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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C. S. 11 Sep 2025

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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
15
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.
15
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.
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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.
8

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Accepted Answer · 2025-08-21T03:41:25+00:00

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.