What are essential financial metrics for solo freelancers?

Description:

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?

2 Answers

Sort by:

Anonymous 21 Aug 2025

Copy answer link Report answer
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.
13
Anonymous 11 Aug 2025

Copy answer link Report answer
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.
8