How to Set Your Freelance Rate in South Africa
Setting your freelance rate is one of the hardest things when you start working for yourself. Charge too little and you burn out. Charge too much and you get no work. Here is a simple method to find the right rate for South Africa.
Key Takeaways
- Your rate must cover tax, medical aid, retirement, and leave
- Freelancers need to charge 2x to 3x what an employee earns per hour
- You will only bill about 60-70% of your working hours
- Always quote per project when possible (not per hour)
- Review and increase your rate every 6-12 months
Why freelancers must charge more than employees
As an employee, your company pays for many things you do not see: UIF, medical aid contributions, pension, leave days, office space, equipment. As a freelancer, YOU pay for all of this yourself. Plus you pay more tax (provisional tax). So your hourly rate must be much higher than what an employee earns per hour.
- No paid leave (sick days, holidays, annual leave)
- No employer UIF or pension contributions
- You pay for your own medical aid (full amount)
- You pay for your own equipment, internet, electricity
- You spend time on admin, invoicing, and finding clients (unpaid)
- You need to save for quiet months with no work
The simple formula
Here is a basic way to calculate your minimum hourly rate:
- Step 1: Decide your target monthly income (what you want to take home)
- Step 2: Add 30-35% for tax (provisional tax + income tax)
- Step 3: Add your monthly expenses (medical aid, insurance, software, etc.)
- Step 4: Divide by billable hours (about 100-120 hours per month, not 160)
- Example: R30,000 take-home + R10,000 tax + R5,000 expenses = R45,000 / 110 hours = R409/hour
Why you cannot bill 8 hours a day
Many new freelancers think they can bill 8 hours a day, 5 days a week (160 hours/month). This is wrong. You will spend time on admin, marketing, invoicing, meetings, and looking for new clients. Realistically, you can bill about 60-70% of your time.
- Realistic billable hours: 100-120 per month
- The rest goes to: finding clients, admin, invoicing, learning
- If you calculate your rate on 160 hours, you will be underpaid
- Always use 100-120 hours in your calculation
Tips for South African freelancers
Here are some practical tips specific to working in South Africa:
- Register as a provisional taxpayer with SARS (you must pay tax twice a year)
- Save 30-35% of every invoice for tax
- Get a good accountant (they save you more than they cost)
- Quote in Rands for local clients, USD/EUR for international clients
- International clients often pay 3-5x more than local ones
- Build an emergency fund of 3-6 months expenses
Ready to see your own numbers?
Use the Freelance Rate Calculator