One of the greatest aspects of being a freelancer is having the freedom to work when and where you want. Additionally, you have the capability to decide how much you charge to complete a project.
For many new freelancers, though, it can be difficult to set your hourly rates. We’ve put together a quick guide to help you figure things out.
Let’s get started.
One of the most important factors you need to consider when setting your hourly rates is how much your time is worth to you. For example, many freelancers have other obligations in their lives that take priority over generating income.
This could be schoolwork, taking care of a newborn child, etc.
So, one freelancer may value their time far more than somebody else would. There is no right answer in this scenario, but acknowledging this factor will help you decide the rates that are best for you.
The type of freelance work that you do will also have an influence on this amount. Someone who works in video editing, for instance, may not find this endeavor to be worth it without getting paid a certain amount.
Hectic's time tracking tool can help you establish how long it takes you to complete commissioned work on average. You can then use this information to get a solid idea of how much money you can expect to make from each project.
Regardless of how you value your own time, it’s also essential to take into account your level of experience in your industry. Someone who has been working as a freelance graphic designer for five years can get away with charging a far larger amount than someone who has only recently secured their first client.
Since a greater amount of experience will allow you to provide better results, it only makes sense to increase your rates. However, your current portfolio needs to accurately reflect your abilities.
Otherwise, you may find it difficult to prove to your prospective clients what you’re capable of. A great way to ensure that your portfolio remains a reliable representation of your potential is by constantly cycling out bad work.
To elaborate, whenever you complete a project that you wish to add to your portfolio, you can replace the weakest project in your current portfolio with the new one. Over time, this can drastically improve the quality of your portfolio and make it easier for you to secure clients in the future.
It's no secret that making a large amount of money brings plenty of opportunity with it. But, not every individual requires the same amount of money in order to feel satisfied.
Depending on your lifestyle and ambitions, you might only need to make $75,000 per year. Another freelancer in your field might feel compelled to make $200,000 per year in order to facilitate their needs.
Without taking this into consideration, it’s highly likely that you will fall short of your goals. Fortunately, it’s relatively easy to establish an hourly rate based on this factor.
Let’s assume that you want to make $100,000 within a 12 month period by working 40 hours per week. You would divide $100,000 by 12 in order to calculate the income you need to generate each month.
In this case, it would be approximately $8,333.
From here, you would then divide this number by four to calculate how much you would need to make each week. This amount would be $2,083.
Finally, you will divide this number by 40 in order to figure out how much you would need to make per hour. The result in this scenario would be $52.08.
Keep in mind that you will also need to factor in things like scheduled time off, weeks where you may not be able to secure a full workload, etc.
Interestingly, many freelancers are afraid to charge large amounts for their services. This stems from a fear that they will drive away potential clients.
Ironically, charging too little for your services could actually cause the same occurrence. If you’re charging rock-bottom rates as a professional, it might illustrate to your clients that you don’t value your own work.
They might even begin to question why you would charge so little when other freelancers charge far more.
If you don’t give off the impression that you value the work you provide, nobody else will value it. So, it’s in your best interest to avoid setting your rates on the lower end of the appropriate pay scale.
Once you’ve calculated this amount, you can then use it to help draft a solid contract. Leaving payment information ambiguous in this type of document is highly inadvisable.
It's essential that you invoice your clients appropriately in order to ensure that you are fully compensated. But, new freelancers are often unfamiliar with how to handle this obligation.
Our software strives to make it as easy as possible for you to do so. In fact, it even provides your clients with click-to-pay functionality, allowing you to streamline the process.
You can also create and send an invoice in seconds, saving you plenty of time on an obligation that many freelancers find difficult.
Feel free to visit this resource for more information.
Many entrepreneurs tend to overlook this option, but it can be one of the most useful.
By simply reaching out to other freelancers and asking what their rates are, you can get a large amount of insight into what you should be charging. Occasionally, you may even find that certain freelancers have their rates posted on their website, allowing you to forego waiting for a response.
Taking advantage of our freelancer community is a great way to help find like-minded individuals who can point you in the right direction.
More often than not, the individuals you reach out to will be happy to provide this information. You can use this feedback as a foundation to determine your base rate and then slowly increase it as you gain more experience in your industry.
You will also be able to add this amount to your client proposals in order to provide extra transparency into what your clients can expect to pay.
Even though it might seem complicated at first, you can use the above information to set the hourly rates that are most appropriate for you. From here, you’ll be well on your way toward securing the compensation you deserve.
Want to learn more about what we have to offer? Feel free to reach out to us today and see how we can help.