Introduction
As a freelancer, you might be wondering how to determine your rates and maximize your profits. How do other freelancers approach this? Each situation is unique and depends on various factors. In this article, we will explore different methods for calculating your rates, discuss how to confidently ask for a raise, and ensure you are compensated fairly for your work.
When you understand your worth and have calculated your expenses, asking for the right amount becomes easier and more justified. Depending on your level of professional experience and your lifestyle as a freelancer, you can choose your workload and pricing to ensure you feel comfortable while delivering your best work.
At Freeberry, we believe every freelancer should feel happy and at ease when taking on new and existing gigs. That’s why we offer a straightforward solution that helps you stay VAT-compliant without setting up a company while tracking your bills in one place.
We support freelancers worldwide, making freelance journeys easier and more affordable. Without further ado, let’s find out how to price your services profitably.
How Much do you Charge for a Freelance Hourly Rate?
In our previous article, we discussed how to send invoices from an individual to a company, as well as how to invoice for freelance work. We also covered the concept of VAT and the common rules for invoicing as a freelancer in Europe.
Now let’s discuss how to rate yourself fairly and stay sustainable.
a. Factors to Consider:
- Skills and experience:
Your hourly rate should reflect your qualifications and expertise. For example, with a Bachelor’s degree and over a year of freelance graphic design experience, you can set a rate higher than someone just starting out. Experienced professionals in the same field may command € 50–€ 100 per hour or more, depending on their specialization.
- Market research: Understanding the going rate in your industry is crucial.
Research platforms like Upwork, Fiverr, or Glassdoor to find typical hourly rates for graphic designers with similar experience. Engage with online freelancer communities or Reddit threads to get insights into current trends.
- Business expenses: Freelancers bear the costs of running their businesses,
including Software subscriptions (e.g., Adobe Creative Suite). Equipment like a laptop or drawing tablet. Taxes, insurance, and other professional fees. These expenses should be factored into your rate to ensure profitability.
- Income goals: To calculate your hourly rate: Determine your annual income goal
(e.g., € 50,000). Estimate billable hours per year (e.g., 1,000 hours after accounting for non-billable work).
b. Value-Based Pricing:
Value-based pricing is a powerful strategy. This method involves setting your rates based on the perceived value you bring to your clients. For example, while a simple logo design may be less time-consuming, a comprehensive branding package that includes a logo, website, and marketing strategy holds more value and can justify a higher rate. By aligning your pricing with the value you deliver, you can ensure that your rates reflect not just the time spent but the significant impact you make on your clients’ success.
Hourly Rate vs. Project-Based Pricing
a. When to Use Hourly Rates:
Hourly rates are best suited for projects with open-ended tasks, ongoing consultations, or unpredictable timelines. This allows for flexibility and ensures you’re compensated for any unexpected time commitments.
For example, if you’re providing ongoing website maintenance or offering strategic consulting services where the scope of work can evolve, an hourly rate provides a fair and transparent way to bill for your time.
b. When to Use Project-Based Pricing:
Project-based pricing is ideal for projects with clearly defined deliverables and a fixed scope. This provides both you and the client with clarity and predictability.
Examples of projects commonly priced this way include:
- Logo design: A set price for designing a logo, including a specified number of concepts and revisions.
- Website banners: A fixed price for creating a set number of banners in specific dimensions and formats.
- Social media graphics: A project price for designing a series of graphics for a social media campaign.
c. Tips for Project Pricing:
When using project-based pricing, it’s crucial to outline deliverables in detail to avoid misunderstandings. This includes specifying the number of design concepts, revisions, file formats, and any other relevant details. Additionally, limiting revisions to a predetermined number can help prevent scope creep and ensure the project stays within budget and timeline.
By clearly defining the scope and deliverables upfront, you can confidently set a project price that reflects the value you provide.
How Many Hours Do Part-Time Freelancers Work?
a. Defining “Part-Time”:
There’s no single, universally accepted definition of “part-time” freelancing. Unlike traditional employment with set hours, a freelancer’s schedule is largely self-determined. However, “part-time” generally implies working fewer hours than a full-time equivalent. This could be interpreted in several ways:
Hours per week: A common benchmark is working less than 30-35 hours per week. Some might consider anything under 20 hours part-time, while others might extend it to 35.
Project commitment: A part-time freelancer might take on fewer projects simultaneously than a full-time freelancer. They might deliberately choose smaller projects to manage their workload.
Client commitment: Part-time freelancers might work with fewer clients at any given time. This allows for better focus and prevents overcommitment.
Income target: The definition can also be tied to income. A freelancer might consider themselves part-time if their earnings are significantly lower than what they’d make in a full-time position in their field.
The crucial point is that “part-time” is flexible and depends on the individual freelancer’s goals, commitments, and capacity.
b. Typical Workloads:
The distribution of work across a 15-30 hour workweek varies considerably depending on the type of freelancing and the nature of the projects. Here are some examples:
Scenario 1: Writing (15 hours/week): A freelance writer might spend 3 hours daily (Monday to Friday) writing blog posts for one client, and 2 hours on Friday dedicated to another client’s website copy. This leaves room for marketing, administrative tasks, and self-improvement.
