If you’re just starting out in freelancing it can be tough to know exactly how much to charge and what your hourly or day rate should be. What makes it more difficult is that you want to get it right the first time to avoid any issues such as over or under or overcharging in the future.
Quick tip: start with a rate that you feel is right for you and offer a promotion (eg: 20% percent off for one week only) to see if that makes a difference. It's a way to test the waters and experiment with price without permanently dropping your rate.
Employers will always look for value but that does not mean being cheap. They want to source the best talent at the best rate and your prices should reflect your value.
Firstly, do some research. Find out what other freelancers are charging for similar work, compare and come up with a rate that reflects your skills and experience whilst making sure your rate is still competitive. Just because you're starting out, doesn't mean you have to undercut and undervalue yourself. A freelancer's value is what an employer is willing to pay for it.
Secondly, calculate your overheads. When deciding how much to charge, it’s worth taking into account your business costs. This can include office rent, insurance, travel, stationery or kit. You need to cover your costs so make sure your price is reasonable as well as being realistic. Once you've added up your business expenses, add your living expenses such as rent, food and entertainment. Next, divide this number by the number of chargeable hours you do in a year and add 20% for tax. This will provide your bottom line ie: the minimum hourly rate you should never go below.
EXPENSES / CHARGEABLE HOURS + 20% TAX = MINIMUM HOURLY RATE
Finally, when deciding on your price, make sure you consider your productivity and how much you’ll realistically achieve within a set time period. It is vital that you don’t put yourself in a situation where you have not budgeted enough hours or days otherwise you’ll start losing money on the job.
Bonus tip: Employers HATE it when they request a day rate from a freelancer only to be asked what their budget is. A brand will have an amount set out but if you chop and change for each client, you can quickly pick up a bad reputation.
