Definition
An hourly rate is the price charged for one hour of work. On an invoice it appears as the unit price on time-based line items, multiplied by the billable hours. Hourly rates should cover not only the worker's time but also overhead, taxes, non-billable time, and profit.
Hourly rate in practice
A common approach is to set a target annual income, add overhead and tax, and divide by realistic billable hours (often 1,000 to 1,400 per year for a freelancer, not 2,000). Review the rate at least yearly.
Frequently Asked Questions
Should I show my hourly rate on the invoice?
Yes for hourly engagements. Showing the rate and the hours lets the client verify the total and matches what they agreed to. For fixed-price work, show the fixed fee instead.