Why You Can’t Afford Low Paying Freelance Gigs

Taking on new clients is both exciting and nerve-wracking. It's an opportunity to start fresh, create something new, and build relationships.

This week, I traveled to San Diego for XYPN Conference and FinCon. Like many of my fellow bloggers, I left with a stack of business cards.

I can't believe how much freelance work is out there.

After a conference or major networking event, it's easy to get swept away by the idea of dramatically increasing your income.

But it's important to take a step back and be strategic before accepting new gigs.

One of the questions I get asked a lot is what to charge as a freelance writer or social media consultant. We all struggle with fears of undervaluing our services, but don't want to scare away potential clients, either.

It's a tricky situation.

If you are still struggling to get paid what you are worth — and most of us do — I hope you find this post helpful.

Here is why you can't afford low paying freelance gigs:

Self-employment is expensive. 

As a full-time employee, your hourly rate or salary may include several large expenses like health insurance, a retirement plan, paid time off for vacation, taxes, overhead costs like an office, and more.

Before you start quoting your rates, you need to calculate how much it actually costs to run your business.

Here are some important questions to think about:

  • Have you considered taxes? Experts recommend setting aside 25-30% of your income to cover quarterly taxes. Have you factored this expense into your rates?
  • What is the cost of running your business? The Freelancers Union created an infographic with expenses you may need to budget for:
    • Office or co-working space
    • Website maintenance
    • Internet
    • Invoicing & accounting software
    • Project management software
    • Cell phone
    • New laptop every two years
    • Marketing
    • Other software
    • Uncollected payments
    • Accounting and tax preparation fees
  • How much is your health insurance? Most freelancers are footing the bill for health care on their own. Tip: if you have a high-deductible health plan, consider opening a health savings account.
  • How much are you willing to work? One of the toughest things about freelancing is finding the right balance. Most people I know either struggle with too few or too many clients. By deciding how much you are willing to work, you know how many billable hours you have available, and you can adjust your rates accordingly.


Pricing too low reduces the perceived value of your services.

When I was a concert promoter, one of my mentors was always telling me, perception is reality.” And he was totally right!

Pricing your services appropriately signals your value to prospective clients. It shows them you are in-demand, talented, and expect to be compensated fairly for your work.

There's an opportunity cost to every gig you accept. 

Let's face it—it's easy to get trapped in the scarcity mindset when you are self-employed. This can lead to accepting work that either pays too low or isn't a match with your long-term goals.

The problem is, by accepting lower paying gigs, you may be wasting your time and energy. This means you may not be available for better opportunities as they arise.

Low paying work can lead to burn out.

One of the biggest mistakes freelancers make in the beginning is charging too little for their services. With lower rates, more hours are required. This quickly leads to a fuller schedule than you want.

Even if you have a full-time job, I still recommend using the formula below to determine your hourly rates. If you decide to become self-employed or you are are laid off in the future, you will be prepared.

How To Price Your Services

So, how should you price your services?

A good starting point is determining your desired annual salary.

Here's an example:

Target annual salary – $50,000
Plus overhead costs – $15,000 (est. cost of running business + health insurance + taxes)
Adjusted annual salary – $65,000

Workable hours per year – 2,080 (40 hour workweeks)

2 weeks of vacation – 80 hours
7 U.S. holidays – 56 hours
5 sick days – 40 hours

Adjusted workable hours – 1,904 hours
Less non-billable hours – 25%
1,904  x  .75 = 1,428 billable hours

$65,000 adjusted annual salary / 1,428 billable hours =

You need to charge $45.51 per hour.

Many gigs will be priced per project, so it's important to properly estimate how many hours it will take. By keeping your hourly rate in mind when offering a project quote, you will know you aren't being underpaid.


Careful Cents Club – Without a doubt, Carrie Smith's Careful Cents Club is the best online community for freelancers. I've lost count of how many times I've searched her Facebook Group for an answer about rates, contracts, and more.

Here is a great post from Carrie on landing freelance gigs with no experience.

Who Pays Writers? – An anonymous, crowdsourced list of which publications pay freelance writers, and how much.

The Freelancer by Contently – Daily news, insights, and analysis on freelancing and the gig economy. Plus, it's a great spot for hosting your portfolio. Bonus: another rates database!

Readers: How have you overcome the challenge of adequately pricing your services?

Related Post


Discussions — 37 Responses

  • Tamara September 28, 2016 on 12:37 pm

    Thank you for the honest and detailed breakdown of how much per hour, including expenses I wouldn’t have thought of!

    I would also suggest checking what professional agencies might be charging per hour for similar services. It’s worth a look to check out your competition.

    • Kate Dore Tamara October 4, 2016 on 2:33 pm

      Great points, Tamara! It’s always helpful to see what competitors are charging.

  • Latoya @ Life abd a Budget September 28, 2016 on 12:41 pm

    This is an awesome example, Kate. I’m definitrly going to need it soon! Thanks:)

    • Kate Dore Latoya @ Life abd a Budget October 4, 2016 on 2:33 pm

      Sure thing, Latoya! Feel free to reach out with questions.

  • Physician on FIRE September 28, 2016 on 12:45 pm

    $45 an hour sounds reasonable, Kate. Have you found writing gigs that could pay that much or more?

    • Kate Dore Physician on FIRE October 4, 2016 on 2:32 pm

      The $45 per hour rate is just an example, but it’s not unreasonable based on the scope of a project and how fast you can work. I recommend everyone calculate their number and then assess projects on a case-by-case basis.

  • Kayla @ Shoeaholicnomore September 28, 2016 on 1:46 pm

    Yes! Working on scaling up all of my business activities to make sure I’m earning as much as I want to per hour to be on target for my desired annual salary. It also tends to weed out clients that are cheap and bad at paying on time, etc.

    • Kate Dore Kayla @ Shoeaholicnomore October 4, 2016 on 2:28 pm

      Great points, Kayla! Higher rates do tend to weed out clients who aren’t a good fit.

  • Tia @ financiallyfitandfab September 28, 2016 on 1:56 pm

    Thanks so much for the detailed breakdown! I don’t think I’ve seen anything as detailed. Unfortunately, many don’t realize the additional costs of self employment like health insurance and taxes.

    • Kate Dore Tia @ financiallyfitandfab October 4, 2016 on 2:27 pm

      Thanks for commenting, Tia! I totally agree with you. I’ve had conversations about this with several friends who were trying to adequately price their services.

  • Tonya@Budget and the Beach September 29, 2016 on 8:21 am

    When you get a check from a freelance client it can really feel huge, until you factor in all of those costs like taxes and health care. It can be easy to get lulled into having any old work at all, and promises from clients like more work or that this will look good on your resume, but if you an hold off for the bigger jobs, it’s probably worth it in the long run.

    • Kate Dore Tonya@Budget and the Beach October 4, 2016 on 2:26 pm

      Definitely, Tonya! I don’t appreciate low paying gig offers that promise more, better paying work in the future.

  • Matt @ Optimize Your Life September 29, 2016 on 8:52 am

    This is a really useful framework. Thanks for the thoughtful post and the resources. I will be bookmarking this post and all of the resources to review in the future!

    • Kate Dore Matt @ Optimize Your Life October 4, 2016 on 2:24 pm

      Awesome, Matt! Please don’t hesitate to reach out with questions in the future.

  • Ms. Montana September 29, 2016 on 9:42 am

    This is a great write up! The taxes often come as a big shock for folks starting out. Paying the full share of social security or workers comp adds up. I think working the numbers backwards is the way to go.

    • Kate Dore Ms. Montana October 4, 2016 on 2:24 pm

      Totally, Ms. Montana. It’s rough paying the extra taxes alone, but being self-employed is still pretty awesome! 🙂

  • Hank September 29, 2016 on 9:48 am

    I love how you broke it down by hourly rate required to set a baseline idea of what to charge or what your breakeven point needs to be. Very interesting approach that way. Do you adjust it each year for a raise?

    • Kate Dore Hank October 4, 2016 on 2:23 pm

      Thanks for commenting, Hank! I’ve been adjusting my rates as I add new clients. I think it’s important to continue to increase your rates as you gain experience (like CFP coursework, for example).

  • Chonce September 29, 2016 on 9:53 am

    This is so true, and scaling up is something I seriously need to work on. Now that I’m freelancing full time, I see how expensive self employment can be but you’ve done a great job of laying out how to price your services.

