How To Determine Your Hourly Rate As A Freelancer (Calculator)
When I started freelancing in 2014, determining my hourly rate was pretty daunting.
What’s too high? What’s too low?
Will this be enough to support my monthly bills?
When someone has a full-time job, they’re given a salary that sets a financial road map in place for raises, promotions and new positions ahead. When that person starts freelancing, a new road is set before them with a million different turns to take.
There’s an actual formula I recommend to anyone needing guidance in determining their rate as a freelancer.
It starts by researching the salary you would ideally have if you were employed full-time for the services you look to provide your clients.
For example, at the time this article was written the average national salary for a full-time marketing manager is around $80,000 according to glassdoor.com.
If a person wants to freelance their marketing skills and is at a manager level in years of experience and general expertise, this is a good number for them to start with and calculate with our freelance formula.
It looks a little something like this:
Take your ideal salary and divide it by 12 (months in a year)
Divide that number by 4 (weeks in a month)
Divide that number by 40 (hours in a typical work week)
Multiple that number by 2 to get your hourly rate (because you are now responsible for paying taxes, healthcare and retirement)
Round that number to the nearest five
For this example, the hourly rate for a freelance marketing manager is $85.
Now that you have your hourly rate, it’s up to you to determine if that number will provide enough financial stability for your needs and the amount of hours you want to work.
Whether you charge less or more is entirely up to you.
You may charge less if you want to work with a client that has a smaller budget, or charge more if you specialize in a high-demand field of work.
More than anything, this formula is intended to give you a starting point to determine an hourly rate that is reflective of your value and what you can provide your clients with it.
Use our calculator to determine your hourly freelancer rate (slide the blue dot to adjust your ideal salary)
Another approach to freelancing is offering flat fees for routine services.
For example, a graphic designer will more than likely be hired for designing repeat services like logos, business cards and social media headers. If that designer knows it takes an average of 10 hours to design a logo, they can use their hourly rate (let’s say it’s $45) to determine a flat fee of $450 for their logo design service and so on.
To learn the differences between hourly rates, retainers, and flat fees - and the best times to use them - read this post.
Also remember that as a self-employed person, you are responsible for taking out your own taxes, contributing to your own retirement plan and paying for health insurance. This is why we multiply by two to get our final rate. So if the number sounds higher than you anticipated, it’s for good reason.