How do I determine my freelance rate?

Show Notes:

How do I determine my freelance rate?

  • Start with a yearly goal, then subtract 3 zeros from your yearly goal
  • Determine what you need to cover your business and personal expenses
  • If you have a good niche and brand, don’t worry about your competitors
  • Estimate how much you want to work. There are 2,080 work hours in the year
  • Decide if you want to charge hourly or per project
  • Leave a 10% fudge factor

Raw Transcript

Get ready for freelancing strategies, hacks and tactics to help you skyrocket your success brought to you by Freelancer masterclass calm. You’re listening to freelancing school with your instructor Mike Volkin.

Welcome to Freelancer school. I seem to always be getting a barrage of questions about my rate. Is it too much? Is it too little? And when I say my rate, I mean the person asking you the question, not my particular rate. To be honest with you, I never actually worry about my rate. Nobody ever questions it anymore. That’s probably because of the way I branded myself. I present myself in the discovery call in the way I only get on the phone with clients. I know I can help as opposed to many freelancers who hop on the phone with anybody who will talk to them. So I want you to make that your goal to bring in into talk To only qualified prospects. But that’s a show for another day. Right now we’re going to be talking about how do I determine my freelance rate. And there are a few things. The first thing I want you to do is start with your yearly goal, and then subtract three zeros from that yearly goal. That’s the simplest way to really determine your rate, leaving all things all of the things unconsidered. Okay, so if you have a yearly goal of $100,000 in income, then I want you to subtract three zeros from that and that is your hourly rate. That should be your hourly rate. So in other words, $100 per hour if you want to make $100,000 a year. That’s a very loose definition, but that is a good starting point to get you close to where you need to be. That’s one of those 8020 things that’ll get you 80% there. Okay. The other thing you can do to determine what your freelance rate is determine what you need to cover in your business and personal impact. finances. So if you have a typical personal credit card of, I don’t know, $3,000 a month, and a business expense credit card of $500 a month, say you’re a new freelancer, you’re not many expenses, what I say 3000 plus 530 $500. So you want to factor that in, if you have a goal of say, you know, $10,000 a month for nice round numbers, but you have 30 $500 expenses, that means your take home will be 60 $500 a month. So when you think about what your income should be and what you should charge as a freelancer, you have to understand what your expenses are. Because if you have abnormally high expenses, which some of you I’ve seen do, you should factor that into what your gross revenue would be or your income in this case. Okay. The third thing I want to mention is if you have a good niche and a brand, you shouldn’t have to worry about your competitor. So many people say well, Mike, I want to charge $100 now But I see a lot of my competitors, which have the same amount of experiences me charging $40 an hour. Okay, well, that’s a pretty big difference. But honestly, if you have a good brand, and you’re targeting a good niche and you have a good experience in that niche, then you shouldn’t have to worry about what other people are charging. That’s why I always tell you to find a good niche and develop a good brand, because over time that pays huge dividends, rather than being that generalist who has to always compete on price. So keep that in mind in terms of like, who your ideal client is, and then what industry you want to work with all that good stuff, develop your own brand, and then you won’t have to worry about any of that stuff. Another tip for you is determine how much you want to work how many hours you know, as a full time freelancer, I always set aside time every day to prospect so if I want to work, quote unquote be at work, even though I don’t feel it’s work. You know, for a typical eight hour day, I want to set aside two or three hours of prospecting. That means I can devote Five or six hours to client work. So if your goal is to make, say $100,000 a year, when you backtrack that amount, and you divide that by your monthly income and then divide that into whatever hours you work, you have to factor in the total amount of hours you want to work in a day or a month and divide that by your daily or monthly income, that would help you determine your hourly rate as well. Okay?

Then you might want to determine if you want to work hourly or per project, this whole hourly discussion we have and what you want to determine your rate to be might be a moot point, if you just want to work per project, you might have a very specific set of skills, you might say, Okay, I designed five page websites for anybody for whatever reason, and this is what I charge and then that’s it. There’s no hourly rate, it’s just whatever you want to charge per project. All the clients are the same. If you have that type of niche where you can do something like that more power to you. per project work certainly has its disadvantages as well. its advantages. So consider our leavers per project. And there are other ways to charge clients as well, which we talked about in Freelancer masterclass, it goes beyond the scope of this podcast. But the last tip I want to leave you for determining your freelance rate is to leave a 10% fudge factor. Unfortunately, crap happens, I don’t want to swear crap happens that’s not a swear word, right. So you know, things will take you longer than expected, maybe clients might call for an extra meeting, that you don’t expect Whatever the case, you always want to leave an extra 10% because chips don’t always fall where they should. Alright, so whatever your rate is, just bump it up 10% that will give you a little bit of cushion room. And also that goes back to the old saying under promise and over deliver. So if you’re telling a client something’s going to cost $3,000, and that’s including that 10% fudge factor, and only winds up being say 20 $700. Then all of a sudden they’re happier because you came in under budget. You’re probably more likely going to get follow up work because of that. Okay, so I hope these tips helped Best of luck.

Thank you for joining us for freelancing school. Be sure to subscribe and get the latest updates on the show. Go to freelancing masterclass calm to become a master freelancer.

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