How Much Should I Charge as a Freelancer?
13 Things to Consider When Coming up With a Price
Putting a price on your work is tough. That's most true when you're first starting. Lucky for you, there are numerous tools and resources available that'll make this process easier. There are a few factors to consider when you're deciding how much to charge as a newcomer.
1. What the Client Is Asking For
Is the project for a small business or is it for a rapidly growing startup? Is it for your mother or is it for a stranger? Take into consideration what the client is asking for, and also who it is for. Also, what is the standard rate in the area where you/the client live(s)? Think about the value you are giving them.
2. The "Jerk" Tax
Is a client a pain to work with? Are they cutting into your personal time? This should be taken into account, as well. And remember: it is perfectly acceptable to "fire" clients. It's not all about the money. It's also about your happiness.
3. Honesty About Your Skill Level
How much experience do you have in this area? Be honest. Just like entry-level positions at companies, when you're starting, you will be on the lower end of the pay scale. Also, be honest about the time it'll take you to finish a project. It is a typically good measure, especially when first starting, to give deadlines farther in advance than you think it'll take to finish.
4. Hourly vs. Project-Based Payment Options
There are positives and negatives to both. Charging by the project is best for when you’ve done a similar project before and know how long/how much effort it takes. For example, if you're designing/developing a website, consider charging by the page. A ten-page site versus 20 page would have different costs. Think about the value you are bringing them and their business.
5. How Much You Want to Earn This Year
Take a look at glassdoor.com and see what businesses have established as salaries for workers who do a job similar to what you're going to be offering as a freelancer. You could base what you charge on that.
6. Don't Forget About Taxes
If you’re self-employed, you've still got taxes to worry about. Luckily, the IRS has a page full of information regarding taxation for self-employed individuals, and tools to estimate taxes. According to Lifehacker, it’s easy to make a rough estimate of your taxes: “ (You) can add a factor of 15% to your salary to cover tax contributions. In our example, 15% times the $45,000 salary is $6,750. Adding these together, our new salary with taxes is $51,750.”
7. Factor in Supplies and Other Materials
Don't forget to include the price of expenses you may have to cover, on behalf of the client. Take a few minutes to consider that before you give your client your final price estimate.
8. Factor in a Profit Margin
Make sure you pay yourself enough to be able to sustain slower work periods. Lifehacker advises you to add in a profit margin of between 10% and 30%. This way, you’ll have an extra cushion when you need it, and capital for growth and other financial necessities if you don’t need it.
9. Don’t Be Afraid That Your Price Is Too High
There will always be other people out there who charge less — likewise, others who are more expensive. If you make your prices too low, you won’t make enough to sustain yourself.
10. Look for Studies/Releases on Freelancer Rates
11. Find Freelancer Networking Groups
This can be done online or offline. These kinds of networking communities are a great way to exchange ideas and learn about ways you can improve your business. Plus, you may be able to glean some insights on how they charge their clients.
12. Ask Your Client Their Budget
Lots of freelancers worry about how to price a new project proposal. And if their price will be within their prospective client's budget. Why not ask the client what they want to pay? Many will give some ballpark of what their budget is for a project. This will help you come up with a better proposal, and more likely to land the gig.
13. Don't Be Afraid to Negotiate
This last tip is important: there is no standard rate for freelance work. No one will ever turn you away for work if you request a bit of leeway in the budget. Everything is negotiable. If you bid too low for a gig and don’t realize it until after you start working, it’s a learning experience. Try to raise your rates and bid higher the next time you see a similar gig.