A Guide to Pricing Models and Establishing Rates for Service-Based Businesses

Aug 19

When you’re just getting started as a freelancer, one of the biggest questions you’ll face is: How should I price my services? It’s more than just picking a number — your pricing shapes how clients perceive your value, how sustainable your income is, and how much room you have to grow.

The good news? There’s no one-size-fits-all approach. Most freelancers experiment with a mix of hourly, project-based, and retainer pricing (sometimes even VIP Days!) before finding the sweet spot that works for them and their clients.

Here’s a breakdown of each pricing model — plus key questions to help you decide which one to start with.

Hourly rates

🔎 When to consider them:

Projects with evolving or unpredictable scopes
Work that’s easy to break down into billable time
When you’re still testing out your services

✅ Pros:

Simple to calculate (time x rate)
Flexible for clients with shifting needs
A great starting point if you’re unsure about your capacity and how long tasks will take

❌ Cons:

Can limit your earning potential (since you’re trading time for money)
Clients may feel unsure about open-ended costs
Can feel less premium for high-value creative work

Flat-rate packages

🔎 When to consider them:

You want to make pricing clear and predictable
You’re offering the same deliverables to multiple clients
You’re confident in how long projects typically take

✅ Pros:

Clients love the clarity of a set price
Easier to “productize” your services and scale
Can feel more premium and streamlined

❌ Cons:

You need to be sure you’re accounting for the full scope of work or risk undercharging
If a project scope grows, you’ll need a solid system to adjust rates and avoid scope creep

Project-based

🔎 When to consider them:

You’re working on larger, one-off creative projects
You want to give clients a clear total cost
You’re confident in setting clear boundaries around deliverables

✅ Pros:

Clear start and finish for each project
Easier to sell for complex work than hourly rates
Can help you build a portfolio of “signature” projects

❌ Cons:

Requires crystal-clear communication about what’s included
You’ll need to protect your time and ensure any new requests get a new quote

Retainers

🔎 When to consider them:

You want steady, ongoing income and long-term relationships
You’re offering services that benefit from consistent support

✅ Pros:

Builds a predictable income stream
Deepens your client relationships and trust
Lets you plan your schedule and workload more easily

❌ Cons:

Requires you to be consistently available for your retainer clients
Not every service or client relationship is a fit for this long-term commitment

VIP Days / Intensives

🔎 When to consider them:

When you’ve nailed your delivery process and can easily productize your offering
You want to offer high-impact, focused work in a short timeframe
You’re great at deep dives and love dedicated, distraction-free time

✅ Pros:

Lets you charge a premium for your focused expertise
Delivers big results for clients in a single, convenient timeframe (say goodbye to scope creep!)
A great way to offer quick wins for clients without long-term commitments

❌ Cons:

Can be intense. Requires a lot of prep and energy in a short window
You run the risk of those days that you just don’t feel “on”, or you or your kids get sick - and not being able to complete the project as promised
Not every client or project is suited to a one-day sprint

How to price your services

Once you’ve chosen your services, it’s time to figure out how much to charge. Here’s a simple way to calculate your baseline rate and how to tweak it for different pricing models.

Start with your income goal

How much do you need to earn each month to cover your personal and business expenses, plus save for taxes? Add 25–30% on top of your monthly “take-home” goal to cover taxes and overhead.

Know your billable hours

Not every hour you work will be for a client. Factor in time for marketing, admin, and client communication. For example:

If you work 30 hours/week but only 20 are billable, price based on those 20 hours.

Calculate your baseline hourly rate

Take your monthly income goal (including taxes!) and divide it by your billable hours. Example:

$5,000 income goal / 80 billable hours/month = $62.50/hr baseline.

Adjust for different pricing models

Hourly rates

Great for flexible work or new freelancers. Start with your baseline hourly rate and adjust as you gain confidence and experience.

Flat-rate packages

Think about the time and resources it takes to deliver a specific result. Multiply your baseline hourly rate by the hours it typically takes — then pad in a little extra for admin, client communication, and value.

Project-based pricing

For bigger or more custom projects, consider:

How many hours will it take (prep, delivery, follow-up)?
Are there any costs (tools, travel, etc.)?
What’s the value of this work to the client?

Retainers

Estimate how many hours or deliverables you’ll provide each month, then set a monthly fee that meets your income goal and builds in value for long-term support.

VIP Days / intensives

Calculate the total time you’ll spend preparing, delivering, and following up - and price accordingly. These rates are usually higher to reflect the intense focus and immediate value.

Build in profitability and plan for growth

Your pricing needs to cover more than just your hours:

✅ Taxes (add 25–30%)

✅ Tools and software

✅ Time spent marketing and onboarding

✅ A healthy profit margin: because you deserve to thrive!

Pro tip: Start with a baseline, but raise your rates with each new client — even if it’s $2–$5 more each time as you’re getting started. Your skills are growing, and your pricing should too.

Trusted resources to help you decide on rates

Check out our recorded webinar with Annie Hillman, virtual CFO & Founder of 1428 Financial on how to price for profitability and long-term success — she breaks down exactly how to factor in your taxes, tools, and goals to build a truly sustainable business.

Freelancing Females’ Rate Sheet and Calculator

One of the most comprehensive freelance rate sheets we’ve seen where real freelancers input their information to benefit the entire community — with breakdowns by gender, location, industry, and job type.

You’re not locked in forever

The beauty of owning your business? You can adjust your rates and services as you grow. - on your terms Many freelancers start small and evolve as they find what works. The key is to start now and refine along the way.

Next step: Build a solid foundation

Once you’ve chosen your services and structured your pricing, the real magic happens in how you run your business — from proposals and contracts to client experience and getting paid. Having streamlined systems in Dubsado helps you: