Why Your "Hourly Rate" is a Lie
Most new freelance folks do some back of the envelope math to find their first rate, only to discover they feel strained while working more than they wanted. Here's why.
You did the back of the envelope math. We all do.
Whether you are already running your own consultancy or just daydreaming about handing in your resignation letter, the calculation usually looks the same. You look at the salary you want (or the one you have now), divide it by 40 hours a week, and come up with a number.
You look at that hourly rate and think: This looks fair. This is doable.
But if you stop the math there, you are setting yourself up for a struggle.
The most common reason talented professionals feel exhausted—or hesitate to leave their jobs—isn’t a lack of skill. It’s a misunderstanding of the math. Your hourly rate is often a lie because it treats you like an employee, not a business.
The Mindset Upgrade: Employee Math vs. Boss Math
When you work for an organization, the financial equation is taken care of for you. You get paid for the hour you spend in a meeting, but you are effectively also “paid” for the time you spend staring out the window, the hour you spend fixing the printer, and the two weeks you spend on vacation. The infrastructure supports you.
When you step out on your own, you have the incredible opportunity to build that infrastructure for yourself.
As a laundry list of things that I’ve done during work hours in the past week which haven’t been billable hours:
Pulled all my 2025 tax documents together for my accountant
Sent invoices (and nagged people who haven’t paid)
Emailed several new potential clients
Troubleshooted (troubleshot?) why my laptop spontaneously rejected my monitor
Got water from downstairs about 50 zillion times
Updated my calendar for February
Took some time off because I had a bad headache
Shoveled snow
None of this is rocket science. We all know that this stuff cuts into labor hours. But when we start working for ourselves we don’t always have these things in mind. Our focus is on getting a rate that we feel okay about.
But actually sustainable consultant life requires a shift in how you value your time.
If you only charge for the time you are physically executing work (the “billable hour”), you are accidentally agreeing to do all the other critical parts of your business—marketing, strategy, education, and accounting—for free.
The shift from “freelancer” to “business owner” happens the moment you realize your rate isn’t just a price tag for your time; it’s the fuel for your entire operation.
Protecting the Asset (That’s You)
Here is the most important part of the new math: Your rate needs to include the time you spend resting.
We’re building businesses with space to breathe. We don’t view rest as “time off.” We view it as a requirement for showing up and delivering quality work for our clients.
If you are a knowledge worker—a consultant, an advisor, a strategist—your product is your brain. Your clients are not paying for your typing speed; they are paying for your insight, your experience, and your ability to solve complex problems.
To keep that product premium, you need to protect it.
Rest is strategic: It ensures you have the energy to innovate.
Space is profitable: It gives you the room to see the big picture for your clients.
When you factor this into your pricing from the start, you aren’t being greedy. You are being professional. You are ensuring that when you show up for a client, you are resourced and ready to deliver your absolute best work.
What does this look like in practice? This means factoring in sick time, vacation time, and time off to refuel throughout the year when you calculate how many available hours your have to bill.
Design Your Freedom
Whether you are five years into your business or five months away from starting, you have the power to design a system that works for you.
A sustainable rate creates freedom. It allows you to take a vacation without panic. It allows you to say “no” to misaligned projects. It turns the dream of “working for yourself” into a sustainable reality, rather than just a different kind of job.
So, how do you calculate a rate that actually covers the life you want to lead?
Stop Guessing. Start Building.
You don’t need to guess what your time is worth. You just need to take the blinders off and run the real numbers. Then you’ll really know whether your consultant life will be your dream job.
I’ve created a tool to help you do exactly that. It walks you through the “hidden” value of your business—including your rest, your admin time, and your profit goals—to help you find a rate that supports your life by design.
Want to go deeper? We are discussing this exact topic in our upcoming event this month. We’ll be tearing down the old “hourly” mindset and building financial models that prioritize breath, freedom, and sustainable growth.