How to determine your right freelance rate
If you are a freelance, you have undoubtedly heard phrases like “Increase your rates!” or “Get paid for the value you offer!”. But what exactly does it mean? How do you know if you are charging enough for your work? This article offers some tips for setting the correct freelance rate for you and your customers.
In particular, we will talk about:
- How to set your freelance rates
- How to identify the average rate that freelancers in your industry charge
- Hourly rate vs. project rate
- How to make more money by freelancing
- How to make money from top online casino
How to set your freelance rates
1. Determine the income you want to make
How much do you want to earn per year? Work backward from this number to calculate the total number of hours worked each year. For example:
- Your goal is € 60,000 per year before tax
- Are you willing to work 32 hours a week (or four days for 8 hours)
- You would like to take four weeks off a year
- You think it advisable to consider two weeks for any unforeseen events, such as illness
52 weeks in a year – 6 weeks = 46 weeks you intend to dedicate to work
46 weeks x 32 hours = 1472 working hours per year
€ 60,000 / 1472 hours = approximately € 40 per hour
The € 40 / hr rate is what you should apply to reach your annual gross salary target of € 60,000.
But wait a minute, have you ever heard of billable and non-billable time?
Unfortunately, freelancers cannot bill their clients for every single hour of their work, but some times need to be taken into account for:
- Prepare invoices and deal with bureaucratic matters
- Reply to emails
- Search and retain new customers
- Promote your business
- Go to appointments (unless this time cannot be charged to the customer)
- Devote yourself to training, for example, by taking courses
- Stop for a moment for lunch!
Billable and non-billable hours are not the same for everyone, but they depend on you and your goals. However, a 60/40 ratio may be a reasonable estimate. So returning to our previous example, we need to subtract 40% of the non-billable hours from our total hours:
- 1472 – 40% = 883.2 billable working hours per year
- € 60,000 / 883.2 hours = approximately € 68 per hour
Therefore, the rate of 68 € / h is what you have to apply if you want to reach your goal of 60,000 € gross per year.
Never forget the reasons that led you to work as a freelancer: more freedom, flexible working hours, more time to dedicate to the family, and casino en ligne français site.
All freelancers like you have made a well-motivated choice. When setting your rates, always keep your goals in mind and make sure you value your work to achieve them.
2. Calculate your costs
When you are a freelance, you must also take care of practices that employers typically deal with insubordinate work:
- Social security (varies from country to country)
- Payment of taxes
- Professional insurance
- Equipment necessary for carrying out your work
- Rent your workspace, heating, electricity, and internet connection for your home office
- Licenses for the software you need for your business
- Creation of your site accompanied by legal texts that must comply with the provisions of the law
- Advertising expenses
- Costs for any travel
These are also things you need to consider when setting your freelance rates. When you start studying numbers, it’s easy to see why most freelancers don’t charge the correct rate.
Are you thinking of leaving your job as an employee to start a freelance business? There are several tools online for calculating the daily rate for freelancers – use them to check which rate you should apply to reach your salary target.
How to identify the average rate that freelancers in your industry charge
Other elements come into play when it comes to setting your freelance pace, such as your industry, skill and experience level, portfolio, your achievements, and, last but not least, your negotiation skills.
If you’re not sure what rates other freelancers in your industry offer, don’t worry and ask.
Freelancers are often reluctant to talk about money, but this way, you lose important information and risk devaluing your work. To avoid these risks, join groups on Linkedin or Facebook created especially for freelancers in your industry and start some networking. When you start asking friends and colleagues what their rate is, you will see that they will be happy to talk to you about it and may even be curious to ask you the same thing.
Furthermore, we always recommend that you refer to the trade associations who will be able to give you accurate and shared information about the trend of tariffs in your sector.
Hourly rate vs. project rate
Any freelancer starting their own business will ask themselves, “How much should I get paid per hour?”. Setting a rate per project can also lead to excellent results. Below are the strengths and weaknesses of the two billing systems.
Strengths of the hourly rate:
- Useful when working with agencies either by jokes or by words, since in many cases, you will be asked for your daily rate as a freelancer
- You will not face losses if the project undergoes changes that will take you longer than expected
- It allows you to quickly calculate your potential income thanks to the estimated billable hours
Weaknesses of the hourly rate:
- Your hourly rate must cover all your costs (taxes, tools, hours not worked, etc.)
- You could risk devaluing your work (for example, you could only spend 5 hours designing a brochure which will ensure your client a profit of € 15,000)
- If you are quick at your job, you are penalized
Strengths of the project rate:
- You can determine the cost based on the actual value of your work rather than the time it takes
- You are not penalized if the knowledge you have of the client or the project allows you to work at a faster pace
- You can help the customer know in advance how much he will spend and thus respect the available budget
Weaknesses of the project rate:
- If you rate the complexity of the project incorrectly, you could get a meager hourly rate
- You need a contract that protects you in case of any changes and deviations from the initial project
- You need to be confident in your work and able to justify your fees
How to make more money by freelancing
First, avoid freelance platforms that keep a large percentage of your earnings. While it’s not impossible to make ends meet by working exclusively through these platforms, keep in mind that most of them attract low-paying clients and that you’ll have to wage a downward war with thousands of other freelancers like you, especially if you’re starting.
Instead, use your energy to create your website to present your portfolio to show everyone what you can do. You can decide how to introduce yourself to potential customers, which services to offer, and what rate to apply.
Do not forget that the site must be accompanied by legal texts that comply with the provisions of the law!