What is Your Time Really Worth? Calculating Your Freelance Rate

Posted July 1, 2015 by Lois Gilbert

What is your time really worth?

 

That’s a hard question for freelancers and contract workers to answer.

When you’re a freelancer, it can be really hard to tell. As a full-time employee, your salary also takes into consideration business costs like health care, licensing, taxes, and other business essentials – but when you work for yourself, you’ve got to cover all of that and more.

This is a serious consideration if you’re thinking of quitting your job in pursuit of leading a more fulfilling, self-employed career.

Often, in the interest of netting new clients and seeming like a more attractive hire, freelancers will charge as little as possible, hoping to make up for your low rates by sheer volume. This kind of pricing, which photographer Sue Bryce calls a “survival rate,” is extremely risky, because it doesn’t take into account the ebb and flow of work, nor does it allow you to grow your business by expanding markets or investing in marketing.

First, it’s important to note that there’s a big difference between “rates that keep you afloat” and “rates that make you real money.”  “Survival rate” is the amount of money that’s required to keep the lights on, but it doesn’t actually help you get ahead.

So why do so many freelancers and other independent workers settle for offering their services at a cut rate?

When you charge enough to not only survive, but thrive, says Sue, “you find better prospects and clients. It is that simple.”

“You find people who can pay what you need to earn…then you ask them for it,” she explains.

In the world of business, it’s pretty easy to find out how much your peers get paid.  GlassDoor, Indeed, and other websites make it easy to estimate what’s a fair salary, based on the competition and the market. But for freelancers and small business owners, it’s a little trickier. Short of actually calling around to ask after the rates of others offering similar services (which actually is not a terrible tactic), how do you know how to set rates for your business?

The main reason creative entrepreneurs end up charging too little “is because they confuse fees or services with their personal value/worth, “says Ilise Benun, founder of

Marketing-Mentor.com. “The two have nothing to do with each other. If you can see that, the value of your services has more to do with what the client will get out of what you have to do for them, then you can charge more. It’s not about YOU. It’s about the value to them.”

Figuring out how much to charge means divorcing your self-worth from the services you offer. You’re not asking people to buy you, you’re telling them how much your time, energy, and talent are worth, and then letting them make the decision.

Another reason that many people charge too little: They forget that they are the expert in the room, and that they command the situation.

Remember that your client is looking to you to lead the conversation, not the other way around. They are coming to you for the service – a service they want – and it’s your job to let them know that they are in good hands and that you are worth whatever it is you’re asking them to pay.

“The quality of the work really has little to do with the price you are paid. Clients have a hard time telling what is great and what is not. It’s how you present it. That’s why you see people who aren’t ‘great,’ make a lot at what they do,” she says.

In the end, it’s much more about confidence and about understanding what you offer.

But how do you find out how much is enough to really grow your business? What’s your thriving rate?

Here’s a handy graphic to help you figure it out:

http://blog.creativelive.com/how-to-calculate-freelance-hourly-rate-infographic/

This information was first posted in the Creative Live blog by Ryan Robinson

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