How to set your hourly rate as a sole trader

The hardest question at the start of a freelance career is easy to ask and hard to answer: how much should I charge? Too low and the work will not support you. Too high and clients walk away. The right number covers your costs, leaves you a reasonable income, and still matches the value the client receives. This guide works that number out step by step, with real figures.

The example assumes an OSVČ — a self-employed person (sole trader) registered in Czechia — who applies the 60 % flat-rate expense deduction.

Why guessing the price does not work

Many sole traders set the price by instinct: they look at what the competition charges, go a little below it to stay "competitive", and hope the year works out. The flaw is simple — the number ignores your real costs.

As an employee you see a net salary and your employer handles everything else. As an OSVČ you pay income tax, social security and health insurance out of what you invoice, and you also fund every cost of running the business. An hourly rate of CZK 500 can sound reasonable, and still leave you below the minimum wage once everything is deducted.

Step 1: Decide the net monthly income you need

Start from the end — how much money you want left in your account after every obligation is paid. Be realistic and include:

• Living costs (housing, food, transport)
• A reserve — at least three months of income as a financial cushion
• Retirement saving (as an OSVČ you have no employer contribution)
• Personal investment and time off

The example works with a target net income of CZK 60,000 per month (CZK 720,000 per year).

Step 2: Add tax and insurance

Three compulsory payments come out of a sole trader's gross income.

Personal income tax

The income tax rate is 15 % of the tax base; above a tax base of CZK 1,762,812 per year the second rate of 23 % applies (the older "solidarity surcharge" was abolished back in 2021). The tax base is income minus expenses. If you apply a flat-rate expense deduction — typically 40 % or 60 % depending on the type of activity — the calculation is simple. If you keep tax records instead, it depends on your actual expenses.

The example applies the 60 % flat-rate deduction used for licensed trade activity:

Tax base = income × 40 % (because 60 % goes to expenses)
Tax = tax base × 15 % − taxpayer credit (CZK 30,840)

Social security

A sole trader whose business is the main activity pays social security at 29.2 % of the assessment base, which since 2024 is 55 % of the tax base (income minus expenses). In practice:

Social security = (income − expenses) × 55 % × 29.2 %

A minimum assessment base applies as well: with the business as your main activity you pay at least CZK 5,005 a month in 2026 (CZK 60,060 a year), even if the calculation comes out lower.

Health insurance

The health insurance rate is 13.5 % of the assessment base, which here is 50 % of the tax base:

Health insurance = (income − expenses) × 50 % × 13.5 %

Here too there is a minimum — with the business as your main activity, CZK 3,306 a month (CZK 39,672 a year).

Putting it together

For a target net income of CZK 60,000 per month (CZK 720,000 per year) with the 60 % flat-rate deduction, we need the gross annual income (P) that leaves CZK 720,000 after tax and insurance.

• Tax base = P × 40 %
• Tax = (P × 0.4) × 15 % − 30,840 = P × 0.06 − 30,840
• Social security = (P × 0.4) × 55 % × 29.2 % = P × 0.0642 — but at least CZK 60,060 a year (12 × CZK 5,005)
• Health insurance = (P × 0.4) × 50 % × 13.5 % = P × 0.027 — but at least CZK 39,672 a year (12 × CZK 3,306)
• At income of around CZK 800,000–900,000 the insurance calculated from the real base comes out below the minimum (social security roughly CZK 4,500 and health insurance roughly CZK 1,900 a month), so you pay the statutory minimums
• Total levies = P × 0.06 − 30,840 + 60,060 + 39,672 = P × 0.06 + 68,892
• Net income = P − (P × 0.06 + 68,892) = P × 0.94 − 68,892

Solving 720,000 = P × 0.94 − 68,892:

P = (720,000 + 68,892) / 0.94 = roughly CZK 839,000 per year, or CZK 69,900 per month

So a net income of CZK 60,000 a month means invoicing roughly CZK 69,900 a month. Tax and insurance take about CZK 9,900 of that under the 60 % flat-rate deduction — CZK 8,311 of it is the minimum insurance.

Step 3: Add the cost of running the business

The flat-rate deduction covers expenses for tax purposes, but your real operating costs have to be covered by what you invoice. Typical monthly costs of a sole trader:

• Software and licences: CZK 1,000–5,000 (tools, cloud services, invoicing software)
• Hardware: CZK 1,000–3,000 (computer, monitor and phone, spread across the months)
• Office or coworking: CZK 0–8,000
• Phone and internet: CZK 500–1,500
• Training: CZK 500–2,000 (courses, books, conferences)
• Accountant or tax adviser: CZK 500–3,000
• Liability insurance: CZK 200–500
• Other: CZK 500–2,000 (travel, postage, client entertainment)

The example assumes average costs of CZK 8,000 a month.

Total monthly invoicing therefore has to be 69,900 + 8,000 = CZK 77,900.

Step 4: Count the hours you can actually bill

This is where most sole traders go wrong. You cannot bill eight hours a day, five days a week, fifty-two weeks a year. You have to account for:

• Holiday: as an OSVČ you have no paid leave. Count at least four weeks a year (20 days).
• Illness: there is no sickness benefit for the first 14 days unless you pay the voluntary scheme. Count 5–10 days a year.
• Public holidays: 13 a year in Czechia.
• Admin: invoicing, bookkeeping, taxes, dealing with the authorities — at least 2–4 hours a week.
• Sales and marketing: finding clients, writing proposals, networking — 2–6 hours a week.
• Learning: courses, reading, keeping up with the field — 2–4 hours a week.
• Idle time: gaps between projects, cancelled work — count on 10–20 % of capacity.

