How to Price Your Services as a Sole Trader

Working out how much to charge as a sole trader can feel like a bit of a guessing game – especially when you’re just starting out. But pricing your services isn’t just about picking a number that “feels right” or matching your competitors. It’s about understanding your costs, valuing your time, and finding a price point your customers are willing to pay – without underselling yourself.

In this guide, we’ll help you build a pricing strategy that works for your business in the long term. Whether you’re after a freelance day rate calculator (UK) or want to feel more confident about pricing your product or service, you’re in the right place.

1. Understand your costs

Before you think about freelance rates, you need a clear picture of what it costs to run your business. This forms the foundation of all good service pricing.

Make sure you factor in:

• Fixed costs – software subscriptions, insurance, your website, office space (even if it’s your home!)
• Variable costs – materials, travel, tools, subcontractors, or anything that changes depending on the job
• Your time – not just delivery time, but admin, prep, marketing, and invoicing too

It’s easy to forget the time you spend chasing payments or replying to leads – especially if you’re new to running a business. But those hours matter and should be reflected in your self-employed rates.

2. Choose a pricing model that works for you

There’s no single right way to charge for your work. The best pricing model depends on the kind of service you offer and how your clients like to pay.

Here are the most common options:

• Hourly rate – great for flexible, short-term jobs
• Day rate – often used by UK freelancers and contractors
• Project rate – best when the scope is clear and deliverables are fixed
• Retainers – useful for ongoing monthly work with regular clients

If you’re unsure what to charge, a freelance rate calculator can help you reverse-engineer your ideal rate.

Think about:

• How many days you want to work
• Annual leave and sick days
• Your income target after tax

This gives you a realistic minimum you need to charge to keep your business running.

3. Factor in your value, not just your costs

One of the most common mistakes small businesses make is undercharging. Yes, your costs are a good place to start – but they’re not the whole story.

When thinking about how to price, ask:

• What value are you offering clients?
• Are you helping them save time, make money, or reduce stress?
• Is your experience, speed, or quality worth a higher price?

Remember, value-based pricing focuses on outcomes, not just time spent. If you’re saving a client days of effort, that’s worth more than the hourly rate it took to deliver.

4. Take a look at your competitors

Knowing what others are charging can give you a ballpark figure, but don’t copy-paste. Competitor pricing is only part of the picture.

Ask:

• Who are their customers?
• What’s included in their fee?
• Do they position themselves as high-end, mid-range, or budget?

Your pricing should sit comfortably within your market without underselling your quality. If you want to increase your market share or target new clients, you may need to adjust your price point accordingly.

5. Choose a strategy that supports your goals

Once you understand your numbers and your audience, it’s time to pick a pricing strategy that aligns with your goals.

Here are a few that work well for small businesses:

• Cost-plus pricing: Add a fixed percentage markup to your base costs. It’s simple and predictable.
• Value-based pricing: Charge based on what your service is worth to the client, not just the time it takes.
• Penetration pricing: Set your rates slightly lower to attract clients and build up reviews – just don’t stay there forever.
• Price skimming: Start with a higher price and lower it over time to attract new clients or compete with newer businesses.

You might also offer tiered pricing (e.g. bronze, silver, gold packages) to give clients more flexibility and control over what they’re paying for.

6. Pricing products vs services

If you sell both products and services (for example, a digital download plus 1-to-1 advice), you may need two separate strategies.

Service pricing tends to be more flexible and value-driven, while pricing products is usually based on production cost, time, packaging, and delivery.

Make sure you’re not undercharging for the time involved in creating, maintaining, or delivering those products – especially digital ones.

7. Review and raise your rates regularly

Once your prices are live, that’s not the end of the story. Keep an eye on:

• Your workload – are you fully booked and still getting enquiries?
• Your skills – have you gained new experience, qualifications, or client results?
• Inflation and industry trends – are your prices keeping pace?

A good rule of thumb is to review your small business pricing every 6–12 months. You don’t need to overhaul everything, but a small increase can make a big difference to your bottom line.

You can also use feedback, testimonials, and new case studies to justify your freelancer fees – especially if you’re moving into a more premium market.

Final thoughts

Setting prices as a sole trader might feel awkward at first, but it’s one of the most important parts of running a sustainable business. Get clear on your costs, understand your value, and don’t be afraid to charge what your service is worth.

Whether you’re using a freelance rate calculator (UK), experimenting with cost-plus pricing, or setting project fees, remember: pricing is a process, not a one-time decision.

As your business grows, so should your confidence – and your rates.