How to Decide on Your Freelance Rate: Five Questions to Ask Yourself
Skylar Wooden and Katie Butler
October 21, 2017
As Pare and Flourish has grown, we’ve been faced with this question several times. As a freelance writer, Skylar is wrestling with this question on a regular basis. To help you, and ourselves, we compiled five very important questions to ask before you decide on a rate. A freelancer’s rate may seem arbitrary based on what they want to make; it’s anything but.
How Much are your Living Expenses?
First things first, if you are going to do this full time, you have to know what you need to live. How much money do you need to pay the bills? Calculate your bills—all of them. Factor in the smaller expenses that you don’t usually consider, such as oil changes, property taxes, car registration, medical bills, and so forth. Also be sure to consider your day-to-day expenses like groceries and gas.
Once you’ve factored everything in, give yourself a cushion of $200 to $500 a month, depending on your lifestyle. It is nearly impossible to remember every small thing, so your cushion is there to make sure you have the money if you need it.
How Much Would You Expect from a Formal Employer?
How much per hour would you want from an employer if you were doing the same job? Understand that normally that per hour rate factors in your health insurance, 401k, and other benefits.
Determine what you would want per hour and then add the amount of your potential benefits. Extra work expenses don’t stop there. Will you be taking clients out to lunch? Will you be taking yourself out to lunch? Anything you’re doing during the work day, or for work, can be factored into this number.
What is Your Experience Level?
Your fee per hour is partially, but not completely, dependent on your experience level. Here is where many people lose confidence. Just because you haven’t done a job for a long period of time does not mean that you should be working for free or anything close to it. You can keep your prices low at the beginning so as to build your project portfolio, but don’t give your work away. Your time is always of value, regardless of your experience level.
With that said, you should raise your hourly (or project) fee every year after beginning your self-employed career.
How Much Do Others Charge for the Same Service?
Research is your friend on this one, especially if you aren’t friends with other freelancers in your industry. The internet knows all. You can easily find out the average prices per hour or per project. Your location will likely factor into this average as well. You will find numerous blogs specific to your industry.
Also consider googling individual people in your area/industry. Freelancers and new businesses often have their price on their website. Know what you’re worth!
Pro Tip: If you’re struggling to calculate a price per hour, determine how much you want for the entire project and work backwards.
What is Your Overhead?
What does it cost you to provide this service? Other than your blood, sweat, and tears, of course. Anything that you need to do your job is considered overhead: subscriptions, memberships, software, hardware, taxes, advertisement, and so forth.
These expenses are an important factor in your hourly/project rate. Emotional overhead is also something to consider. For example, if you have a full schedule and a client approaches you for a project, do you give them the same rate? In our opinion, no. You are delving into what would have been personal time. This is worth more to us. If it’s worth more to you, and you can get by without that project, give them a higher rate. To decide this rate, we suggest you use the highest possible number in your comfort zone.
Conclusion: Do Not Waiver!
Once you determine a price, be confident. You’ve put in the time and effort to choose the perfect number. Do not let anyone try to tell you that you’re charging too much. Your time is worth more than you think and, sometimes, more than your clients think. Stay strong!
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