July 31st, 2007
AlmostGotIt‘s comment on a recent post of mine raises a question I hear a lot: How much more should I charge as a freelancer? Is there a hard-and-fast rule or formula? I’ve also heard a variety of percentages we freelancers should be charging above the corresponding employee rate — 30% more, 40% more, 50% more, etc. (Here’s one take on what to charge.)
But rather than worry about whether I’m living up to some universal formula of freelance wages, I’m most concerned with whether I’m pulling in enough money to cover my business expenses, unbillable hours worked per project (invoicing, contract negotiations, and the like), personal benefits, tax requirements, and living expenses. And of course, I’m concerned about whether the rate is fair for the industry, geographic region, and my experience level.
Of course that means doing the math and necessary research, but I think crunching the numbers yourself can help boost your confidence when it comes time to haggle with clients. If you know you need, say, $500 a day to cover your business and living expenses, you won’t settle for anything less.
I offered up some negotiation tips here. But today I wanted to direct your attention to this cool hourly freelance rate calculator. I especially like the “here’s your break-even rate” feature. I think this information can also help you strengthen your negotiation skills. If you know a client’s only willing to pay 2% above your break-even rate, it will be easier to stand your ground and walk away if necessary (that is, if you’re looking to do more than merely cover your business and living expenses and would like to make an actual business profit). My one gripe about this calculator is that it doesn’t have a field for utilities other than telecom, but you can add that in with the rent or “other expenses” fields.