The undercharging epidemic
Survey after survey of South African freelancers and tradespeople shows the same thing: most are charging too little — often 40–60% below what the market will bear and what their skills justify.
This guide walks you through calculating a rate grounded in real numbers, not guesswork or what "feels right."
Step 1: Calculate your minimum viable rate
Your minimum viable rate (MVR) is the hourly or daily rate below which you can't cover costs and pay yourself a living wage.
- Annual personal expenses: rent, food, transport, insurance, phone
- Annual business expenses: tools, vehicle, insurance, software, marketing
- Tax provision: typically 25–35% of net income as a sole proprietor
- Billable hours: roughly 1,200–1,400 per year after admin, marketing, leave, and sick days
MVR = (Personal expenses + Business expenses + Tax) ÷ Billable hours
Step 2: Research the market rate
Your MVR is the floor. Market rate sets the ceiling. Research what others with your skills and experience charge:
- Ask peers in your industry — directly, or via WhatsApp groups
- Browse job boards — advertised day rates reveal what clients expect
- Talk to recruiters in your field
- Check freelancing platforms for comparable roles
Step 3: Price for value, not just time
The most profitable pricing isn't hourly — it's value-based. A website that generates R1m in client sales is worth far more than 40 hours of developer time. A plumber who prevents R80,000 in water damage is delivering enormous value.
Ask: what is this work worth to my client? Then price accordingly — with your MVR as the floor.
Step 4: Itemise every overhead on your quote
Materials, travel, parking, subcontractors — all of it must appear on the quote. Many tradespeople absorb these costs "to stay competitive" and erode their margin entirely. Itemise everything and explain it professionally.
The confidence problem
Most undercharging isn't a maths problem — it's a confidence problem. Fear of a client saying no. Imposter syndrome. Comparison with cheaper competitors.
The truth: clients who choose purely on price are usually the worst clients. Higher-priced providers are often perceived as higher quality. Quoting your real rate also filters out time-wasters before they consume your calendar.
Raise your rates once a year
Inflation in South Africa runs at 4–7% annually. If you're not raising your rates, you're taking a real pay cut every year. Build annual rate reviews into your calendar — January or your business anniversary are natural moments.