A realistic calculation:

• Working days in the year: 252
• Minus holiday: −20 days
• Minus illness: −7 days
• Minus public holidays: −13 days
• Actual working days: 212
• Of an eight-hour day, at most 5–6 hours are billable (the rest is admin, marketing and learning)
• Billable hours: 212 × 5.5 = 1,166 hours a year
• Minus idle time (15 %): 1,166 × 0.85 = 991 hours a year

That is roughly 83 billable hours a month.

Step 5: Calculate the hourly rate

Now everything is in place:

Hourly rate = annual invoicing needed / billable hours
Hourly rate = (77,900 × 12) / 991 = 934,800 / 991 = roughly CZK 945/hour

For a net income of CZK 60,000 a month you need to charge at least CZK 945 an hour. At CZK 500 an hour you will either work far more hours or earn considerably less than planned.

The most common pricing mistakes

1. Comparing with an employee's salary

Someone who earned CZK 50,000 gross as an employee reasons: "I will bill CZK 300 an hour, that is more than I had." It is not. The employer also paid 33.8 % in contributions on top (almost CZK 17,000), plus paid holiday, sick leave, equipment, an office and training. The employer's real cost was almost CZK 67,000 a month plus benefits, holiday and equipment that are hard to put a figure on — that is the number to compare against.

2. Ignoring non-billable time

As shown above, you realistically bill only 50–60 % of your working time. Calculate with eight hours a day and 22 days a month and the resulting rate will be far too low.

3. Ignoring seasonality

Most fields have seasonal swings — IT typically slows in January and over the summer, marketing before Christmas. Your price has to absorb the months when you bill less.

4. Cutting the price out of fear

Fear of rejection leads to discounts. But a client who turns you down over price is probably not your ideal client. Good clients look for value, not for the lowest number.

Indicative rates by field (an illustrative estimate)

For orientation, here is an illustrative range of hourly rates — an editorial estimate, not survey data. The actual rate depends on experience, specialisation and region:

• Graphic design: CZK 600–1,500/hour
• Web development: CZK 800–2,500/hour
• Copywriting: CZK 500–1,200/hour
• Marketing and PR: CZK 700–2,000/hour
• Bookkeeping and tax: CZK 600–1,500/hour
• Translation: CZK 400–900/hour (often billed per standard page instead)
• Photography: CZK 800–3,000/hour
• IT consulting: CZK 1,200–4,000/hour

If your calculated rate lands well below the bottom of the range for your field, you have probably underestimated one of the cost factors.

How to raise a rate that is too low

If your current rate does not cover your costs, move systematically:

1. Tell existing clients in advance — ideally two or three months ahead. Explain the reasons: rising costs, inflation, a broader skill set.
2. Quote new clients at the new rate — starting higher with a new client is easier than raising the price for an existing one.
3. Raise in steps — if you need 30 %, take it in two steps of 15 % six months apart.
4. Add something — with a higher price, offer faster delivery, an extra consultation or a wider scope of service.
5. Keep one consistent price list — in Taxorio you can save item templates with current prices. When you issue an invoice you pick the item from the template instead of deciding the price again, which also stops you from unintentionally charging different clients different amounts for the same work.

Alternatives to an hourly rate

Hourly billing is not the only option:

• Fixed project price — one price for the whole project. Works well if you estimate scope reliably. The client knows the total in advance and you are rewarded for working efficiently.
• Monthly retainer — the client pays a fixed amount each month for an agreed scope of work. It stabilises income and makes planning easier.
• Value-based pricing — the price follows the value delivered, not the hours spent. If you save a client CZK 500,000 a year, charging CZK 100,000 is fair even when the work takes 20 hours.

Check the calculation against real data

Theory is one thing, the year is another. After a few months in business, compare the calculation with what actually happened. The Taxorio dashboard shows the real income and expenses for the current year, month by month; for another period — a year, a quarter or your own date range — use the filters and the summary in the invoice and expense lists. Compare:

• Hours actually billed against the assumption
• Actual spending against the planned budget
• Actual net income against the target

Where reality does not match the plan, adjust the rate. Pricing is not a one-off decision — it is an ongoing process worth revisiting at least once a year.

Summary: the formula for a minimum hourly rate

The whole procedure in short:

1. Set the net annual income you need
2. Add income tax, social security and health insurance (roughly 15–25 % of gross income under flat-rate expenses)
3. Add your annual operating costs
4. Divide by the hours you can realistically bill (around 900–1,100 a year)

Minimum hourly rate = (net income + levies + operating costs) / billable hours

The result is your floor — the rate you should not go below. A working rate 10–20 % higher gives you a reserve for the unexpected and room to grow. And keep checking the number against the real figures in your income and expense records.

Taxorio scope: Taxorio provides invoicing and income/expense records for Czech sole traders. It is not full accounting or personalised tax advice. For an unsupported or unusual case, verify the treatment with a Czech accountant or tax adviser before filing.