There are a lot of perks that come along with freelancing like creating your own work schedule, picking and choosing the projects you work on and the ability to set your own rate to ensure you’re getting paid what you deserve. However, taking home your ideal salary is dependent on what you charge your clients for your time and your work.
The question is, how do you determine the appropriate amount to charge?
Setting your rate isn’t always easy because what you should ask for is rarely apples-to-apples to what you’d request doing the same job as a traditional employee. There are several key differences to consider that will ultimately affect what you actually take home as a freelancer.
With any job, you should do some research before requesting and accepting a salary. You want to be sure you’re earning what you deserve based on your experience and industry standards. This rule applies whether you’re working as a traditional employee or a freelancer. So, your first step to setting your rate is to look around online to find out what the average yearly salary is for someone in your field with your level of expertise.
Once you’ve determined the average annual salary, divide it by 2080, the standard number of hours a full-time employee works over the course of a year (assuming a 40-hour week); this will give you an idea of the average hourly rate for your role. Keep in mind, though, that this rate is assuming you’re working as a typical W2 employee with benefits including help covering the cost of insurance premiums, retirement account(s), paid time off and more.
Do some more research to determine the average annual amount an employer pays in benefits for a typical full-time employee and then divide it again by 2080 to find out how much that would add to your hourly rate. This may make a really big impact, however, it could also add too much to your hourly rate which would make it difficult to find clients willing to pay that much.
You want to make sure your rate is competitive without selling yourself short, so doing a little market research is a good idea at this point. Join an online community of freelancers in your industry to get a feel for what they charge their clients based on the work and their experience. You might find that they request less than the final hourly rate you came to, or they could possibly ask for more, so this will help you determine an appropriate range you’ll want to stay within.
That final range you come up with after all of your industry research could be really wide, so you’ll want to narrow it down even more to determine the minimum amount you need to charge to cover your expenses as well as the appropriate amount to charge individual clients (because it’s not always the same for every project).
Here are some personal factors to keep in mind when setting your rate:
Client-specific factors to consider when setting your rate:
📖Read more: Use our freelance work guide for more helpful tips and tools.
One drawback to freelancing is that you don’t usually have a guaranteed review with your boss and/or annual merit increases, so increasing your rate is a little trickier. You want to make sure you’re staying within the appropriate market range, and if you’re asking an existing client to pay you more you may be required to defend your request and/or be willing to negotiate.
Things to consider with existing clients
The key thing to keep in mind when setting your initial rate with a new client is what you think you’re worth. You might be inclined to set a lower rate to get more clients or even dismiss some of your experience, but you would be selling yourself short. Part of being successful as a freelancer is being confident in what you bring to the table, and your pay rate will serve as a direct reflection of that confidence. Aim high, because you are great at what you do.
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