The Month I Realized I Was Pricing My Time for Last Year

The Rate I Set and Forgot

I set my hourly rate when I went freelance. I based it on what felt reasonable, what I thought clients would accept, and a rough guess at how many hours a week I would bill. It was not scientific. Most first rates are not.

The problem is that I never updated it. Month after month, I sent invoices at the same number. Clients never complained. Work kept coming in. I assumed that meant the rate was fine.

Then I ran a real numbers check on a slow Tuesday and found out I was wrong.

What the Numbers Actually Said

I pulled twelve months of time logs and invoices. I wanted to see my effective hourly rate, meaning not what I charged but what I actually earned per hour when you account for all the hours I worked, billable and not.

The math was uncomfortable. My stated rate was one number. My real rate, once I included proposal writing, client calls, admin, revision rounds that did not make it to invoices, and the general overhead of running a solo operation, was significantly lower.

Lower than when I had started, actually. Because I had taken on more complex work, more client management, more responsibility, without ever adjusting what I charged.

I had gotten better at the job and was earning less per hour for it.

The Rate That Made Sense Then Does Not Make Sense Now

When I first went freelance, my overhead was low. I worked from home, used free tools, had simple projects. My effective rate being close to my stated rate was not unrealistic.

Eighteen months later, I had software subscriptions, a better computer I was still paying off, occasional subcontractor help, and projects that required a lot more coordination than my early work. My costs had gone up. My skills had grown. The market rate for what I was doing had shifted.

But my invoice rate had not moved at all.

How Time Tracking Made the Problem Visible

I would not have known any of this without the time logs. If I had been running on gut feel, I would have kept thinking things were fine because money was coming in. Revenue felt okay. But revenue is not the same as a healthy rate.

Time-Trak let me pull actual hours per project and compare them to what I invoiced. For some clients the gap was small. For a couple of them it was striking. I had one client I thought was one of my better-paying accounts. When I looked at total hours versus total invoiced, they were paying me less per hour than my lowest-tier work because the projects kept running long and I kept absorbing the overages.

The log turned a feeling into a number. And the number made it impossible to ignore.

What I Did About It

I raised my rate. Not dramatically, not all at once, but I raised it. For new clients, the new rate applied immediately. For existing clients, I gave notice and explained the change plainly.

Most of them stayed. One did not, and I had enough data to know that client had been my lowest-margin account anyway.

I also started reviewing my effective rate every quarter. Not just what I charge but what I actually earn when hours are accounted for fully. It takes about thirty minutes and it has changed how I price every project since.

Your rate is not a number you set once. It is something you have to update as your work changes. If you are not tracking hours closely enough to calculate your real rate, you are probably not charging enough.

Track your time, bill every minute.

Time-Trak is a native Mac and Windows time tracker with a floating timer, automatic screenshots, and one-click invoicing.

Free during beta.

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