Freelancer Rates in 2026: The Truth About What You’re Really Making Per Hour with Emily Reagan #277

Emily Reagan 0:00 Here’s the thing, most freelancers discover that their real rates are 30 to 50% lower than they thought. And so if you think you’re making $50 an hour, you might actually be making less. Most of you are, hey, hey, hey, it’s Emily Reagan here. Welcome back to the show. I’m so glad you’re here. Well, we are going on seven snow ice days here in Richmond, Virginia, so I’m losing my crazy just a little bit. It’s taking everything in my power to get this podcast episode out and have quiet in my house. And I just want to thank you for being here. I have planned out this episode A while ago, and I was super excited, because so many of us scoff at the thought of hourly rates, but hourly rates are so important, even if you’ve worked your way into packages and projects and VIP days. So there’s three different hourly rates I want you to know, even if you’ve outgrown hourly rates. But before I get started, I really want to invite you to join our digital marketers work group. This is a community and mastermind for already working freelancers who want to build more profitable service based businesses, not by working more hours, but by positioning smarter, pricing better and working with clients who actually value what you do. And so if this is you get your application into the work group. We accept a couple new unicorns every month, and I’d love to be welcoming you in this q1 this episode is going to be a reality check for a lot of you, and it is getting us to face our numbers. We just had Megan Hale in the work group, talking about revenue, talking about expenses, cash flow, and all these important things that we have to pay attention to in our freelance businesses. Yes, we have to do the marketing, we have to provide the services. We got to work with the clients, but we also have to run our own businesses, and we need to keep profit top of mind, right. And this is also important for being able to sell and articulate our value, to really lean into value based pricing and differentiate ourselves from overseas VAs or admin vas, or anyone who’s doing more commodity hourly pricing. And here’s the thing, most freelancers discover that their real rates are 30 to 50% lower than I thought. And so if you think you’re making $50 an hour, you might actually be making less. Most of you are. So I want you to grab your coffee, grab your notebook, get into this, because knowledge is power here. Facing your numbers is power here, and most important knowledge is profit. And that’s why we’re here, right? We didn’t trade in our corporate nine to fives. So we can work like crazy just to barely fill our bank accounts. A lot of you are experiencing this. You’re like, Emily, I’m putting in 40 hour work weeks, and I’m just not seeing the money in my account. So we got to know what to charge and when we know what to charge, and we have confidence there we know what to price and we know how to package. And so also, if you’re listening to this, I have a pricing and packaging workshop coming up. This is a two hour live intensive where we’re going to lay out and build your packages. So if you are interested, grab the link in the show notes, sign up. I’m only taking 25 service providers. The cost is $97 I would love to have you there. Today, we’re going to cover three main hourly rates that you need to know, even if you’re not offering hourly rates to the client. And these are your minimal acceptable rate, your Mar M, A R, your effective hourly rate per client, and then your total business effective rate, which we’ll just touch on briefly today. And so a lot of you, I see this all the time with my students like Emily. I’m so busy, I’m working all the time, and I’m not making the money I thought I would, right. We have to face taxes. We pay self employment taxes, like there’s overhead, there’s expenses. We are independent contractors, and we need to incur cost, and we also have this risk of a profit. That’s what makes us independent business owners, and a lot of us find out we’re accidentally making Chick fil A wages of $15 an hour. And that’s not why we’re here. Lot of us have college degrees. We’re over educated. We have over 10 years of experience, 20 years of experience. We do not need to be working for $15 an hour. You already know me. You know this podcast. We don’t even post jobs like that in the work group. So let’s start with your minimal acceptable rate. Now, I do have some trainings over in our digital marketers work group that give you access to learning about pricing and packaging that help you calculate these numbers for yourself. But you’re smart. You could do it on the back of a napkin. You can do it in a more complex spreadsheet. You can take your your budget system, and calculate this number based on your unique situation. And this isn’t new. This isn’t rocket science. It’s just a step a lot of us miss. And if you are, especially in the seat where you are the breadwinner, where your family depends on your income, or you have financial goals and you. Want to hit targets, and you need to know what to charge to get there. This is a crucial number. So the minimal acceptable rate is the absolute minimum you need to earn per hour to cover your living expenses, your business expenses, and pay yourself a salary and cover your taxes too. This is a baseline. This is your I will not show up for less than an hour. And this is so powerful, because when you know this minimal rate, you don’t say yes to clients who are trying to get you for a discount. You show up to discovery calls with the power knowing your numbers and knowing your floor, and it’s just the floor. There’s a ton we can do to raise that minimal acceptable rate, but it’s a starting point. This also lets you go in and price packages and projects when you know this rate. That way, you don’t lose money if you say yes to a project you’ve never done before. So here’s the formula, quite simple. You take your living expenses, especially if you’re the breadwinner, some of us this