What are essential financial metrics for solo freelancers?

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Which specific metrics should solo freelancers monitor (cash runway, burn rate, client concentration, average invoice value, DSO, profit margin, tax reserve, etc.), how do you calculate each one, what benchmark targets or ranges are realistic at different income levels, how often should they be reviewed, and how can those numbers be used to set prices, decide on taking new clients, or plan for hiring and growth?

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Anonymous 21 Aug 2025

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tracking cash flow timing beats obsessing over perfect formulas. focus on how fast clients pay and your real spending habits. adjust prices if payments drag or expenses spike.
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Jordan Nguyen 10 Aug 2025

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For solo freelancers, metrics aren't just numbers—they're your survival compass. Beyond the usual suspects like cash runway or burn rate, consider tracking your "client acquisition cost" (how much time and money you spend landing each client). It’s easy to overlook this because it feels less tangible than invoices or expenses. Calculate it by dividing total marketing and sales costs by new clients gained in a period.
Another gem is "revenue per active hour." Not just billed hours but actual productive time spent on client work versus admin or marketing. This reveals if you're wasting precious hours that could be better priced or delegated.
Review these monthly at first—freelancing landscapes can shift fast—and use them to decide if chasing more clients makes sense, when to raise prices, or even when hiring help might actually boost profits instead of draining them. These insights turn guesswork into strategy.
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- A. P.: Thanks for sharing! How do you usually track "revenue per active hour" without it becoming too time-consuming?
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  Jordan Nguyen: Great question! I automate data collection by integrating usage logs with revenue reports using simple scripts. This way, I get updated metrics without manual effort, keeping it efficient and accurate.
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N. L. 15 Aug 2025

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track your effective hourly rate, not just invoice averages. it shows if you’re pricing time right after all the unpaid work and admin. review quarterly to adjust rates or client load.
22
Anonymous 11 Aug 2025

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I once had a stretch where three clients ghosted me in one month and I lived on ramen and a credit card balance tracker, which taught me to actually care about numbers. I kept spreadsheets, receipts in a shoebox, and way too many late-night invoices. Not proud. Still, lessons learned.
Key metrics to monitor: cash runway = cash reserves / monthly net burn, burn rate = monthly expenses minus recurring income, client concentration = % revenue from each client aim <20–30%, average invoice value = total invoiced / # invoices, DSO = (AR / total credit sales) × days in period, profit margin = (net profit / revenue) ×100, tax reserve = % of revenue set aside (usually 20–30% depending on taxes). Targets: runway 3–6 months minimum, 6–12 if solo building, DSO under 30 days ideal, profit margin 30–60% for many freelancers. Review cash weekly, P&L monthly, strategy quarterly. Use these numbers to set rates by covering expenses + desired profit + tax reserve then divide by billable hours or project scope. Decline clients that push DSO or overconcentrate revenue, and hire when margin drops and demand is sustained.
22
Anonymous 16 Nov 2025

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One time I started freelancing and got so caught up chasing new gigs that I totally ignored my finances until my bank account looked like a desert and I had zero clue when I'd run outta money, which is why cash runway is killer important but alongside that you gotta look at your “operating leverage” which basically means how much your fixed costs stack up against variable ones; it helps you see how quickly expenses rise as you grow so you’re not stuck paying mad overhead if clients dip, and also check your “client payment velocity” which tracks not just how many days clients take to pay (DSO) but when they actually send a payment after invoice (sometimes invoices clock days unpaid before the real payment hits); both numbers can vary wildly depending on niche or income level but aiming for invoices to pay within 30 days is solid, and monitoring tax reserves should be done monthly by putting aside roughly 25-30% of net income (but check local rates) so you don’t freak come tax season. Reviewing all these metrics once a month lets you tweak prices if cash runway dips below 3 months or client concentration crosses 40%, signals hiring when operating leverage lowers fixed cost risk,
15
Kingston Robinson 31 Oct 2025

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Back when I was freelancing solo, I didn't think much about things like cash runway or burn rate because it all felt a bit too "corporate" for my little operation, and then one winter I found myself scrambling to cover holiday expenses just because a big client paid late—that experience totally revamped how I look at financial metrics, especially tax reserve which I now swear by—it basically means setting aside a percentage of your income for taxes so you're not begging for an extension come April, and figuring it out is simple: estimate your tax bill as (income minus expenses) times your tax rate, then keep that much off to the side; usually around 25-30% is safe but check your own situation—and unlike things like burn rate or DSO which change month-to-month, you want to update your tax reserve calculation quarterly, especially since a surprise tax bill can wreck pricing plans or hiring ideas; knowing this number lets you be realistic about what money is truly "yours" so it prevents over-optimistic spending or throwing yourself off balance when negotiating rates or scaling; also keeping tabs on profit margin is key since it tells you whether raising prices or cutting costs will help you hit income
15
Allison Freeman 29 Nov 2025

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Early in my solo freelancing, I ignored client concentration until one big client vanished overnight. Lesson: track client concentration (revenue % per client). Keep it under 30%. Calculate cash runway as cash reserves divided by monthly expenses—review monthly. Use tools like QuickBooks or Wave for real-time tracking. Monitor Days Sales Outstanding (DSO) via invoicing software like FreshBooks to spot late payers fast. Don’t just price by invoice average; calculate profit margin after tax reserve set aside (15-25%) using spreadsheets or Xero.
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Accepted Answer · 2025-09-11T16:22:05+00:00

Know your financial health like a doctor knows vital signs—track cash runway monthly, but also measure your effective hourly rate including unpaid work to price