Setting your freelance rate can seem like a daunting task. How the heck should you know what you should charge? After all you’re new to this self-employment gig and you’ve probably gotten pretty used to other people telling you what they were going to pay you for your time. Well my friend, the tables have turned and now it’s you who gets to decide what to charge for your time, your work, and your ideas.
There is no magic formula to decide what your freelance rate should be. But there are a few things that you need to keep in mind now that you’re going to be self-employed.
Yep. You pay your own now. Your employer isn’t going to be taking any taxes off your paycheque, so you have to take care of that yourself on April 15th. Of course this is going to vary depending on where you are and how much you make in a year, but in general about 30-40% of your income is going to the government. You might also be responsible for paying into EI or other government programs. Check into it for your location.
Now that you’re the boss, you get to pay for all of the things that bosses pay for! You’ll need a laptop, any required software, internet, a phone, business cards, a website… the list goes on but you get the idea. Anything you need to run your business is paid for out of your pocket.
Another business expense to consider is insurance. Since you’re not an employee, you won’t be getting employee insurance. Or benefits! What would typically be rolled into your total salary consideration from an employer is now on you to cover.
There are going to be hours in your day that you can’t bill for and therefore won’t be bringing in any income. This could be time spent writing proposals for potential new clients, learning a new skill, promoting yourself on social media, or getting sucked into a Buzzfeed time-vacuum. Now, this shouldn’t necessarily have an impact on how much you are charging clients. I am only mentioning it to show that setting a freelance rate may not be as easy as dividing your ideal salary by 40 hours a week.
OTHER FREELANCERS AND YOUR UNIQUE OFFERING
Start by checking what others are charging. This definitely shouldn’t be your only consideration as you and your experiences are unique, but it’s a good place to start. Look for freelancers offering similar services as you. Check out their experience levels, their portfolios, their client list, their bio, and their location. This way you can get an idea of the going freelance rate for freelancers in your field.
Now consider what you were making at your last job (if your job was inline with what you will be doing as a freelancer). Take a look at other jobs in your field for someone with roughly your level of experience. Determine an approximate hourly rate for these gigs. Then remember all of the extra business expenses, taxes, insurance and benefits that are falling on you, not the client, to pay for. In a way, this is saving an employer a big chunk of money, not to mention paperwork, by hiring you over a regular employee.
The most important thing about setting your freelance rate is feeling confident in what you are charging for your services. Clients need your expertise and your unique point of view, so you should be charging fairly for that. You want to be competitive but not underselling yourself. If you don’t feel confident asking for as much as other freelancers are charging yet, that’s ok. Maybe getting a client or two under your belt at a lower rate will boost your self-esteem. And you can always increase your rate later. Just remember…