We’ve talked about recognizing your worth as a writer or editor, and we’ve looked at whether to charge or hourly rates. Regardless of what you are going to quote to your client, you probably want to begin the process of setting your rates by coming up with an hourly rate. Then you can convert that rate to a project rate based on how much time a given project will take.
Determine how much money you want to make:
- Determine the income you need to pay your living expenses and have something left over for savings and investment.
- Remember that you will have to pay both the employer’s and employee’s share of your Social Security as well as cover your insurance, vacation and sick time, and any other benefits you were accustomed to as an employee.
- Although you will need to make more money than you would as an employee, be realistic. If you are just beginning as a freelancer, you shouldn’t expect a six-figure income.
Allow for business expenses:
- Account for business expenses such as your computer and office equipment, Internet service, telephone, office supplies, legal and accounting fees, and marketing.
- Think about the possible future need to hire employees or subcontract work to other freelancers, either because you have more work than you can handle or because you are unable to work if you are ill or face a family emergency.
Decide how many billable hours you can work:
- You earn money only when you are doing client work, but you also have to perform administrative and marketing tasks.
- The amount of time you devote to client work will likely be half or less of the time you actually work.
Calculate your fees:
- Add your the annual income you need to receive, your anticipated annual business expenses, and the amount you want to save/invest each year.
- Figure the number of weeks you will work in a year: subtract the number of weeks you want for vacation, sick days, and holidays.
- Determine the number of hours you can bill per year: multiply the number of hours you work per week by the percentage of time that you can bill to the client by the number of weeks you will work.
- Divide the total income you need by the number of hours you will work during the year to arrive at your hourly rate.
- Compare the number with typical rates (for editing rates, see the Editorial Freelancers Association). If the rate you calculated is outside the typical range based on your skills and experience (either high or low), review your calculations and see what parameters you can change. Keep experimenting until you come up with a number that you are comfortable with.
- If you have decided to charge a flat rate rather than an hourly rate, simply estimate the time required for each type of project you do and convert the hourly rate to a project fee.
- Review your rates regularly, at least once a year or more often if you are new to freelancing, and raise them as your experience merits.
Get paid your desired rate:
- Exhibit self-confidence when talking with clients. If you act like you don’t deserve your fee, the client will probably agree with you.
- Be prepared to demonstrate your worth to the client. Show samples of your work; explain your unique skills and expertise that set you apart from other freelancers; do as I do and give a short sample edit.
- Never negotiate out of desperation. If you choose to discount your work during slow times or for certain kinds of projects, do so because it’s in your best interest or because you want to do a good deed for a favorite charity, not because a client intimidated you or because you are in a panic about lack of work.
- Be willing to walk away from projects that will hurt your future. Only you can decide the minimum compensation you will accept for your work based on what is best for you, your business, and your family. Just remember that when a client chooses you because you’re the cheapest, they are likely to walk away from you if they think they save a few pennies somewhere else. Passing up a project like that may give you the chance to find long-term clients with higher-paying work.
Calculator To Help You Set Your Rates:
- Hourly Rate Calculator, Freelance Switch
More Advice on Setting Freelance Rates: