How much should you charge for your services?
This is a question every freelancer asks themselves when they start freelancing. There’s no right or wrong answer, but you must have a clear idea of your minimum freelance hourly rate before you figure out how much you should charge your clients to make a profit. After all, if you don’t know how much it costs you to work for an hour, how will you accurately price your work?
When you know how to factor your costs into your freelance hourly rate, you’ll be ready to price your services for your online consultancy and meeting services as well. Rimuut’s freelance hourly rate calculator is the simplest solution for accurately estimating the cost of work so you can price your freelance services.
Knowing what to charge freelance clients allows you to price your work as efficiently as possible and do the best work for your clients.
We’ve also put together a deep dive into how you can manually calculate your hourly rate with a few tips to ensure your freelance work is always profitable.
How can I figure out my freelance hourly rate?
The ultimate math problem for freelancers: how do we figure out our hourly rate? Here we’ll cover the math behind calculating your freelance hourly rate and give you some practical tips on how to set it, as well as what makes a freelance hourly rate profitable.
Pricing yourself is the most vital aspect of starting your freelance business. That is where all your focus should be. Surprisingly, many solopreneurs and freelancers still don’t know how to set their prices and determine how much they should charge for their services. If you fall into either of the above groups, here are some comprehensive thoughts on this topic.
The most straightforward way to calculate your hourly rate is to divide the total you make each year by your annual hours of work.
40 hours/week × 52 weeks/year = 2,080 hours
$150,000 desired salary ÷ 2,080 hours = roughly $72 per hour
While this calculation seems pretty straightforward, is it actually the most accurate way to calculate your hourly rate? There are many limitations to this calculation. First, it assumes that all employees work precisely 40 hours per week for 52 weeks out of the year, which is rarely the case. The other challenge is that you need to determine an appropriate figure for your salary. What do industry standards look like? How can you compare your skills with what you’re getting paid? Are you getting paid what you think you deserve based on your experience and unique skill set?
Understand your freelance business expenses
You can’t price your freelance services until you know the minimum hourly fee to cover your costs. If you’re an independent contractor, your expenses probably include things like tax, health insurance, business liability insurance, office/coworking space, equipment, home office expenses, and so on. In this case, when you’re calculating your freelance hourly rate, you should consider the amount of money you’d like to get after paying all of your expenses.
Yes, as a freelancer, you can deduct several expenses from your gross income. For example, if you rent office space and use it 100% for business, you can deduct 100% of the rent. This is the same case with operating expenses such as internet and utilities, cost of doing business travel or mileage, website hosting, and software tools. You also get deductions for other business equipment and furnishings, office supplies, and equipment reordering. Software upgrades and renewals are also business-related. If you include these expenses when calculating your hourly rates, you can make sure you get paid fairly.
How much time does your next project require?
There are many factors to consider when determining how many hours you’ll work each week. Are you starting with an extensive network of potential clients, or will you need to do most of the marketing yourself? Do you anticipate that you’ll work more intensely for fewer months? How much more intensely?
Now that you’ve crunched the numbers, you ought to consider what your working day will be like. How much work time will you have? Will you schedule regular breaks? And how many vacations do you think you’re going to take in a year? These are all considerations to make before you decide how much to charge for freelance services.
For example, you might be a consultant charging for your services hourly; however, you are also working to promote your business; you contact clients and email them regularly; these count as your working hours. So when you’re setting a price for your freelance services, you must also include these hidden hours.
Know the market
Being underpaid for your services is one of the biggest problems freelancers face.
Since you are an independent contractor, clients have no responsibility to compensate you fairly; therefore, at times, they don’t — and you end up struggling to make ends meet. This is especially true if you didn’t take the time to do some investigative work to uncover competitor rates and what other freelancers are charging similar clients. This will help ensure your hourly rate is based on reality and in alignment with your market and what potential clients are willing to pay.
In conclusion, to calculate the freelance hourly rate, you need to calculate the total cost of doing business, the number of billable hours in a year, and lastly, your freelance hourly rate.
About The Author
İpek Tüzün writes articles about freelancing, the future of work, the digital nomad lifestyle, and artificial intelligence. Tüzün currently works as a Content Manager at Rimuut and lives in Barcelona with her husband and dog.
