The Hidden Costs Freelancers Forget to Price In

It’s not just about hours worked. These hidden costs are silently eating into your profits.

When freelancers set their rates, most focus on billable hours. You think: How long will this project take? Multiply that by your hourly rate, and done. 

But here’s more to it than just hours worked. Every project comes with hidden expenses that eat into your profit margin if you don’t factor them in. Imagine a graphic designer who charges per project but forgets to account for the monthly $50 software subscription needed to complete their work. Over the year, that's an extra $600 straight out of their profits. These 'hidden costs' might look small on their own, but over time, they can be the difference between scraping by and building a sustainable business.

Let’s break down the most common ones.

1. Admin Time

Sending proposals, onboarding clients, answering emails, and creating invoices all take time. Even though none of this time is billable, it’s still work. On average, most freelancers spend 20–30% of their week on admin tasks. If you don’t build this into your rate, you’re working for free during those hours.

Fix: When setting prices, pad in an admin buffer. For every 10 billable hours, assume 2–3 non-billable. Consider using a simple time-tracking app to log your admin hours. This will give you a clearer picture of how much time you're spending on non-billable tasks and help you set more accurate rates.

2. Software and Tools

Design platforms, scheduling apps, and project management tools can all add up quickly. Even a $30 monthly subscription eats into your bottom line if you’re not spreading that cost across projects. 

Fix: Total your annual tool spend, then divide by your estimated projects or hours. For example, if your total software expenses are $360 per year and you expect to complete 12 projects in that time, you would allocate $30 per project to cover this cost. Work this into your base rate.

3. Revisions and Scope Creep

Clients often request “just one more tweak.” A single round of changes may be fine, but if you get several unexpected edit requests, your hours can go far beyond what you first estimated. 

Fix: Include revision limits in your contracts and set fees for extra changes. For example, you could state, 'This contract includes up to two rounds of revisions. Any additional revisions will be billed at an hourly rate of $50.' Build a small buffer into your rates to cover the occasional overage.

4. Marketing and Client Acquisition

That Instagram post you created, the networking event you attended, the discovery call that didn’t lead anywhere, all cost time and sometimes money. Acquiring clients is part of the job, and it doesn’t pay immediately. 

Fix: Treat marketing like a business expense. If you spend 5 hours a week promoting yourself, spread that time across your billable work.

5. Taxes and Retirement

Unlike traditional employees, freelancers don’t have taxes withheld or retirement contributions matched. If you don’t plan for these, tax season will sting, and your long-term savings may suffer. 

Fix: Add 25–30% to your rate to cover taxes. Set aside a small percentage for retirement, even if it feels early.

6. Professional Development

Courses, books, and conferences sharpen your skills and keep you competitive. But they also cost time and money. 

Fix: Budget for growth. Factor in both the direct spend and the non-billable hours you’ll invest.

The Bottom Line

Freelancing isn’t just trading hours for dollars. It’s running a business. If you ignore hidden costs, your “profit” will always feel lower than it should. Build these expenses into your pricing now, and you’ll stop leaving money on the table. 

Action Plan: Start by reviewing your last project. List all the hidden costs you encountered. Did you account for admin time, software fees, or unanticipated revisions? Once you have this list, adjust your pricing strategy to ensure these costs are covered in future projects. This proactive approach will help safeguard your profits and promote a more sustainable freelancing career.

👉 Which of these costs surprised you the most?

Pricing for Profit Series: Part 3