EP90: The Freelance Rate Show

The tools and resources I used to help me find my base freelance rate.

My exact process and calculate a freelance rate from start to finish with you.

What is a P&L Statement?

Today’s episode 90:
Take the first steps in figuring out your bottom line freelance rate, or the rate you need to charge in order to cover your expenses and reach your annual income target or goal.

Mike’s Personal Note:
I struggle with pricing and charging clients. Knowing how much to charge for creative freelance services and projects is really hard. I never do the same job twice and most projects require creative processes so it is hard to estimate time.

Pricing and rates are like everything else, it takes time, practice, experience and trial and error to figure it out.

Know your numbers
The most critical step in pricing is knowing the numbers of your business. How much do you spend and how much do you need to make to survive (and hopefully thrive).

How To Calculate Your Freelance Rate:

Tools I Used:

Freshbooks: for invoicing and expenses
GSuite & Google Sheets
Mint iOS App
Creative Live Freelance Calculator

 

google

 

Step 1:
How much do you want to make per year?

Step 2:
What is your CODB or Cost of Doing Business?

Office Rent
Web Hosting
Internet/
Invoicing/Accounting
Office Supplies
Project Mgt tools (Google Suite, Dropbox Pro)
iPhone
Computer/Laptop maybe (every 2+ years-I wish)
Ads/Marketing
Software & Subscriptions(Adobe CC, Freshbooks, Libsyn, Amazon Prime, Spotify?Skillshare?,)
Bad Debit or Accounts Payable hopefully not, but it happens (clients that don’t pay)
Accounting & Legal
Travel & Education

Step 3:
What are your personal expenses and cost of living expenses?

Cost of Living Expenses (Rent + Utilities)
Healthcare
Taxes

Step 4:
Adjusted annual income = Income Goal + Expenses

Step 5:
Billable Hours (how many hours a day can you actually charge clients)

Step 6:
Freelance Rate = Adjusted Income/Billable Hours

Exercise:

Calculate Your Freelance Rate

Step1: How much do you want to make annually?

$100,000 (go big or go home)

Step 2: CODB (Cost of Doing Business)
$1,000/month
$12,000/year

Step 3: Personal Expenses
$1,500/month
$18,000/year

Step 4: Adjusted Target Income
$100,000
+12,000 (CODB)
+18,000 (Personal)
=$130,000 (Adjusted Target Income)

Step 5: Billable Hours
Working Days (8 hours per day)
40 hrs/week * 52 weeks a year
= 2,080 total working hours

Vacation (3 Weeks Total):
15 weekdays in 3 weeks * 8 hours per day
= 120 hours for vacation days

Sick Days (5 days)
So 5 days at 8 hours/day
= 40 hours for sick days

Holidays (7 days)
7 days * 8 hours/day
=56 Holiday Hours

TOTAL BILLABLE:
2080 Hours Per Year
–120 Vacation
–40 Hours Sick
–56 Holiday

=1864 TOTAL WORKING HOURS

Minus 25% to allow for Non-Billable Time (admin, marketing, networking…)

1864 x .75
=1398 BILLABLE HOURS

FINAL STEP: FREELANCE RATE

Adjusted Target Income: $130,000
Billable Hours: 1398

Freelance Rate:
130,000/1398=
$93/hour

What is Profit & Loss Statement (P&L):

A report that shows income and expenses for a specific time period. A great way to get a snapshot of your net profit (are you making money!?)

 

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Music: Life of Riley & Wallpaper (incompetech.com)