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 India (and Pakistan, Bangladesh and Philippines) 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 the Maths 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 INR 15,000 to INR 20,0000 salary. However, the minimum could be (in some cities) INR 8,000 and maximum could be around INR 30,000.
So, when you are trying to calculate your hourly rate take INR 15,000 or INR 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 INR 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 INR 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) = INR 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 accomodated 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 advise, 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.
Hope this article helped you. If it did, please share it with other freelancers who can benefit from it. Do share your kind feedback below.
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