Undercharging is the most common — and most damaging — mistake freelancers make. It is understandable: when you are just starting out, charging high rates feels presumptuous. But undercharging attracts the worst clients, keeps you on a treadmill of low-quality work, and prevents you from investing time in skill development. This guide will show you exactly how to calculate the right rate and raise it without losing good clients.
The Three Pricing Models
Hourly Rate
Charging by the hour is the most common model for beginners. The problem: it penalises you for getting faster and better. Treat hourly rates as a starting point, not a permanent strategy.
Project-Based (Fixed Price)
Fixed-price projects reward efficiency. If a project takes you three hours instead of five, you earn more per hour. This model requires accurate scoping — always define clearly what is and is not included before agreeing.
Retainer
A monthly retainer — where a client pays a fixed fee for a set amount of work each month — is the holy grail of freelancing. It provides predictable income and reduces the feast-or-famine cycle.
How to Calculate Your Minimum Viable Rate
- Calculate your monthly expenses (rent, food, transport, utilities, subscriptions)
- Add your business costs (software, equipment, internet)
- Add a savings/investment target
- This gives you your ‘break-even’ monthly income
- Divide by your billable hours per month (realistically 100-120 hours)
- This is your absolute minimum hourly rate
Then research market rates. Check Upwork’s hourly rate data for your skill and region. Your rate should be at or above the market median, not at the bottom.
How to Raise Your Rates
- Give 30-60 days notice before a rate increase
- Frame it as a reflection of your growth: “Based on the level of work I now deliver and current market rates, my rate will increase to X from [date].”
- Apply new rates immediately to new clients while honouring current rates for existing clients briefly
- Accept that some clients will leave — those clients were often the lowest-value ones anyway
Conclusion
You will almost certainly undercharge at the start. That is normal. But make raising your rates a deliberate goal with a specific timeline. For the complete freelancing picture, read our guide to starting freelancing in Pakistan and our Upwork proposal guide. Explore our full Freelancing category for more.