Packing up your office and going freelance is a decision that is fraught with questions, but #1 on most people’s lists is probably, “How much do I charge?”
Setting your freelance rate is a complicated puzzle filled with even more questions: Do I charge hourly? By the day? By the project? What do other people charge? What’s a fair rate? Should I lower my rate to get more work?
Ugh. All of those questions are enough to make working in cubicle in a nondescript office building for a faceless company sound appealing. But don’t be discouraged.
When it comes to setting a freelance rate, there isn’t a one-size-fits-all solution. But with a little research and some great tools, you can calculate your rate and start getting paid.
First things first: you need to figure out how much money you need to live. While you may think this means carrying over your salary at your last full time job, it’s important to remember that as a freelancer you are responsible for expenses like health insurance, travel, and retirement contributions that may have been at least partially covered by your previous employer.
Add together all of your personal monthly expenses. These are the things you’ll be paying no matter what happens workwise—rent, food, transportation (i.e. car payments, insurance premiums, subway cards, gas), utilities (i.e. electricity, internet, phone), subscriptions (i.e. web hosting, Netflix, Spotify, cable), and health insurance (i.e. premiums, prescriptions, co-pays).
From there you add in the new expenses that freelancing brings up like self-employment taxes and retirement fund contributions. You won’t know those exact numbers, but adding about 30 percent to your total will likely cover it.
Then, divide that number by the number of hours you want to work each month and voila: you have the minimum hourly rate you need to charge to stay afloat.
From there the real fun begins because, as Christina M. Frey, senior editor and literary coach at Page Two Editing and co-executive at the Editorial Freelancers Association puts it, “You’re not just self-employed, you’re also the self-employer.”
“You need to think about your overhead but don’t forget to consider the number of non-billable hours you’ll put in each day,” she says. “You may say ‘I’m making $X per hour and that’s fine,’ but what if you’re only working four billable hours and spending the other four on marketing and administrative, which is all unpaid? That needs to be considered when calculating rates.”
While generally you shouldn’t compare yourself to anyone else because you’re perfect just the way you are, when it comes to setting a freelance rate, knowing what others are charging is incredibly helpful.
Google is your friend here. Search for others doing what you’re doing and get a sense of what they’re charging for their work. “Join facebook groups, professional organizations, go to discussion forums, go to conferences, and find your tribe,” suggests Frey. “Get a small group of like-minded freelancers together to talk openly and honestly about pricing. In these small mastermind groups, you can be more open talking about money or other business matters. It takes time to find people you can trust, but it’s worth it.”
You can then adjust your pricing based on your experience, because the value you bring to the table should be a big consideration when you’re pricing your work.
“As women we’re often conditioned to devalue what we bring to the table and that can cause us to be timid,” says Frey. “Don’t only look at what others are doing; identify what you yourself are offering a client. Know your client and know their needs. Know your own skills and strengths. Be confident! Don’t sell yourself short.”
Sometimes it makes more sense to bill on a per project basis because different types of work have different demands. “Know what hourly rate you want to ask for but also be aware of the demands of the particular type of work,” Frey says, adding that, in her own work, she knows that some types of editing are more taxing than others.
To find the project rate, Frey suggests laying out the client’s needs and what you can do to meet those needs line by line. “Write out everything the process will entail, including the value you bring as well as what the client can expect and when,” says Frey. The when forces you to assign an amount of time for each line which you can use to assign an hourly rate. You can then add all the hours together to find your project rate.
A lot of people think of freelancing as a work-when-you-want type of gig, but for many it can be more of a work-when-you’re-awake thing. Which is why it’s even more important to take care of yourself when you’re working for yourself.
“You know you need to put money aside and plan for expenses like a new computer, new software, and other upgrades,” Frey says. “But as a freelancer, you are your biggest business asset and you have to treat yourself with as much care or more as you would your best equipment. So, factor in weekends and holidays—you deserve to take weekends off, and you deserve a vacation. It’s critical because you will burn out if you don’t and you won’t be able to perform at your best.”
If you’re looking to step up your side hustle—or just get started—we’ve got a whole track of programming at the Girlboss Rally dedicated to helping you level up your part-time passion project. Join us for actionable workshops and IRL advice by registering now at girlbossrally.com.