is extra side income. So take your living expenses, add in your annual business expenses, everything you’re doing in your tech stack, your professional organizations, your courses like the work group, like UDM a school, take your website, your Google workspace, all of that, add it up. Then add in 25% for your salary and add in another 25% for taxes. Just it’s easier just to assume 25% for taxes, and you can work it out for your tax bracket, and then divide that by about 1300 billable hours. There’s actually 1326 billable hours on average for a freelancer, which I have that memorized. It’s a very realistic numbers for freelancers that we actually work when you account for holidays, sick days, the fact that we don’t always work a solid eight hours every single day. So say your expenses are 48,000 you need to add 25% to pay yourself a salary like on top of that, and then you’re going to add in another 25% for taxes. So let’s just say that 75,000 total. You’ll divide that by the 1300 hours, and you’ll get Hold on, I should have done this math ahead of time, about $56 an hour. So then that’s your minimal acceptable rate. Anything below that, you’re losing money, you’re not covering your cost, you’re not paying yourself appropriately. And this becomes a goal, a goal to do what you need to do to raise the rate. And that’s gonna be a whole separate episode. Honestly, it should be. What do you need to do to raise the rate? Get better. Get in the right rooms. Get better at your services. Do better marketing. Hello, come into the work group. We can help you. We can help you there. Now, if you’re someone like me, for a long time, I had the privilege of being a military spouse. I have free health care. We got a, you know, income stipend. We didn’t make a huge salary, but things were covered where your income, like mine was side money for a long time, like your partner has a career, or maybe you have passive income. Maybe you’re you’re working for extra piano lessons, Botox, vacations in a five to nine so maybe you work backward with your income goal there, and then you set it by based on what you want to contribute. So say, you know, you need 20,000 Right? Like, then you can work backward that, like, I want to make an extra 20,000 a year. So let’s just say you want to make 1000 a week. You want to work 20 hours. That’s $50 an hour. That’s easy math, right? We can, like, work backward and add in some taxes and stuff. I’m not going to do that here on the show, but the point is, you have to know this number. You have to write it down. You have to tattoo it in your brain. You have to bring it with you to every discovery call. Know the minimum you’re willing to show up so you can pass over the $3 an hour, $25 an hour crap that isn’t on par with what you’re operating at. This is your floor. This is your non negotiable. Everything else people looking for cheaper help, less experienced help. That’s okay. Those is not your clients, right? We all know that some of the clients who treat us as commodities, who are shopping around for the cheapest rate, they’re not the best client, right? So you have your minimal acceptable rate. A good practice is to just practice it stayed in front of the mirror. My rate is $56, an hour. Pause. Quiet. Now we’re getting into like, sales skills and whatnot, which you hear on the show here. But let that sit with you. Let it become second nature. Let you not blink an eye the next time you are in line at the grocery store and someone finds out you do marketing, and they start talking to you and they want to pick your brain, and you’re like, Sure, my rate’s $56 an hour. Would you like to book a call? Like, okay, maybe not the grocery store line, but there’s been so many places in my community where people have asked to work with me and I needed that number prepared. So this is where things get interesting. Now we need to know our affected hourly rate, and this is the part that’ll be a little painful for some of you. When you have clients, this is what you’re actually making per hour. And when you break it down based on any pricing model, if you have packages, projects, retainers, it’s the time you actually invest into that client. And it’s a per client calculation, and it’s what you make per client. And we all know clients can have different different scope, different projects. Different rates. So what you’ll do quite simply, maybe you do this quarterly, maybe you do this monthly. Take the total you earned divided by the total time you worked. One good thing you can do is just do it per week, and kind of guess times four to get the month. Does that make sense? So we kind of take on average what we do per week per client, especially if it’s routine work, and then we can kind of get that monthly and that’s it. Here’s the catch. You have to track your hours, though, not just the billable ones. That’s the part that sucks. It’s the non billable hours. It’s when you’re having this direct communication to the client, although some of that, some of the communication is billable, some of it is not, especially for projects, the revisions, the extra admin time, the invoicing, the filing, the organizing, the password resets, the onboarding, the offboarding, not all of that is hourly, especially if you’re in projects and packages, fixing your own mistakes. You eat that cost, any tech issues and glitches, everything that goes into serving that client, that specific client, you are going to write down all the hours, and so we’re going to have the billable hours right? Especially if we’re hourly, we’re also going to have the client work that’s not billable. Now, this is not general marketing. This is not your networking. This is not spending money joining the work group. This is not investing in a new skill. This is only client specific, and only if they requested it. Okay, so you’re doing marketing for yourself. Doesn’t count. You’re doing billable marketing work for your client. It counts. Okay. I’m just going to give you one example in this podcast, because I know it’s a lot of math, and if you’re very visual, you want to