Determining your freelance rate can be intimidating, confusing and personal. Today we will discuss a couple of basic ways to determine this number, how to understand the process and some helpful resources. Don't panic right brainers! This left brain math is pretty easy. Plus your reward is a free printable at the end!
• Research what the competition is charging in your national area and for the level of experience. These numbers are usually annual median salaries broken out by region. {see + rate equations for how to use these salaries.}
• Try using a salary calculator. These online resources will let you plug in numbers and they will spit out a suggested rate.
• After your research, my recommended place to start is using basic math rate equations. Desired annual salary divided by realistic billable hours in a year.
• Learn how to keep track of your time, whether it is on paper or electronic. Once you have established an hourly rate, you will be more prepared to bid and provide estimates per project to clients.
**helpful hint** My word of advice on setting your rate, BE REALISTIC! DO YOUR RESEARCH! Please do not tell a client that you are going to charge them $200 per hour with only 3 years worth of design experience. I can almost guarantee they will not end up as your client. The mission is "marathon" or long term clients. Not "sprint" or one time clients.
+ research :: Check out the online salary surveys for your area. These surveys are released annually and provide median salaries for a range of design positions for various regions in the US. These may refer to freelancers as solo designers or independents.
+ salary calculator :: These tools help you figure out a rough number for your hourly rate. Down side to this method: they might ask you to enter numbers that you may not know yet about your freelance business. Overhead, equipment, insurance, etc.
• Freelance Switch salary calculator
• Simply Hired - freelance graphic design - type in your city, state or zip code
• Coroflot – Corculator
+
rate equations :: {provided example will assume you are a
one person operation}
All numbers and examples are taken from Jeff Fisher's book. {Have you bought this book yet? Why not?} They are provided as reference and should be used as a starting point. Equation uses an 8 hour work day {I wish!}
1. Fact: Work hours in a year = 2,080 hours
2. Average hours not working a year = 176 hours {adjust as needed}
• Example: 7 legal holidays + 2 weeks vacation + 5 sick
days = hours not working
{7 x 8 hr} 56 hours + {10 days x 8 hr} 80 hours + {5 x 8 hr} 40 hours =
176 hours per year
3. 2,080 work hours minus 176 hours not working = 1,904 hours
4. Jeff recommends taking off 25% down time during the week. For example purposes, we will assume that you are not working a full billable 8 hour day.
• Example: 1,904 hours x 25% down time = 1,428 billable hours a year
5. Divide your billable hours by your desired salary. This will provide your hourly rate.
• Example: $52,000 divided by 1,428 billable hours = $36.41 per hour {easier to use round number}
**helpful hint** I used this method to help determine my hourly rate. I like this method because it allows you to work backwards from your desired annual salary. This is also a good way to determine how many billable hours you would like to work. Part-time, 4 days a week, 6 months a year, etc. All can be broken out into billable hours.
+ keep track of your time :: Keep detailed track of your time. This will help you learn how long it will realistically take you to finish a project from beginning to end. Learning your design process time will help you to accurately bid and estimate projects for clients.
• Example: 4 hours to complete one concept x 3 client proposed/requested concepts = 12 hours
12 hours x $50 {hourly
rate} = $600 estimate total
/ Hourly vs per project / On-site work usually charges per hour. Off-site may depend on the client. Client may supply you with a budget {amount they have allocated to give to a freelancer} and knowing your hourly rate will help determine roughly how many hours you should spend on that project.
• Example: Client budget divided by your hourly rate = hours you should work
$600 {budget} divided by $50 {hourly rate} = 12 hours you should work
12 hours you should work divided by 3 proposed solutions = 4 hours per solution
**helpful hint** Be prepared to go over your hours almost every time without pay. Strong freelancers will continue until the level of work meets their internal standard and they know their client will be satisfied. DO NOT TURN IN WORK JUST BECAUSE YOU REACHED YOUR SUGGESTED HOURLY LIMIT! Unprofessional and client will feel that.
/ Telling Freelancer Time / Break clock into quarters and work on military time. Use your best ETHICAL judgment when recording your hours. {The provided image illustrates in the gray areas what quarter I would record for what time worked. i.e., If I work till 10:35 am I would say 10.5.}
• Example:
You worked on-site from 9:30 am until 3:15 pm.
Military hours + clock quarters would be 15.25 {3:15 pm} minus 9.5 {9:30
am} = 5.75 hours of work.
5.75 hours of work multiplied by your hourly rate = invoice
total for the day
Download FreelanceRateClock here. © erinvaledesign. For personal use only. Not for commercial use.
**helpful hint** keep a small notebook with you to accurately record hours worked, job number and a brief description should you be asked to justify your time. Photoshop work, layout work, clipping path work, etc.
/ Freelance Switch / 6 Cool Tools to Track Your Time
+ remember :: If you have any specific freelance questions you would like to see answered, shoot me an email or write it in the comments section. I will be happy to hunt down the answers.
Also, I just wanted to remind everyone that I am taking all Fridays in March off from posting to work on some personal design projects. Have a great weekend!
{image credits Ryan.Chandra and Vale Design}
