To figure out how much you’d charge per hour, ask yourself:
How much would you normally get at a job as a base salary?
Take that amount, double it, and divide by 2000, and that’s how much you should charge per hour.
Or, take your given salary and divide it by 1000.
This calculation takes into account that freelancers work 50% of the year (the doubling part), and the year is represented by 2000 hours.
From there, you have a wiggle room of about $10 either way.
EXAMPLE: You could earn $30,000 at your job
$30,000 x 2 = $60,000
$60,000 / 2000 hours = $30/hour
That’s how much you should charge per hour.
You could also take your given salary and divide it by 10000.
$30,000 / 1000 = $30/hour
Start there, and then either raise or lower your prices if business is not rolling in.
Anna
Great tip for if I start my own consulting business after college and many years of work (:
save. spend. splurge.
Thanks!!
dojo
Excellent idea to make the calculations. My reasoning was similar and it looks like we’re close to my numbers.
save. spend. splurge.
It’s a good rule of thumb to see if freelancing is worth it.
Lisa E. @ Lisa vs. the Loans
Interesting! Keeping this in the back of my mind for if/when I start my own thang 🙂
save. spend. splurge.
Glad to help 🙂
Athena
I usually put aside at least 20% for taxes!
Thanks for this post! I really love that this could be used in general and is a good way to value my time. How I decided my rate was that I don’t have a lot of clients yet but even so, my time is valuable. I decided to use the rate that I earn on the side at my part time job and so far it’s transferred over well. 🙂
save. spend. splurge.
Whatever works 🙂 I was just accounting for freelancers not working all the time
Potato
In my case I have a full-time salaried job, so I fiddled with my freelance rates until I found a balance where I had just a little bit of extra work but not none. As it turns out, the end result is the same as your formula!
save. spend. splurge.
See? It works 🙂
It has to be worth it to freelance versus working on a salary and my formula takes that into account.
debt debs
I thought the doubling part was to take into consideration the missing benefits of a salaried position. (Pension/RRSP match, medical, dental etc.).
save. spend. splurge.
*shrug* Pension/RRSP match is not that big of an amount and as a freelancer you can save for your own retirement a lot easier than with a company. Medical and Dental is maybe $1000 a year if that especially if you’re young
For me, the doubling of the salary is to make sure that being an independent and not working 100% of the time is covered, and you can make at least as much money in your job as an employee but only able to work half the time on average.
cat eyes & skinny jeans
I freelance for magazines and newspapers quite often where a set fee is already in place; therefore, I have never had to do these types of calculations myself.
xx
save. spend. splurge.
Ahh. It all depends on the industry. 🙂
Ree Klein
I respectfully disagree with this approach. I think it depends on a lot of things. But most importantly if your last job had nothing to do with writing, for example, but you run a great blog that has loads of examples showing how well you write, don’t base your rate on your old job. That’s an apples to oranges comparison.
Instead, take a look at what people are charging on sites like ODesk. You can find more than 7k blog/content writers asking between $20 and $30/hr and nearly 8k charging more than $30.
And in response to Gia T., I advise being VERY conservative your first year. Hold 40% aside to cover your taxes. You can adjust the following year, but this practice will gain you two valuable things: First, you will have piece-of-mind that the money will be there come tax time and second, you will live on less and that means you can work on growing wealth.
Cheers!
Ree
Gia T.
@Ree Klein: Thanks for the info Ree!
save. spend. splurge.
For me, my calculation is in general for freelancing, not for writing specifically.
I am a freelancer but not as a writer.
For writing, you can look at what other people are charging, but if you are a freelancer (like I was) in an industry where you don’t really know any freelancers or don’t know WHAT to charge, this is a good calculation to use.
Gia T.
I’m curious, though isn’t exactly on the same topic, but is there a formula or general rule for calculating how much you should set aside for taxes while working a freelance job, assuming the contractor doesn’t offer income tax withholding?
save. spend. splurge.
I am not sure how it works in the U.S., but my company is incorporated. Tax rate is ~20%.
Gia T.
@save. spend. splurge.: Thanks, good to know!