see this. And I just want to remind you, if you need help doing this, the work group has trainings to walk you through it. You can come back and listen to the notes, or you can join me in that live packaging workshop. And we’ll kind of, we’ll start there and build from there too. But let’s say you’re doing emails and social for a client. You’re charging $800 a month. It sounds pretty good, right? But when you actually, when you actually track your time, when you you find out it’s taking you 19 hours of work per month. And so that 800 divided by 19 is a $42 effective hourly rate. So $800 divided by 19 means a $42 effective hourly rate. So you have to come back and compare that $42 your effective rate to your minimal acceptable rate. Are you losing money on that client? Even if it feels like 800 a month, 800 a month is good money. That’s a good project, but you could be losing money because your Mar is still 56 sometimes you’ll find and it hurts that you just worked for half of what you’re worth, that your work’s worth, you might find that because of all the tedious, non billable work, that your profit margin starts slipping and it is now below your minimal acceptable rate, and it’s going to be different for everyone. Some of us do not have to cover all of our living expenses. Unfortunately, I’m in a situation now that I’m divorced. Now I have my own medical insurance. Now I have the mortgage, like my life has changed. So thank God I know those numbers and what I actually need to make. And I mean, I thank God every day I started freelancing so I could cover my own mortgage. But are you seeing the problem here? This is why so many freelancers feel like they are hustling all of the time and not making money they thought, especially compared to their corporate nine to five, because they’re not tracking real numbers. And here’s what I found. Are a ton of these hidden time killers. And this is why I think AI is so great, because if you can build if you can build custom gpts, if you can build some agents, if you can start subcontracting to people to help you go faster, you can produce more. And I know if AI gets a bad name, but it is about efficiency here, and it’s about like not wasting time, and we can’t always turn our brains on and switch our contacts all of the time. I will say, surprise, surprise. I’ve just updated our AI unit in UDMA school, and I am going to be offering these trainings inside the work group too. So if you’re looking for a starting point with AI to learn how to do it for yourself and your clients. We got you. We got you. That’s also inside the work group. But I just want to talk about these hidden time killers, because no amount of like Speedy Gonzales on the keyboard is going to fix this scope creep, you know, with the client going just one more revision. Can you look at this thing? Can you do this while you’re there? Can you just sign on real quick. The just word is always triggering for me, and every time you say yes without charging for it, you’re eating into your profit margin. You are eating into your kids, your kids college savings. They’re five two nines, number two, long meetings, meetings that didn’t need to be meetings, but also long meetings, meetings that don’t end when they’re supposed to, when the client doesn’t stay on the agenda, you block 30 minutes. It takes an hour, blah, blah, blah and billable time. Most of us, though, are billing for our time. What I think you want to watch out is making sure that the client knows you are billing them for that. But with projects, it’s not quite like that. It’s a little different, right? We need to keep our. Meetings on point. And I say this with kindness, because we’ve had people in the work group go into the never ending client call where it was hard, and so it’s up to you to put on your big girl pants and really leave these meetings, keep the client and you on the agenda right. Keep it on point. The non billable communication is another one. It’s the quick questions. It’s the time on Voxer, the time the DMS, things that could be like a three paragraph email that all the clarifications that are needed, Slack messages and all of that. It’s nice to kind of rope that in together as a meeting. This is also why I love this whisper flow tech tool, because I can just press function on my computer. I have it uploaded, and I can speak into my prompts. But more importantly, I can shoot out quick emails to my team, to leads to clients and to friends without all the typing, and I can shave down time there in the non billable communication. So go check out whisper flow. We have an affiliate link. It’s only $12 but you can sign up for a free a free thing. Go check it out. It’s like the best tool ever. It’s changing my life. Another hidden killer is your own inefficiency here, and I don’t mean that from a place of judgment. We’re human. We’re learning new software, we’re doing research. We’re second guessing, right? We’re analysis, paralyzing ourselves. We care about our work, so we’re being extra careful. We don’t want to make mistakes. We have to fix our mistakes, and we do have to eat that cost too, and it’s part of it, and that’s part of the billing or the project work, right? We got to think about some of that. And then, of course, distractions, Tiktok, I don’t know, kids, snow days, I don’t know. Like today, I missed out on work because I went had a crazy opportunity to go see the Tibetan monks walk through Richmond, Virginia. So of course, I’m going to do that admin, time, invoicing, filing. That’s why AI agents can really help tech issues. That’s always going to happen, right? So there’s a learning curve, and that’s why having a community like our work group is so helpful, because you can troubleshoot faster than spending three hours on a GoDaddy support call. I’ve had to get on live calls. I’ve had work group members meet up with me to walk me through a tech glitch or something crazy that went wonky. So as a rule of thumb, you are going to spend 30% of your time on non billable work. So your billable rate should be one and a half to two times