Loomrate Pricing Glossary
Plain-English definitions of the terms behind freelance rates, quotes, and profit margins.
True Hourly Rate#
The net income you actually take home per hour, after taxes, business expenses, platform fees, and unpaid overhead time are subtracted from your gross billing and divided across all hours worked — not just billable ones. Run your own numbers with the freelance rate calculator.
Billable Hours#
Hours of work you can directly invoice to a client — design, development, writing, or consulting time explicitly agreed within the project scope.
Non-Billable Hours#
Unpaid time spent running your freelance business — emails, client calls, status meetings, admin, revisions, and bookkeeping. It isn't invoiced directly, but it still costs you time and lowers your effective rate. See how this affects pricing in the pricing FAQ.
Gross Rate (Quoted Rate)#
The hourly rate you quote a client before subtracting taxes, fees, and unpaid overhead — calculated simply as project fee divided by billable hours. Almost always higher than your true hourly rate.
Net Take-Home Pay#
What remains from a project fee after direct expenses, platform commissions, prorated overhead, and tax reserves have all been deducted — the number that actually lands in your pocket.
Scope Creep#
When a project's actual required effort exceeds the originally estimated hours without a corresponding increase in fee, silently eroding your effective rate. Loomrate's comparison tools flag this automatically — see the FAQ for how it's calculated.
Overhead Costs#
Recurring business expenses — software subscriptions, equipment, insurance, coworking space — prorated across your billable hours to determine their true cost per project.
Platform Fee (Commission)#
The percentage a freelance marketplace such as Upwork or Fiverr deducts from your earnings before payout, directly lowering your effective hourly rate below your quoted rate.
Self-Employment Tax#
Tax obligations freelancers must set aside and pay themselves, since no employer withholds or matches contributions on their behalf. Usually estimated as a reserve percentage of gross profit.
Effective Hourly Rate#
Total project income divided by total hours actually worked, including non-billable time — often used interchangeably with "true hourly rate."
Fixed-Fee Pricing#
Charging a flat project fee instead of an hourly rate. Can produce high margins when work is efficient, but carries real scope-creep risk if actual hours run over estimate. Use the project quote calculator to plan one safely.
Utilization Rate#
The percentage of your total working hours that are billable, used to gauge how efficiently your time converts into paid work.
Rate Card#
A documented price list of your standard hourly or project rates by service type, used to standardize quotes and speed up client negotiations.
Tax Reserve#
A portion of income set aside from each payment specifically to cover future tax liabilities, preventing cash-flow shortfalls at filing time.
Profit Margin (Freelance)#
The percentage of a project fee that remains as net profit after all direct costs, overhead, and taxes are subtracted — the clearest single signal of whether a contract is worth taking.
Income Target#
The annual or monthly take-home amount a freelancer aims to earn, used to back-calculate the rates and billable hours required to reach it.
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