💰 2025 Freelance Pricing Guide

I’ve worked with 20+ talent platforms and marketplaces and have helped over 4.5 million people across 190+ countries in their freelance journey. I’ve become the go-to price consultant and wage negotiator in my friend group because of it.

Here’s the TLDR about all things freelance pricing.

*Note - My example figures are simply for understanding and do not reflect accurate market rates for products and services.

Likely one of the most obvious and popular models, Time and Materials consists of setting a time-based rate (hourly, daily, weekly, monthly) and customers pay for the actual time spent by the service provider and the materials used during a project.

Example: A Software Developer charges $80 per hour, works 40 hours on a project, and buys and implements a tool for a customer that costs $500. Their invoice would show $3700 (plus taxes, if applicable).

This is a simple and common model, Project and Milestone pricing involves billing clients after achieving specific deliverables.

Example: A Creative Director running a brand redesign may be invoicing their client $20,000 after delivering a brand strategy, $10,000 after creating messaging tone and voice, $10,000 after creating a visual language and logos. Breaking apart a $40,000 project as deliverables are shipped.

This is often more an art than a science. Value-based pricing is a strategic approach where the price of a product or service is determined based on its perceived value to customers rather than historical pricing or production costs. It’s often used for outputs with high perceived value, unique features, emotional appeal, and scarcity.

Example 1: Management Consultants often price based on value. The value that they provide through strategic advice, problem-solving, and expertise is priced much higher than simply the cost of time and is much more nuanced than a specific set of deliverables.

Example 2: A Marketing Consultant doesn't just run ads - they implement an AI-driven customer acquisition system that increases a client's revenue by $50K annually. They price based on that $50K value (maybe $15K for the implementation), not the 40 hours it took to set up.

Typically used in longer relationships, a retainer pricing model is where clients pay in advance for ongoing services provided during a set period. Unused retainer time usually expires, and, depending on the agreement, the client can or cannot take unused time into the next month.

Example: A lawyer charges a $1000 retainer fee per month for 10 hours of work. The client pays in advance. The lawyer works 4 hours and deducts $400 from the retainer, leaving a balance of $600. This is where their agreement will need to specify what happens next.

They must determine in their initial contract if the lawyer will

This strategy is an “output” based model, rather than an “input” based model. Success-based pricing is a strategy where freelancers charge clients only when a successful transaction occurs between the client and an end customer. This ensures that both client and freelancer pre-define “success” when entering an agreement and aligning it with business goals.

Note: This may be a success-only agreement where payments only occur if the client earns more revenue from end-clients OR this may be added on top of another price model where someone is paid by time or deliverable AND commission or equity on top of this.

Example 1: A Marketing Consultant sets up a new customer lead channel (referral program, partnerships, ads, etc.). They may charge a % commission or affiliate fee on all end-customer transactions completed through that channel for a period of time (6 months to a year).

Example 2: A Strategic Advisor may charge a low retainer or advisory fee to a startup on a strict budget and accept an equity or share option grant in exchange for reducing their rates. They only earn money if the company is successful (earn more revenue, investment, etc.)

Example 3: A Freelance Developer builds custom AI automation for a client's customer service. Instead of charging $10K upfront, they charge $2K setup fee plus 20% of the money saved on reduced customer service staffing costs over 12 months.

This is where freelancers accept company equity (shares/stock options) in lieu of or in addition to traditional payment. It's becoming increasingly popular with startups and high-growth companies.

Example: A Product Designer might accept 0.5% equity in a startup plus a reduced hourly rate of $50/hour instead of their standard $100/hour rate. They only realize value if the company grows or gets acquired.

Freelancers receive ongoing payments based on usage, sales, or performance of their work. This is particularly relevant in the AI age where creative work can be continuously monetized.

Example: A Graphic Designer creates brand assets and receives 2% royalty on all products sold using those designs. Or a Writer contributes training data to an AI platform and receives ongoing royalties based on how often their content is used to generate responses.

This is a hybrid model that's gaining serious traction in the AI age. Licensing involves creating a product, system, or intellectual property once and then selling the rights to use it to multiple clients simultaneously. It combines elements of product sales, recurring revenue, and usage-based pricing.

Example: A Marketing Automation Specialist builds an AI-powered lead qualification chatbot and licenses it to 15 different real estate agencies for $800/month each. The same agent serves multiple clients, but each pays for their own implementation and customization. The specialist might also charge usage fees based on the number of leads processed monthly.

The most common approach to pricing, especially for new freelancers coming from full-time in-house employment, is to take their annual after-tax / take-home salary and split it out into an hourly rate.

Here’s why that’s a terrible approach. You’re not accounting for other costs and expenses like:

Pricing, in general, is always subjective. Everyone's costs differ, methods differ, and markups differ. You do not need to subscribe to this formula AT ALL and should create your own. This is simply to illustrate things that people might be missing out on.

Here's a real-life scenario as an example.

Jane was laid off from her job as an AI automation specialist at a tech company and wants to go freelance. The demand for AI implementation is exploding, and she's already had multiple inquiries from people in her network who want to hire her to build custom workflows and AI agents. She's trying to calculate her rate card and has chosen a time and materials pricing model for her initial client work (though she's planning to transition to licensing her AI tools once she's built a few). Her gross salary was $150,000/year.

👎 She should NOT do this

Take 150,000 / 52 weeks / 40 workable hours per week giving her a rate of $72/hour.

While this accommodates her taxes as it’s her pre-tax salary amount, she’s still losing money.

👍 She should do THIS

You can see that this adds up quickly. If Jane simply took her salary split at $72/hour, she would be nearly halving her potential rate.

When was the last time you raised your rates? You might be overdue.