The most common mistake when setting your price: you take the salary you’d like, divide it by 160 hours and get a rate that slowly bankrupts you. As a sole proprietor you don’t sell all your hours, yet you have to pay contributions, equipment, holidays and the months when there’s less work. Here is a formula that takes all of this into account.
Step 1: calculate your annual costs
- Personal costs: how much you need to live per month (rent, food, transport, savings) × 12.
- Business costs: contributions (for a full sole proprietorship in 2026 around €651 per month), accounting, equipment, software, a workspace, training, a reserve.
- Taxes: you also pay income tax on your profit – with the flat-rate scheme it is easiest to estimate in advance.
The sum is the amount your business has to generate per year for you to live normally – not minimally.
Step 2: realistically estimate your billable hours
A year has around 2,000 working hours, but you won’t sell them all. Subtract holidays, public holidays, sick leave, admin, finding clients, quotes and training – what remains is realistically 1,100 to 1,300 billable hours per year. This is the most important number in the whole calculation and the reason why the “salary divided by 160” rate doesn’t work.
Step 3: divide and add a margin
Divide your annual costs by your billable hours – you get the rate at which you break even. Then add 10–20% margin for the unexpected, non-payers and growth. The result is your minimum rate: below it you don’t take on work, because with every hour you’re actually losing money.
A simplified example
Let’s say you need €1,700 per month to live, and your business costs including contributions come to around €1,100 per month: together roughly €34,000 per year, and with a reserve for income tax around €42,000. At 1,150 billable hours that is about €37 per hour – with the margin, therefore, around €40 per hour as the lower limit. For comparison: the same calculation with 160 hours per month would have misled you to €22 and into a loss.
Step 4: check the market and the value
The formula gives the lower limit, while the market and value give the upper one. Check how much experienced peers in your niche charge, and price the result, not the effort: if you save a client €10,000, your rate isn’t too high at €60 per hour. Specialisation is the fastest route to a higher price – a “developer” competes with everyone, a “developer of online stores for manufacturing companies” with only a few.
When to raise your rate
- You’re booked more than 80% of the time – demand can bear a higher price.
- Offer new clients a higher rate; raise it for existing ones at the new year or a new project, announced in advance.
- Nobody is negotiating? Your rate is too low. A healthy quota is that the occasional client says no.
The cost often forgotten: your workspace
Your calculation of costs also includes the space where you work. Membership at the makerSP_CE coworking space (from €135 incl. VAT per month per the price list) is a tax-recognised expense and, at a €40 rate, amounts to roughly four billable hours a month – in return you get an environment in which those hours actually happen, plus a meeting room for client meetings and a community that brings referrals.
Frequently asked questions
Should I even state my price in advance?
Yes – roughly. Hiding your price attracts clients with unrealistic expectations and costs you hours of meetings. State a range or a starting rate and justify it with results.
Hourly rate or a per-project price?
Start with an hourly rate to get to know your speed. Once you can estimate the scope of typical projects well, move to a project price – it rewards your efficiency, whereas the hourly rate punishes it.
What if a client tells me the competition is cheaper?
There will always be someone cheaper. The answer is not to lower your price, but clear value: what the client gets with you that they don’t with the cheaper option. If price alone decides, that is often not your client.
Conclusion
Your hourly rate is not a feeling but a calculation: annual costs divided by a realistic 1,100–1,300 billable hours, plus a margin. Calculate your lower limit, check the market and raise your price through specialisation and results. And once you’ve set it – defend it too.
Reserve your spot at makerSP_CE
Coworking makerSP_CE, Pivovarniška ulica 6, Ljubljana (next to Tivoli Park). A fixed price, no notice period, 24/7 access and free parking.
Web: makerspace.si | E-mail: rezervacije@makerspace.si | Phone: +386 30 393 405
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- What Exactly Is Cash Flow and Why Is It Crucial for Your Business?
- 5 reasons why freelancers and sole traders choose coworking spaces
- Working for Foreign Clients: VAT, Invoices and Payments Made Simple