Among the most frequent questions that I have encountered within freelancing communities, and perhaps the most pressing issue for a lot of new freelancers is this:
How much do I charge?– thousands of new freelancers
This can be a long and complicated question to answer even for an established freelancer, with many different methods of calculating prices and value. For a new freelancer, especially one who has just started stepping out from their company, it can be especially difficult to pick a price.
What are you worth?
The first thing to figure out is what you’re worth right now. This is really easy if you’re currently employed to do the thing that you want to freelance with:
You’re worth 2-3 times what you’re already getting paid.
When you consider your base salary, you forget that your employer is also paying for equipment, office space, taxes, entitlements, time off, those hours where you’re not doing anything productive, and a huge range of other expenses that really add up. In total, you may cost 2-3 times what you’re actually payed.
How does this apply to my rate?
It’s fairly simple. Figure out your current hourly income – say $25/hr. Your starting hourly rate as a freelancer should be somewhere between $50/hr and $75/hr. The more experienced you are, the more likely you are to start at the high end, but you’ll probably be moving it up from there after a year.
Ultimately you are now responsible for all of those expenses that your employer used to cover. Sure, your expenses are lower because you’re already living at your office, but your biggest expense starting out will be one thing: doing nothing.
You often can’t bill 40 hour weeks as a freelancer, and you might have days or weeks where there’s no work, no clients, and nothing to do. The hours that you can bill have to cover your expenses for the hours that you can’t.
And now, the hard part…
You actually have to charge that rate. This is where impostor syndrome starts kicking in, and you start intentionally under-quoting in the hope that you won’t scare clients off. Remember that even though your hourly rate seems high, you’re still cheaper to your clients than hiring someone with your skill as an employee.
For more tips, tricks, and thoughts on freelancing, please look through our other posts.