Figuring out your day rate as a freelancer can be an intimidating task, especially if you’re new to the game. We’ve all been there. But, the good news is that you don’t have to guess your rate or even copy what other freelancers are doing. Those tips are totally out of date.
What’s hot right now is using a systematized approach in figuring out how much money you should be making per client (or per project) in order to not only cover your expenses but also leave some room for fun and enjoyment.
In this article, we're going to demystify the process and give you THE ONLY tool you need to value your skills and expertise properly. So buckle up, grab a snack, and get ready to boost your earning potential like a pro!
So, you're ready to set your freelance day rate, but where do you start? Determining your rate can be a tricky task, but asking yourself the right questions can make all the difference. In this section, we're going to guide you through the key questions to consider when setting your daily freelance rate.
From understanding your expenses and workload to valuing your time and expertise, these questions will help you set a rate that accurately reflects your value as a freelancer. So grab a notebook, get ready to reflect, and let's dive in!
Q1: How Much Do I Want to Earn?
One of the most important questions to ask yourself when setting your freelance day rate is how much you want to earn. It's easy to get caught up in comparing yourself to others or settling for less than you deserve, but it's essential to determine your worth and set your rate accordingly. Start by calculating your annual income goal and breaking it down into a daily rate but make sure to consider your expenses, workload, and the value you bring to your clients.
Q2: How Much Work Can I Do?
Now ask yourself how much work you can realistically do in one day. While it's tempting to aim high and pack your schedule full, overloading yourself can lead to burnout and compromise the quality of your work. Take into account your experience, skills, and the type of work you do, and set a workload that you can handle while still delivering excellent results.
Q3: What Do My Expenses Look Like?
Keep in mind that, as a freelancer, you're responsible for all of your business expenses, including taxes, insurance, equipment, software, and more. It's important to calculate these costs and factor them into your day rate to ensure that you're covering your expenses and making a profit. Take the time to research and analyze your expenses carefully, and be sure to adjust your rate as needed to accommodate for any changes.
Q4: How Many Days Off Will I Need?
Unlike traditional employees, freelancers don't receive paid time off, so it's important to factor in this time when determining your rate. Consider how many days off you'll need for vacations, sick days, and personal time, and factor this into your rate accordingly.
By including time off in your calculations, you can ensure that you're earning enough to cover your expenses and support your lifestyle, while also allowing yourself the flexibility and freedom that comes with being a freelancer.
Q5: What About the Future?
A common mistake freelancers make is that they live and work for the now and they often forget about the future. Yes, we’re talking about retirement money. It would be smart to consider how much you need to save for retirement and adjust your rate to ensure that you're putting aside enough money each month.
There are several retirement savings options available for freelancers, including individual retirement accounts (IRAs) and Simplified Employee Pension Plans (SEPs). Take the time to plan for your retirement and incorporate this into your day rate, to ensure that you're building a secure financial future for yourself and your family.
Once you get to a number based on the questions above, think of this number as the bare minimum you need to be making as a freelancer. Now, your true earnings should be relevant to your skillset and the value you provide to your clients.
You may be able to charge more depending on several factors, including your skill set, experience level, cost of living in your area, and the size of the client company. By taking these factors into account, you can adjust your rate accordingly and ensure that you're earning what you deserve. Don't be afraid to charge a premium for your expertise and experience as a freelancer.
Now here’s the good part! We’ve put together a comprehensive project minimum pricing calculator for you to help you figure out your hourly rate, as well as your daily, weekly, and monthly rate.
Here’s how it works:
Enter the desired amounts in the yellow columns. Think about how much money you’d like to have in your pocket at the end of the month, and how many days you’re willing to work. Then add in your business expenses, a nice safety net percentage, and the number of holidays or days off you want to plan for.
The calculator will then give you the exact amount you will need to make broken down into your hourly, daily, and weekly rate. It will also calculate how much you’d make on a 3 month project versus a 6 month project.
As we come to the end of our article, it's time to put all the pieces together and start calculating your freelance day rate. Don't worry; it's not rocket science, but it does require some thoughtful consideration. Remember, your day rate isn't just a random number you pick out of thin air. It's an essential aspect of your freelance business and determines how much you earn and how successful you'll be.