What should be my Freelance Hourly Rate as a New
Freelancer?
Whenever we
get into freelancing, the most important question that block our mind is what
should be my Freelance Hourly Rate? or what should I charge to the
clients as a new freelancer?
This is a
million dollar question and the sooner you figure out the math the better it
is.
Like most
freelancers you might decide the magic number to be $10 per hour because that’s
what every new freelancer is doing or maybe you would pick up $20 per hour
because that makes you look a professional who provides high quality work to
his clients.
There are are
very few freelancers that actually work out the math for their hourly
cost or while quoting a fixed cost project.
For instance,
$500 is good money in Asian countries and a new freelancer would agree on a
$500 project without giving it a second thought. Since you are providing a
service and your earnings is directly proportional to the time you invest in
working on projects – it’s important that you work out the math for your
billing rates else the project ($500 or even a $5000 project) may put you in a
loss overall.
So, how do I
work out to calculate my freelance hourly rate?
Here is how
you do it —>
Step 1: Take a step back and calculate your
monthly target earning.
If you got
into freelancing straight after your school or college and have no work experience then probably you won’t know how much
you might have been paid in a job. But finding that info should be easy for you
– ask your friends or relatives who are into a job to get an idea how much
(average job salary, not the minimum or maximum).
For example,
a fresher just out of college applying for a Web Design Job easily get between PKR
15,000 to PKR 20,000 salary. However, the minimum could be (in some cities) PKR
8,000 and maximum could be around PKR 30,000.
So, when you are trying to calculate your hourly rate take PKR 15,000 or PKR 20,000
as the baseline.
If you were
into a job and then decided to get into freelancing you know your skills worth
already. For example , maybe you have been a graphics designer for 3 years and
your most recent in-hand salary is PKR 35,000 so you can chose that as the
baseline.
Step 2: Multiply it by Factor of 2.
Now once you
have the baseline multiply it by a factor of 2, means your target from freelancing should
be to AT LEAST earn twice as much you would have earned from a
regular job. The reason is that Freelancing earnings are not as
secured as the salary that you will get in a job – a fixed amount on a fixed
date.
Your earnings
in freelancing would vary from month to month, sometimes you would hit the
target sometimes surpass and sometimes miss the target. If you set the target
as 2 times then even if you miss the target and say achieve 1.2 times of it,
you would still be able to manage your monthly expenses easily avoiding the
pressure that is created when you fail to manage your monthly expenses.
For example,
if you are a parent and you have to pay school fees for your kids then being
unable to manage it will put you in a lot of pressure and negativity and you
would not be able to give in your best at work.
You
should ALWAYS try to hit the target though and do not settle on
earnings that are just enough for your monthly expenses. The savings that you
would make would help you in a lot in investing back in yourself and your
career and also raise the standard of living for you and your family.
Step 3- Divide it by Number Of Working Days
Okay , by now
you should have the required monthly earnings calculated. All you need to do
now is now divide it by the number of working days i.e 25 – assuming you work 6
days a week, adjust differently if need be.
Your hourly
rate = (Required monthly earnings)/(Number of working days x Number of working
hours per day)
Assuming that
your required earnings are PKR 50,000 and you work 10 hours a day , 6 days a
week
your hourly rate should be a minimum of
Your hourly
rate = ( 50000)/(25×10) = PKR 200
Now you may
think this is just between $3 to $4 per hour – Gaurav! Is that what you
really want me to put as my hourly rate?
Well , the answer is No.
Even though
we did the maths right , we forgot a two important factors –
1) As
a new freelancer(also applicable to experienced freelancers) you would not
have enough work to keep you busy for 10 hours a day. What if you have no work
for 7 days in a month? We would need to accommodate that as well in the hourly
rate.
2) Estimating
jobs in hours is not easy because what you can do in 3 hours an expert can do
that in just 1 hour. Read the previous sentence two times please as that
concept is very important and that’s going to change your hourly rate
significantly.
Now Let’s
cover each of this factor in much detail as understanding these factors is very
important in calculating how much hourly or fixed cost should you share for
your projects on the freelancing platforms like Freelancer.com or Upwork.com
Factor 1 – You will NOT always be occupied
with Billable work
Since you
have monthly financial goals to meet else you won’t be able to manage your
personal expenses or support your family. So it’s important to be prepared for
the cases when you will not be doing work that can be billed to the client
(Billable work) – or simply Billable work is the work that you charge your
client for.
For example,
you may be spending several hours in a week to find projects on the freelancing
platform and that time is not billable to any client. New freelancers are
mostly idle (non-billable) for over 40% of their weekly working hours. Since
this idle time would need to be accommodated in your billed time so that your
overall earnings can meet your financial needs, you would need to increase the
hourly rate or fixed cost that you will charge your clients during the working
week or month.
Factor 2 – How much time would an expert need to do
the same job?
This may be a
little tricky to understand but a very important one to consider. Say you are a
web designer and get a project to design a landing page – you may have
estimated the job for say 6 hours as per your experience. Say if your hourly
rate is $10 then the client will pay you $60 for the task.
However, your
level of expertise is maybe beginner level or medium level but not expert level
and deep inside you know that an expert would have done this in just 4 hours
but he may have charged like $25 per hour so client would have ended up paying
$100 so it’s still a sweet deal for the client hiring you for the job instead
if you can provide the same level of work quality.
You would
obviously be posing yourself as an expert else you won’t be hired but keep in
mind that you should not estimate the job hours like an expert – be honest to
yourself and estimate the hours based on your actual experience and expertise
on the skill.
Okay, so I’ve
explained you the two factors that must be considered in deciding your hourly
rate but we still have not come down to an actual number. That’s because the 2
factors I have discussed above would vary from person to person so I don’t want
to influence your math by giving any specific numbers here.
If you still
need advice, here it is (but I would recommend you to do your own math)
1) If you
need money really badly to support your life – You can go between $6-$8 per
hour
2) If you have other sources of income ( like a day job or support from family)
and you can rather wait than lowering your hourly rate – You can go between
$12-$15.
If you have a
work portfolio doesn’t matter if you have zero review and no work history on a freelancing platform
and you are super confident about your skills + you know how to sell your
services ( effective bid writing) and do not mind bidding 24×7 for your first
few projects then go for $20 – $25 per hour or higher if you may like.
