rate setting

Setting Your Freelance Rate

This article was written by Dave DiVerniero of Freelancer Advocate.

How much should I charge?

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I wish I could give you a number and send you on your way. Nothing is less satisfying than a milquetoast ‘it depends’. But, well. It does depend.

The question is, at the same time, both absurdly simple and tremendously complex. The simple answer is that you should charge the maximum amount you can get a critical mass of clients to pay. But figuring out where your services live on the supply and demand curve is much more complex.

The Minimum

Most people don’t want to give specific numbers when talking about rate, because there is so much to consider and it’s so easy to point out if a number is wrong. I’m not worried about being wrong. I live for being wrong. In any case, it’s helpful to establish a floor so we have at least one point of reference when determining our rate.

If you employ a job-skill in your freelance work- meaning any chump off the street couldn’t just walk in and do your job- you should not accept work for less than $30/hr. I didn’t just pull this number out of my sweet behind, though you could be forgiven for assuming that, there is compelling evidence that this should be the lowest fair wage for skilled freelance labor.

In today’s market you can, with minimal onboarding and no experience or job skills, make $15-$25/hour though companies like Uber, Postmates, TaskRabbit, and Rover. You never have to look for any clients and in many cases, you can get as much work as you’d like to do. $5/hr is a very modest raise for the additional value of a job-skill and the additional strain of managing your own client list.

And $30/hr is the absolute minimum. Even if you are, say, a graphic designer fresh out of college, with no actual experience, you still have a skill and that skill has value.

A Woefully Imprecise Formula

As much as I wish there was, there isn’t a one-size-fits-all equation that can determine everyone’s rate. However, I have a rough formula I use to get in the right ballpark. It’s not perfect, but it can help give you a starting place if you’re otherwise lost.

(Annual Full Time Salary / 140 ) + equipment costs and expenses = Ballpark Daily Rate

For those who can do a bit of quick math, you may have noticed that this equates to about double what an equivalent full-time salaried employee makes in a day- give or take. That’s not an accident.

Do the math with me:
100%-        Full-time salary
+30%-        Benefits- Full-time employees enjoy a variety of benefits, most notably health insurance and paid vacation. This is typically equivalent of ⅓ of a full-time salary.
+20%-        Unbillable time- Freelancing comes with certain tasks that are typically not billable to any client. Things like invoicing, bookkeeping and initial consultations represent a fair chunk of time that should be compensated with a 20% rise in rate.
+50%-        Marketing/No Job security. Freelancers find their own clients, many of whom they contract with for a short time. This constitutes a huge, time-consuming effort on the part of a freelancer and often makes it difficult to maintain a stable income. At a minimum, it warrants a 50% wage bump.

Doubling the daily or hourly wage of a full-time employee is not at all outlandish. In fact, some people say you should triple a full-time employee’s daily rate as a freelancer. I say: If you can get people to pay triple, charge triple.

Other Considerations

There is no doubt that setting your rate is subtle dance and we’re just scratching the surface. I have a much more detailed explanation in my comprehensive freelancing course. For now, here is some additional guidance to help you get started:

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The most accurate way to find out what you should be charging is to ask your peers. People can be cagey about their rates, but if you’re not afraid to ask a few extra people you should get enough answers to give you a decent average.

Don’t base your rate on job listings you see online. You’ll encounter artificially low wages in online listings. Freelance platforms have a high rate of garbage-jobs which aren’t worth bothering with and if a rate is listed on a traditional job board it is often so recruiters can find staff willing to work for peanuts. It might be depressing to encounter these low wages but don’t let it drag down your rate.

If you’re getting a lot of pushback on your rate, it’s most likely that you’re going after the wrong clients or looking for them in the wrong places. You’re not necessarily too expensive just because people can’t afford you. Kate Spade didn’t sell her handbags in Walmart, and that didn’t mean people weren’t willing to pay for them.

I want you to a walk away knowing this – whatever you decide your rate should be, you’re worth it- and if a few clients can’t afford you or won’t pay it, that doesn’t make you worth any less.

About Dave DiVerniero

Dave DiVerniero is a freelancing expert and advocate. He was a freelance editor and producer for nearly a decade, serving some of the biggest clients (Facebook, Oakley, Audi) and TV Shows (e.g. Hell’s Kitchen, Biggest Loser, Tanked) in the world. Now, as The Freelancer Advocate, he teaches creative professionals how to build freelance careers and supports freelancers by speaking out against inequitable treatment.
Website: www.freelanceradvocate.com