Freelance work is a numbers game. There’s only a tiny hourly cost margin between prosperity and ruin. It is a hard decision how you actually need to charge for your work. I don’t think there’s one answer to it. And neither do I think you should blindly follow anyone’s advice when it comes to how you should charge.
The best way to start is to look around and see what your
competitors fellow freelancers in the same niche tend to offer–that’s what your client is likely to be used to. The next step is just trying different frequently used models. Knowing the market and knowing yourself can help you make smart choices about your hourly rate and income before you hang out your shingle.
Yes, there are many disadvantages in charging hourly, but I know from experience that in many cases you will still have to charge an hourly rate. So, in case you are trying to learn how to properly charge per hour, here are seven essential tips and tricks!
1. Do Some Research
Overcharging for freelance work will obviously turn away customers, but undercharging will undervalue your work, make it difficult to make ends meet, and drive freelance hourly rates down for all of your peers.
Before quoting your first hourly rate project, do some research on similar freelancers in your area. Ask around openly and cruise Craigslist. If necessary, pose as a prospective client and ask a competitor for an estimate–this sort of reconnaissance work isn’t rare for freelance startups.
2. Know Your Lower Limit
Now that you know how much others charge, how well will the going rate meet your personal needs? You can figure this out on pencil and paper, but FreelanceSwitch provides a thorough and convenient hourly rate calculator. It accounts for everything, including rent and office supplies, and provides you with both an ideal rate and your bottom-basement hourly rate. If you can’t break even within your market’s hourly rate range, it’s best to know early on so you can restructure your business plan.
3. Estimate Your Non-billable Contributions
How many hours per freelance week do you spend tracking and invoicing? Pitching? Following up with clients? You’d be surprised how quickly your non-billable hours add up. Depending on the particulars of your business, a 40-hour freelance workweek might include only 30 billable hours.
You can cut down on some of your administrative time by using a tracking/billing system, but you can’t eliminate non-billable time entirely. Be kind to yourself by recognizing that you can’t directly convert 40 hours of time into 40 hours of cash; plan your hourly rate with lost time in mind.
4. Learn Your Productivity Rate
Just how much of a typical project can you complete in an hour? How many hours do typical projects take? Figuring out your average productivity rate will help you to provide reliable estimates for your clients, manage your workload, and keep your income in balance.
Get in the habit of tracking your work and keeping your own stats. Popular applications can help you to record and organize the time you spend on each freelance project. Checking in with yourself will help you realize whether a particular project has become a time sink, which will in turn help you to troubleshoot work issues with your clients. You’ll also be well prepared to justify your invoices.
5. Don’t Overdo Your Productivity
I know some days you feel like you can take on the world–and you do. You might bang out client projects in a few days by working 12 to 13 hour days because you feel so great and confident. If you’re billing hourly, it won’t matter of course, because you’re still technically working the same amount of hours. This tip is more for your sanity. If you give clients the expectation that you can get a project done in a few days (regardless of the hours) they may still be under that impression when you do the same amount of hours, but on “real person” time–meaning, eight to nine hour days.
6. Enlist the Help of Other Freelancers
What services can you confidently provide yourself?
Say for instance you’re a web designer. You’re bound to get clients that want copy done once their website is designed and ready to go live. When you run into instances like these, you can either find general rates for that particular type of freelance work, tackle it yourself, and work it into your hourly rate, or ask another freelancer what they charge. Then, you can either bill the client separately for each service (yours and whatever freelancer’s you’re contracting) or roll it all into one cost.
7. Schedule Lunch
The prospect of beginning a freelance business is energizing and exciting, and you might be looking forward to spending uninterrupted hours on your projects. Avoid the assumption that you’ll consistently have that novice buzz. You need coffee breaks, lunch breaks, sick days and time off. If your hourly rate and workflow can’t support reasonable downtime, your freelance career will burn you out.
Remember that a good boss treats his or her employees well in order to get top productivity from them. This holds doubly true for the self-employed.
Do you charge an hourly rate? What tips do you have for other freelancers?
Image by dpicker