually charged is profit?”
Here’s where it gets people. Say something costs you $100 to make (your time, materials, whatever), and you mark it up 50%.
$100 × 1.50 = $150 sale price
Profit = $50
Fifty percent markup, right? Sure. But what’s your margin?
$50 profit ÷ $150 sale price = 33.3%
Not 50%. Thirty-three point three percent.
That gap matters a lot if you’re aiming for a specific margin and pricing by markup instead, because you’ll land lower than you meant to, every single time. If you actually want a 50% margin (meaning half of every dollar someone pays you is profit), you don’t mark up by 50%. You’d need to mark up by 100%:
$100 ÷ (1 − 0.50) = $200
I think a lot of people are quietly undercharging simply because they’re using the wrong percentage for the wrong question. Worth checking which one you’ve actually been using.
The math that answers “should I even raise my prices”
This is the one I think is the most useful and the one almost nobody runs before deciding to raise (or not raise) their prices.
The idea…
If you raise your price, you don’t need to keep every single client to come out ahead. You just need to not lose too many. The question is: how many is “too many”?
Say you currently charge $400 and you close 10 clients a month. That’s $4,000 in monthly revenue.
Now say you’re thinking about raising your price to $500. How many clients would you need at $500 to make that same $4,000?
$4,000 ÷ $500 = 8
So you’d need 8 clients at the new price to match what you’re making now with 10. Which means you could lose 2 clients, 20% of your current client base, and you’d be exactly breaking even. Everything past that is pure upside.
Sit with that for a second. A lot of people avoid raising prices because they’re scared of losing clients, but they’ve never actually calculated how much room they have. Usually it’s more than they think.
(Quick note if you’re going the other direction and thinking about lowering your price: the math flips. A lower price needs more sales to match your current revenue, not fewer, so don’t run this the same way expecting a positive number, you’ll just confuse yourself.)
What I noticed after digging into this
The more I looked at this, the more it seemed like the actual problem isn’t that freelancers are bad at math. It’s that nobody’s laid the math out simply, in one place, using their own numbers. People are either guessing completely, or they’ve got some half-built spreadsheet from three years ago that doesn’t account for their current expenses.
I ended up putting together a small set of calculators that run all three of these (plus a couple more, for project quotes and retainer pricing) so you can just plug your own numbers in instead of doing it by hand every time. Mostly just working through the formulas with it until the numbers checked out properly.
I listed it on Gumroad if you want the ready-made version.
Here you can check out my PriceRight — Freelancer & Small Business Pricing Calculator Suite
But honestly, everything above works fine with a plain calculator and a few minutes, that part’s not locked behind anything.
If you run your own day rate, or you check your markup against your margin and it surprises you, I’d genuinely like to know what you find. Drop it in the comments. I’ll catch you in the next one.