    • Kate Dore Chonce October 4, 2016 on 2:20 pm

      Thanks, Chonce! Yes, self-employment is expensive. When I was younger, I had no problem working 60-80 hours per week. Now, my time is much more valuable.

  • Financial Canadian September 30, 2016 on 9:46 am

    Focus is so important. I find that with so many things on the go, it’s easy to lose track of the most important tasks. Thanks for providing such a comprehensive list of how to cut the fat out of my “to-do” list.

    • Kate Dore Financial Canadian October 4, 2016 on 2:19 pm

      Yes, focus is everything. I still struggle with it every day, though. I’m hoping efficiency will continue to grow over time.

  • Mrs. 1500 September 30, 2016 on 3:48 pm

    I will say that writing for free or very low pay can open some doors and give you some writing samples. But you could just as easily accomplish that by creating your own blog, writing for yourself for free, because then YOU get to choose your topic, the direction the article is going, write in your own voice, include swear words if you like, etc. Your personality comes through with no filter on your own blog and I find that writing for myself allows the words to fly out of my head, through my fingers and onto the screen effortlessly. Censoring myself takes a little more work.

    • Kate Dore Mrs. 1500 October 4, 2016 on 2:19 pm

      Totally agree, Mrs. 1500. Because of my limited time, I’ve tried to stay away from free or low paying gigs, even if they look good in a portfolio. Plus, I’d rather save those ideas for my own website!

  • Graham @ Reverse The Crush October 1, 2016 on 10:29 am

    Thanks for sharing this post Kate!
    I found it very helpful as far as the tips & pricing. That seems like a very reasonable rate.
    I also found Mrs. 1500 comment to be interesting. I think it is easy to write for your own blog. Thanks again! Great post 🙂

    • Kate Dore Graham @ Reverse The Crush October 4, 2016 on 2:17 pm

      Agreed, Graham! I’d landed some great freelance gigs based on the writing I’ve done for my blog.

  • Done by Forty October 3, 2016 on 10:47 am

    I really like the analysis at the end. Do you feel like that rate of $45 is around what freelancers in the personal finance world charge?

    • Kate Dore Done by Forty October 4, 2016 on 2:17 pm

      Rates vary from person to person depending on the scope of the project and how much time it requires. Everyone should run the numbers to determine the best rate for them.

  • Stefanie O'Connell October 4, 2016 on 11:57 am

    These are great tips Kate. The time balance has grown so important to me, I take very few jobs these days. To make up for it, I charge a very high rate, but because I’ve taken the time to find the clients willing to pay that rate, I have a very manageable schedule – worth it 🙂

    • Kate Dore Stefanie O'Connell October 4, 2016 on 2:16 pm

      I love this, Stefanie! Time balance is incredibly important to me, too.

  • Our Next Life October 5, 2016 on 2:35 pm

    Such a helpful post! Even though I’m not trying to create a new freelance career, we are starting to think about what type of paid work we might do after we retire next year. And saying to ourselves “we don’t need the money” is a deeply unhelpful way to think about how much we might need to make from the work. Because even if we don’t NEED that work to sustain us, it still comes with costs — technology, time, the potential to kick us up to a more expensive health insurance bracket, taxes, etc. So we need to do our own math on what would make something worth it versus not before we start agreeing to things. Thank you!

    • Kate Dore Our Next Life October 9, 2016 on 5:23 pm

      Great points, Our Next Life! That’s the attitude I had when my freelance gigs were still a side hustle. It has paid off big time!

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  • Dividend Ten October 10, 2016 on 8:06 am

    Great post. If you’re freelancing on a platform like Upwork or Guru, I’d actually argue that you’d need to undercharge for your services so as to build your body of work & recommendations. I hustled on Upwork for $2/ hr for my first job. Today I’ve built my rate to $150/hr. I also make about $1500 / mo side hustling on Fiverr. But the first year or two just have to be about the all-important review, IMHO.

    • Kate Dore Dividend Ten October 10, 2016 on 11:04 am

      Great points, Dividend Ten. Thanks so much for sharing your experiences with Upwork or Guru.

  • The Thrifty Issue November 3, 2016 on 10:25 pm

    Thank you so much! As a freelancer myself from time to time, this is so helpful. Now I have more ideas. x

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