more anyway, because that’s your desired take home rate. You need to charge more because you have to also think about the non billable time. Things just always take longer than we think. It’s like the target trip. Hey, honey, I’ll be back in two hours. It’s never like that. Okay? So now that you know your minimal acceptable rate, now that you know your effective hourly rate per client, let’s talk about the total business effective rate. This is a broader calculation, because now we’re adding in total profitability. So we’re also thinking about not only the time we’re wasting with our clients, the time we’re wasting with our own marketing. That’s really what it is. I know I framed that really negative, but this is your profitability across all clients, all your time. It includes the marketing, the networking, the discovery, calls the learning that you don’t get to charge anyone for and you can’t even bundle it inside the project, right? And this is a big picture number that tells you if your freelance business is actually sustainable. We can dive into that number later, but I want you to think about that when you start calculating broadly, you’re estimating the other work that you’re doing, the marketing Okay, so let’s recap. So if your total business effective rate is less than your Mar we also have a problem, right? So now we have spread that work among different clients. We need each client to be worth it, and this is where big decisions come in. Am I losing money on this type of service, this package, this project, this client? There’s so many more decisions. And for some of you, you might be thinking, yikes, that’s a lot. We need to face these numbers, especially if you want to move from hourly to packages and projects. If you want to be doing VIP days, you need to know these numbers to be able to accurately estimate and quote projects. Okay, so a couple action steps. One, calculate your minimal acceptable rate if you haven’t and if you are in Union my school, if you are in the work group, go watch that lesson, download the workbook. You can do the math. Step two, for just one week, only one week, track everything you’re doing for every single client, especially if it’s a pretty common, typical week. You don’t want to track an atypical week, like if a client’s in a launch, it’s not going to be accurate. And so you are going to track the total revenue, expenses, billable hours and non billable hours for that client, see what your effective hourly rate is per client. So you’re gonna take all the work you did and divide it by the total number of hours you worked, and multiply it times four, so you kind of get that monthly average. So you can see what it looks like monthly and compare that to your Mar which one is more do you keep the client? Do you reduce the scope? Do you increase your rates? Do you fire them? You’re gonna hate me, but I highly suggest having a time tracking system. Use toggle. You can use clockify. Use a spreadsheet. I don’t even care, but you need to track. This moving forward, and this is going to set you up to be able to quote projects too. I hear from you all the time. You guys are all sick of hourly rates and hourly clients. There’s a lot of work that goes into scoping and being prepared for projects and packages. So if you’re in the work group, you can share your findings, share your numbers, get feedback, get support. You are not alone in this. And then if you need help taking this to the next level, please sign up for our premium package workshop. It’s happening February 26 we’re going to help you move from hourly rates into professional packages that sell your expertise, not your time. So this is about moving from cost based pricing to value based pricing. This is about creating expert level packages and pricing that positions you as the obvious choice. Wants your package to sell itself, right? So this is a two hour intensive where you build your package so clear and compelling that these packages sell themselves. I want you to be able to quote your rates, knowing that quality clients will say yes and you will repel the low end commodity seeking clients, right? Your packages should reflect the professional you are okay, and when you present clear and tiered options, when you have defined deliverables, when you have outcomes, clients see you as an expert, and it’s so much easier to sell. The link for the Premium Package workshop is in the show notes. So there’s a couple other things I mentioned. If you are at the beginning of your journey and you still need to learn marketing services, there’s no shade. I can help you know where to start. Pick out your three services. Learn what you need to know about online marketing, and help you set up your business and craft these packages, all inside the unicorn digital marketing assistant school, we have a self paced version called the self starter that you can get in for $87 a month and start building a business that pays you for a lifetime. If you found this episode helpful at all, please share it. Tag me at Emily Reagan, PR, I would love to hear from you in the DMS. Tell me what is your minimal acceptable rate. Just go announce it. Just send me a random number. Screw with my notifications. I know I want to get into so much more when it comes to pricing and packaging, I’m going to save a lot of that for the workshop, but this should bring up a lot for you. If you need help working on your business, if you love being supported with people who are doing the same thing, if you love client referrals and job leads, you need to join our digital marketers work group. We will help you increase your revenue per client. Instead of just adding more clients, you’ll start progressing with better packaging, with specialist positioning, with more business infrastructure, and knowing what to charge, what your work is actually worth. There’s so much power in knowing what other people are charging, what they’re doing, what’s working. We also love to earn out on marketing. All right. I’ll see you in the next episode. Until then, keep being the unicorn that you are.