[This post is part of our special Freelancing Friday!]
When you’re first starting out, you might want to try some formulas that have been developed over the years by other freelancers. To determine an hourly fee, one suggests looking at three areas:
- Your costs
- Your experience
- Your locale.
Here’s how it would flesh out:
Applying the Formula
To use this type of formula, first add up the costs of your monthly office rent, your office equipment and supplies, postage, Internet access, phone service, subscriptions, and any dues or memberships you may have. If you’re working out of your home, talk with your accountant about how much of your housing expenses, including utilities can be applied to your business–if any (you’ll have to do this anyway when you do your taxes). Add all of these up to determine how much it’s costing you per month to run your business. Divide this by the number of billable hours you have each month to come up with an hourly rate that will allow you to break even. By billable hours, I mean those hours for which you’re being paid. Most freelancers shoot for half of their working time to be billable, and the other half to be use marketing, keeping the books, etc.
So let’s say that you’ve determined that your monthly expense to run your business is $1,200 and although you’d like to have 80 billable hours in a month, you’re just getting started, and right now, you only have 30 billable hours in a month. Your fee would be $40 an hour to cover your basic expenses.
Another thing to factor into your fee is your experience. If you’re just starting out and don’t have a track record or samples of your work to show, you’ll probably have to discount your fees until you are more established, so perhaps you decide your hourly fee will be $25.
Third, you want to look at where you live. If the cost of living in your city is high, then you’ll be able to charge more. For example, if you live in New York City, you may want to raise your hourly fee up to around $50; if you live in small town, on the other hand, you may want to lower your hourly fee to around $20.
Any tips and insights you have for setting freelancing fees would be great–so share them in the comments, below!