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Ah, the $64,000 question. How much should you charge as a freelancer. The short answer is enough so that you are making more than you are spending – the longer answer is enough so that you are providing maximum value to your clients (while still making more than you are spending).
Ask other freelancers
The easiest was to get an indicative rate is to ask other freelancers in your industry. This will give you a general range. Don’t be subversive though – I’ve heard stories of freelancers (and even bigger businesses) requesting fake quotes. This is a waste of everyones time – and you miss an opportunity: Freelancers tend to be a helpful bunch – if another freelancer has too much work, or it is outside their area of expertise, they will often pass clients on to other freelancers. This is a great way to get extra work, and to build up a support group of people that are doing the same thing you are.
Just be aware than many freelancers charge too low.
Use a calculator
You can work out what your minimum hourly rate needs to be by using an online calculator. 88 Miles has one associated with our business health dashboard. You can access it here.
First, work out how much you want to make before taxes (call an accountant to ask about this) and expenses each year. If you are just starting out, make an estimate of your expenses – think about things like the monthly cost of software that you use, include a budget for hardware (like computers) and using other services like hosting your website, email and hiring an accountant. Add this amount to into the Annual Revenue Goal field.
Next, work out how many billable hours you think you can do in a day. This is not 8 hours! When you take out time for lunch, breaks, admin, phone calls and brain fade time, it will probably be closer to 4.
Finally, enter the number of days a year you can work. If you are planning on working a full 5-day week and have a week holidays a year and get public or bank holidays off, and factor in some sick leave 240 days a year is a reasonable guestimate.
You should now see an estimated hourly rate. Is it higher or lower than what you expected?
Test it out
Now that you have a magic number, go and try it out. Call some of the people in your CRM, and see how they respond to your quotes.
Protip: If you win every job, you are not charging enough.
As you do more work, try increasing your hourly rate for new jobs. You will eventually find that sweet spot where you are winning jobs because the client sees the value you provide them, and losing some jobs where the client isn’t a good fit.
If you are proud of the work you do, you should get paid for it!
- Ask other freelancers in your industry what they charge
- Calculate the minimum you should charge using our online calculator
- Test out hourly rate on potential clients
- Increase your rate for new jobs
The guy from 88 Miles
P.S. Do you want to see if you are hitting your hour per day targets? You don’t have to wait for the rest of this course to do it; check out our free 30 day trial.