Your salaries in previous full-time jobsThe salary others are making in your fieldA salary that is necessary to maintain your lifestyle, including non-business related expensesThe salary of available jobs in your area that you are qualified for
If you are freelancing on your own, your salary should include not just the amount you need to maintain your desired lifestyle, but also a reasonable amount of profit. This profit may be your savings or may go back into your business. Also remember to calculate your income after paying taxes, making sure you can live on your “take-home” pay. After completing this research, take note of your yearly salary goal.
Hardware Software Education (such as design courses) Cost of attending conferences Advertising and marketing Domain names Office supplies Insurance Legal and accounting fees Membership dues
Your number of billable hours is much different from actual hours worked, which adds activities such as marketing, working on your portfolio, accounting, and seeking out new clients. Calculate your billable hours for a week, which can be done by averaging billable hours for several previous weeks and months or by estimating based on your average workload. Once you have this weekly figure, multiply it by 52 to determine your yearly billable hours. As an example, let’s say you wanted to make $50,000 a year and you have $10,000 in expenses, both of which include adjustments for working as a freelancer. Let’s also say you work a full 40-hour week, but only 25 of those hours are billable. That would leave you with 1,300 billable hours a year. Divide 1,300 into 60,000 (salary plus expenses) and your hourly rate would be approximately $46. You would probably adjust that to $45 or $50 to keep things simple. Try to find out what other freelancers are charging in your area, especially those that do similar work. You might find that you charge much higher or lower, and need to adjust accordingly. It could also take some time to determine if your rate will work, after dealing with several clients and seeing their reaction (and most importantly, if you land the jobs or not!). Once you have done this research, set your final rate. There might be times to adjust your rate on a project basis, such as if you are working for a non-profit with a lower budget but you want to take the job. This is your call to make based on how much you want particular jobs, the benefit to your portfolio, and the potential for follow-up work or leads. Your rates will need to be increased over time to compensate for increased living costs and expenses. To do so, go through the process again, determine a new rate, and do the proper research to determine what the market will bear.
