Freelancing: Figuring Out Your Finances
One of the biggest obstacles first-time freelancers face is figuring out how - and what - to charge clients. There are plenty of options, but as you will quickly learn, in the world of freelancing, with flexibility comes choices—sometimes in overwhelming amounts.
What Should You Charge?
Obviously, the amount you charge will depend on the type of services offered. Different services require varying time commitments. But it is not just the time it will take to complete the task you have to worry about; you also need to factor in things like research, client changes, whether it will be in your name, etc.
When first starting out, deciding what to charge can feel pretty uncomfortable. One of the biggest mistakes I have heard people make, and I am guilty of myself, is under-charging. Whether it is because you think the client won’t be interested if priced too high or you assume that, because you are new, you need to start off at a lower rate, there are many reasons why you're hesitancy may be prevalent. But it's important to remember that you have a specialized skill set and trade that is extremely valuable; you need to be compensated appropriately for your work.
When setting your prices, remember that taxes won't immediately come out of your paychecks, as they typically do for full-time, salaried employees.
To determine what your starting hourly rate should be, calculate all of your living expenses for the year, including rent, loan payments, insurance, bills, etc. Add what you think you will need for spending, on average, for the year.
- Divide that number by 52. The result is what you want to be making per week.
- Take that number and divide it by 40, assuming you will work a 40 hour work week; the result is what the minimum you should charge hourly.
Obviously, this is just a basic framework. If you want to work, say, 20 hours a week, you are going to need to charge more per hour.
Whether or not you choose to charge hourly, you can use it as a starting point; hourly rates are easy to convert to other pricing formats.
If you want to charge per word
Let's say one of the main services you offer is content writing, mostly blogs that average about 500 words in length. How long does it take you to write 500 words? An hour? Take whatever your hourly rate is and divide it by the number of words you can write in that time. So, if your hourly rate is $40, you divide 40 by 500 and find that you charge 8 cents per word.
If you want to charge per page
Use the same method as above. How many pages can you write in an hour? Remember that you are talking about acceptable, decent work here—not stream-of-conscious writing! Be realistic. If you can write a solid two pages of acceptable content in one hour, divide your hourly rate ($40 for example purposes) by the number of pages you would finish in that time (in this case two) and that is what you charge per page ($20).
Flat Rate Fee
Charging per project is sometimes the only way to go, especially if projects don’t have a set length of time, there will be a lot of research and revision involved, or it is a particularly picky client. Some customers will prefer a one-time, flat fee anyway.
The benefits of flat rate fees are that you know you get a set amount of money for your work. But the disadvantage is that you might under-charge by assuming it will require less time than it does. For example, perhaps the client wants changes after you think the project is complete. It is always a good idea to implement a contract letting them know that you might change the fee if it requires more than a certain number of hours.
Not all rewards for your work come in the form of a paycheck. Sometimes bartering can be your best option— an exchange of services. For example, if you know a web designer who can help you improve your website and platform, and in return, you provide them with some content, that’s a tradeoff worth making.