Scenario 2: Web Design (25 hours/week): A web designer might dedicate 5 hours per day (Monday to Friday) to a single ongoing project, perhaps a website redesign. This might involve client communication, design work, development, and testing.
Scenario 3: Graphic Design (30 hours/week): A graphic designer might juggle two smaller projects. They could spend 15 hours a week on logo design for one client and 15 hours on creating marketing materials for another, with some time overlapping for administrative tasks and client communication.
Scenario 4: Virtual Assistant (20 hours/week): A virtual assistant might work 4 hours a day, Monday to Friday, for a single client, handling email management, scheduling, and social media. They could potentially also have a few smaller tasks for other clients on a more ad-hoc basis.
These are just illustrations. The actual workload will depend on the complexity of the projects, the freelancer’s efficiency, and their desired work-life balance.
c. Seasonal Fluctuations:
Freelancing often experiences significant seasonal fluctuations. Peak seasons are times of high demand, leading to increased workload and potentially longer hours. Off-peak seasons see a decrease in demand, resulting in less work and potentially shorter hours.
Examples of seasonal peaks:
Holiday seasons (November-December): Many freelancers in marketing, writing, design, and e-commerce experience a surge in demand.
Tax season (January-April, depending on the region): Freelancers specializing in accounting or tax preparation have busy periods.
Back-to-school season (August-September): Freelancers who work with schools or educational institutions might have an increased workload.
Summer months (June-August): This can be a peak season for some travel-related freelancers or those working in event planning.
Off-peak seasons often require proactive planning. Freelancers might use this time to:
Network and build relationships: Seek new clients and build a pipeline for future work.
Upskill and improve their services: Invest in training or learn new skills to stay competitive.
Market themselves: Focus on marketing efforts to prepare for upcoming peak seasons.
Take a well-deserved break: Rest and recharge to avoid burnout.
Practical Tips for Setting Rates and Hours
As a freelancer, setting the right rates and managing your time effectively are crucial for success. Here are some practical tips to help you navigate these aspects of your career:
a. Start with Competitive Rates
When you’re just starting out, it’s essential to begin with competitive rates. This approach helps you attract clients and build your portfolio. As you gain more experience and deliver high-quality work, you can raise your rates. Building a portfolio is key because it:
- Demonstrates Your Skills: A strong portfolio showcases your abilities and the value you can bring to potential clients.
- Builds Credibility: Having a portfolio that highlights successful projects and client testimonials can significantly boost your credibility in the market.
- Justifies Rate Increases: As your portfolio grows, so does your bargaining power. You can use your portfolio to justify higher rates to clients, based on the quality of work and the results you’ve achieved for other clients.
b. Track Time and Projects
Tracking your time and projects is vital for understanding how much time you spend on tasks, managing your workload, and invoicing clients accurately. Tools like:
- Toggl: Offers a simple and intuitive way to track time across various projects and clients.
- Harvest: Provides time tracking and invoicing features, making it easier to manage your projects and get paid.
Using these tools helps you:
- Understand Your Workflow: By tracking your time, you can identify patterns, inefficiencies, and areas where you can improve your workflow.
- Accurate Invoicing: Tracking time ensures that you invoice clients correctly for the work you’ve done, preventing undercharging or overcharging.
- Project Planning: Historical data on how long tasks take can help you plan future projects more accurately, setting realistic deadlines and expectations with clients.
c. Set Boundaries
Defining your work hours and setting boundaries with clients is crucial for maintaining a healthy work-life balance and avoiding burnout. This includes:
- Clear Communication: Inform clients about your working hours, response times, and availability.
- Setting Limits: Be clear about what you can and cannot do within certain timeframes or budgets.
- Personal Time: Respect your personal time by not checking work emails or taking work calls outside of your defined work hours.
Setting boundaries helps you:
- Maintain Productivity: By focusing on work during defined hours, you can be more productive and efficient.
- Reduce Stress: Clear boundaries reduce the stress of being constantly available and help prevent burnout.
- Improve Client Relationships: Clients who respect your boundaries are more likely to value your time and work, leading to better professional relationships.
d. Test and Adjust
Freelancing is a dynamic profession, and what works today might not work tomorrow. It’s essential to be open to experimenting with different pricing models, work schedules, and client management strategies. This mindset allows you to:
- Find What Works Best: Through experimentation, you can discover the pricing models, work hours, and client management techniques that best suit your skills, lifestyle, and goals.
- Adapt to Changes: The freelance market, client needs, and your personal circumstances can change. Being willing to test and adjust helps you stay adaptable and responsive to these changes.
- Grow Professionally: Experimentation and adaptation are key components of professional growth. They help you learn, innovate, and stay competitive in the market.
How Freeberry Supports Freelancers
Navigating freelancing can be complex, but it doesn’t have to be. Freeberry empowers you to:
- Simplify VAT Compliance: No need to set up a company.
- Manage Invoices: Create, send, and track invoices effortlessly.
- Streamline Financials: Keep all your bills in one place for easier tracking.
Whether you’re a part-time freelancer or working full-time, Freeberry is here to make your journey easier and more efficient.
Take Control of Your Freelance Business Today
Freelancing is about freedom, but managing your finances shouldn’t hold you back. Join Freeberry and discover a smarter way to handle VAT compliance, invoicing, and financial tracking.
Sign up today and experience the difference Freeberry can make for your freelance career!
