Freelance Quote Calculator

A quote starts with an honest estimate of time, broken into the phases the work actually has, meaning research, production, revisions and project management. Multiply the total hours by your hourly rate, which should reflect your skill level, what the market pays and the value the client gets, then add direct material or third-party costs at what they really cost you. A contingency of 10% to 20% on the hours estimate absorbs scope creep and the complications nobody predicted.

Overhead recovery comes next, spreading fixed business costs such as software licences, insurance, equipment depreciation and workspace across the projects that pay for them. Apply the target profit margin on top, remembering that a 20% margin means multiplying the subtotal by 1.25 rather than adding 20%. Where you are VAT-registered, compulsory above £90,000 of turnover, add 20% VAT at the end. Set out labour, materials, expenses and VAT as separate lines so the client can see how the number was built, which also makes negotiating on scope easier than negotiating on price.

Freelancers price in several ways and most use more than one. Hourly rates in the UK run from £25 to £150, with £40 to £80 covering most of the mid-market. Day rates run £200 to £800, with £300 to £500 typical. Project pricing sets a fixed quote per deliverable, and value-based pricing takes a percentage of the value created. Short tasks tend to go hourly and larger jobs by project. Markup on costs such as materials, software and subcontractors usually falls between 20% and 50%. Retainers can carry a discount in exchange for a volume commitment, and the client's budget sensitivity, along with what competitors charge, sets the range you are working in.

Working out the floor below which a job is not worth taking is arithmetic rather than instinct. Divide the annual income target by the hours you can genuinely charge for. Aiming at £60k across 220 working days at 6 chargeable hours a day gives 1,320 hours, so £60,000 divided by 1,320 is a bare minimum of £45 an hour. That figure ignores tax at around 30%, business expenses, the admin that eats roughly 25% of your hours unpaid, and 4 weeks of unpaid holiday and sickness. Allow for all of it and netting £60k realistically needs £75 to £90 an hour.

A written quote protects both sides. It should state the scope in terms of deliverables, the timeline, the total fee with VAT shown where it applies, and payment terms, commonly 50% up front and 50% on delivery, or 30 days from invoice. Say how many rounds of revision are included, since two is the usual allowance, and price out-of-scope work separately. Add the late payment terms, which under the Late Payment of Commercial Debts Act allow interest at 8% above the Bank of England base rate, an acceptance and sign-off process, termination clauses and who owns the intellectual property. Give the quote a validity period so an old price cannot be accepted a year later.

Behind the quote sits the paperwork. A Statement of Work suits each individual project while a Master Services Agreement covers an ongoing client relationship, with an NDA where the work is confidential. Professional indemnity insurance costs £60 to £200 a year, public liability £50 to £150, and IR35 enquiry cover £200 to £400. Trading through a limited company puts a legal barrier between the business and your own assets, which a sole trader does not have. HMRC also treats how you price as evidence of genuine self-employment, since a real freelancer sets their own rates and carries financial risk.

The tax side needs planning from the first invoice. Expenses belong in MTD-compatible software such as Xero, FreeAgent or QuickBooks, at £8 to £20 a month. Pension contributions through a limited company are fully deductible, while a self-employed pension attracts relief at your marginal rate. A side income of up to £1,000 a year is covered by the Trading Allowance. Class 4 National Insurance takes 6% of profits between £12,570 and £50,270. Setting aside 25% to 35% of profit for tax is the usual advice, and a first-year freelancer should budget for the double bill that arrives when Payments on Account add 50% of the year's tax in advance.