If you want to start a life as a freelancer, you have to face many important questions. One of the most confusing
This article describes 4 bulletproof ways to determine your fees as a freelancer and charge an appropriate rate. Learn how much you can really earn!
1. Hourly Rates
Many clients out there offer an hourly rate for any task they have. Moreover, many freelancers have embraced hourly rates as the basis of their contracts. Hourly rates are the easiest to calculate. There are so many online calculators where you can just type a few details and get the hourly rate calculated for you.
For you to get an accurate hourly rate, you should use your desired annual income and divide it by the number of weeks you want to work throughout the year. Further, you should insert the number of hours you want to work within a week.
For instance: If you want to earn 50,000 USD in a calendar year, working 40 weeks and 30 hours
50,000 / 40 / 30 = 42 USD
That implies that you will have to charge an hourly rate of 42 USD.
Without a doubt, your hourly rate is mainly affected by the number of hours you are willing to work. As seen from the calculation above, the calculation of the hourly rate depends on the working weeks per year, working hours per week and your desired annual income.
Working Weeks per Year
It is important to realize that freelancers are paid only for the work they have done. There are no paid vacations or public holidays. That is the basic reason why you should not factor in the 52 weeks of the year in your calculation.
Of course, you will not be able to work for the whole year without giving yourself a break. Even freelancers should take a few weeks for vacation, public holiday, sick days offs and family time.
Working Hours per Week
As much as you may want to earn more in one day, you should not assume that you can work 10 hours a day, 5 to 7 days a week. This is not going to work.
For one, you need breaks. No matter how motivated you might be right now, you cannot and should not work around the clock
And second, as a
Most of us set annual goals. For this reason, we have a desire for an annual income. This is where it gets confusing and freelancers just find themselves throwing in a random figure. Perhaps, even as you read this, you do not have a figure you would a client for your annual income. If asked, you can just result in giving a number that sounds okay for you even without looking at your ultimate input into the job. As a freelancer, you should consider the following while determining your annual income:
Private Expenses and bills
- Monthly rent and other household bills
- Food and Drinks expenses
- Transport expenses including the car, scooter or public transport costs
- Entertainment like going out for hiking or movies
- Insurance expenses such as health care, legal expenses or life insurance
- Additional expenses such as a shopping trip, weekend tour, or presents for your family
- Cost of purchasing new equipment like laptops, home office furniture
- Internet subscription plans and/or mobile hotspot expenses
- Expenses for calls
- Expenses attributable to your workspace
- Cost of purchasing special software or licenses depending on your job
Besides all these, do not fail to factor in your income tax. You will need to consider income tax for you to determine the amount you will take home as the net pay. That will require you to add income tax to the annual income.
2. Project-Based Rates
For some freelancers, it is more viable and profitable to choose a
For instance, it is suitable to have an hourly plan for a virtual assistant with diversified work. This is because it is difficult to tell in advance what the VA has to do and how big the workload is going to be.
On the other hand, a graphic designer may find it easy to ask for a project-based rate since there is a predefined task. That means that you can stick to project-based rates for projects with known requirements and outcomes.
3. Industry-Based Rates
Another factor that influences the freelance rates is the nature of your job. Some industries mainly use a certain type of payment.
For instance, the translation industry rarely has hourly or project-based payment rates. In this industry, translators often find it easier to charge per word that has to be translated. Therefore, anyone that desires to be in this field has to find the perfect rate to charge per word.
The content writing industry is another example of industry-based rates. In this field, you can find pretty much anything. Notably, freelancers charge per hour, per project or even per word.
Factors that influence freelance rates
Regardless of the type of payment, you may want as a freelancer, there are also certain factors that influence your potential rates:
1. Clients’ Opinion
What is the clients’ preference regarding the type of payment he or she wants to use? If the client wants to use a project-based rate, you should not try forcing an hourly rate down the throat. Some clients may develop a healthy lack of trust, especially when working with a freelancer for the first time.
Or maybe your client is a startup company with very cool people and it would be great fun to work with them. Although they don’t have as much budget as you might usually ask
On the other hand, there are big international companies. Their requirements, standards, and preferences are often higher. So is their budget. In this case, you could charge more for your work. Such clients tend to think that freelancers with low rates might compromise the quality of output.
Tip: If you want to learn how to find high-paying clients online, check out the linked post.
2. Workload, deadlines and working days
The workload you are about to do can be another important factor you should consider when calculating your freelance rate. You could give a discount if your client asks you for ongoing, high-volume work. Long-term relationships with a client mean that you will not have to look for new clients and thus save time and energy.
There are clients that will want you to do their tasks as soon as possible. Some are even willing to pay more for you to do their task as a priority. If this is the case, deadlines are more important to adhere to and you should move your schedule to do such work first.
In case a client wants you to work on evenings, weekends or public holiday, negotiate for a higher rate.
3. Experience and Skills
Another crucial factor that determines the rates is your experience and skill level. As a beginner, you are probably not much experienced yet and it would be inappropriate to charge super high rates. Bear in mind that very few clients that are willing to pay senior rates to a junior. If you have
In the near future, you should revise your rates. Rates should not be fixed since there may be changes in the future. After a while, you can justify the rate increment with your increased skill and experience level.
4. Personal Marketing and Negotiation Skills
If you are able to sell yourself well, you can score higher rates and clients will not doubt your competence. A professional portfolio website can make a huge difference. So does the presence on social media.
More often than not, you will find that you have to put in more effort into a task than usual. In that case, you can ask for a higher freelance rate.
For instance, if you are a content writer and the client asks you to write an article about the company’s product. If you do not have a briefing from the client about the product, you will need to carry out a lot of background research. In addition, you will have to deal with terminologies that you are not familiar with, which makes the whole task more complicated.
Rates are individual and dynamic
As you can see, there are a few different ways to calculate your freelance rate. There is no one-fits-it-all approach. You have to look at your own individual situation, the job you are doing and the clients you are working with, to come up with the perfect rate you can charge.