Blog of a first time freelancer: Knowing what to charge
Despite having a little more experience now, quoting prices for work is still the number one thing I find tricky about freelancing.
We’ve all been told at one time or another not to undercharge, but how do you know what you should be charging? In short - with a certain amount of difficulty.
Before you start unravelling mysteries such as what your services are worth, the bottom line is that you need to know how much money you need to make to get by. When I first started freelancing, this logic kept me from panicking too much. I reasoned if I could pay my way at least, I’d be able to sleep.
Of course that’s not a recipe for a happy working life and, obviously, the aim is to turn a profit. Once you know what you absolutely must make, though, you can start tinkering around with things like what you’d like to make and what you should be making based on your skills and experience. I aimed for making as much or more than I was making in the job that I left to go freelance, for example.
When you’re thinking about the profit you’re aiming for, you’ll need to factor in costs such as rent, bills, tax and NI and, ideally, some time off too! Once you have your ideal annual salary and the amount you can’t go below, you can work out a monthly target, then weekly, daily and hourly amounts. You can then multiply your hourly rate by how long you estimate a job will take to get your quote for a project fee.
So there you have it - quoting made simple! Except not quite….
The plot thickens
Unfortunately, things do get more complicated…what about when factors outside your control make things take longer than anticipated? What if you get brain freeze which results in a low rate? What about remaining competitive? Do you charge the same to a small business as a big corporate client? What about the pain-in-the-bum factor?
You can get yourself in a real tizzy with all these conflicting factors and unfortunately there is no real one-size-fits-all formula. You have to take things on a case-by-case basis. Here are some things to consider, though, to help you feel your way to the magic figure:
- Look at job ads, ask on industry forums and consult sector-specific trade associations for ideas on what others are charging/what rates are recommended.
- Consider how busy you are. If you’re snowed under anyway, you can probably afford to aim for a higher rate than if you were desperate for work.
- Weigh up the regularity of work alongside your usual hourly rate. If you know you’re going to get regular work from a client, you can sometimes lower your rate slightly for the reduced hassle.
- If you’re a creative freelancer, you have to accept that you can’t guess how long it will take you to get the right idea and in fairness, you probably can’t bill a client exactly for the time spent awaiting inspiration. There is a lot of give and take, though, and flashes of inspiration should make up for ideas droughts.
- Don’t forget to review your rates. If you’re getting quicker and more skilled, can you nudge your hourly rate up so that you don’t lose out?
- If price negotiations are grinding to a halt, you could always ask a client their budget and then tell them what you can do for that fee.
29th July 2009