When people are starting up and need advice, the first thing they want to know is how to price themselves as a freelancer. I’ve recently been asking people who are new to the game for quotes and it’s struck me that it’s rare people have any idea what to charge.
I was expecting that under charging would be a big problem, but actually it’s the opposite. New freelancers have been quoting me freelance rates that are higher than freelancers I know who have 20 years experience in the game and Nike in their portfolio.
I don’t think this comes from a place of greediness, I think they just really aren’t sure what to charge and maybe have Googled “how much do freelancers charge” when I ask for their rates.
So here’s a guide.
Starting point. Look at jobs you would be comfortable doing with your level of experience and qualifications, how much is the average salary for those jobs? If you have no experience, you may be looking for a job that pays £18-£20k a year. If you have work experience at an executive or management level, you might feel more comfortable at a job that pays something like £25-£35k and if you have a bunch of experience and know that you can seriously compete with your competitors, you might wanna be earning anything from £40k to £400k.
It’s good to understand what people earn. Look at jobs, look at what doctors and nurses earn, teachers and software developers and florists and lawyers. I’ll be honest, before I did this I thought I was really poor. I thought that everyone was earning waaay more than me. This is why it’s good to discuss money openly!
In my city, the average full time salary is £23,000k. If you earn above this amount, you’d be considered as doing quite well. The average software developer earns £31,000k, the average teacher earns £23,000k, salaried GP’s can earn anything from £55 – £80k.
What kind of salary would you realistically be happy with, for your level of experience, skill and education? If you wouldn’t feel comfortable applying for a job that’s £18k a year or £40k a year – this needs to be reflected in your freelance rates.
Now freelancers need to earn more than people on salaried wages. This is because we buy our own equipment, have to pay our own pensions, and pay our own business rates. So when working out what you want your salary to be, add on your yearly expenses.
Remember that you can reduce the tax you pay against your wage with your business expenses. So your expenses aren’t free, but they’re reducing your tax. If you buy a laptop computer for £1000, thats £200 less tax you need to pay.
So say, you would be happy with a wage of £30,000. You’ve added on your business expenses, let’s estimate it at 10 grand which gives us a total freelance wage of £40,000.
Now lets take our £40,000 to a day/hour rate calculator.
That’s a £153 day rate and a £19 hourly rate, these actually work out to be roughly the average freelance rates, coincidentally.
So now you have an idea that your day rate should be roughly £150 and your hourly rate £20.
To make freelancing worthwhile, you really need to be fully booked. If you don’t think you have enough experience and recognition behind you to be working at least part-time – DO NOT GO FREELANCE if that’s going to be your sole income. There is nothing wrong with working a job, getting experience and building up contacts in order to build up the portfolio you’ll need to be working at a higher freelance rate.
Sometimes I lose clients but my income is still comfortable when that happens and I can get new clients booked in within the month. If you’re only able to garner a small rate and you lose clients, that’s going to make it difficult for you to survive financially. That’s why I really don’t think freelancing is a good option for people who are new to their industry unless they’re freelancing as a side hustle while at University or alongside a regular job. If you aren’t able to bring in the clients confidently and get them to agree with a rate you’re happy with, you aren’t going to make this a success right now.
While you’re starting up as a freelancer, you aren’t going to be fully booked. Unless you’re a super star. If you’re taking the plunge into self employment, you’ll need either savings, an additional income or you may be eligible for some government benefits such as Universal Credit. Nothing wrong with that, if you want to go freelance and you’re unemployed, The Job Centre may be able to get you support (it’s always changing).
The good thing about self-employment is that YOU DECIDE your income. If you want 100k a year, with a £400 day rate and £50 hourly wage then you do that, but just remember that you need to be able to justify your salary with excellent work. You might want a salary of 100k, but it doesn’t mean that people will pay it.
Pricing per project.
When pricing per project, there are variables. How much time is this going to realistically take? How much time do you think this client needs you to commit to them? If you think it will take 3 days of the month, and your hourly rate is £20 an hour then charge £450 per project. Make it known to the client how much you want and how long you intend to work on the project. They may want more from you, and want to pay more. But don’t let them barter you down and say “this won’t take that long” – you’re the expert and if you’re too expensive for them, simply tell them to shop elsewhere.
It may also be the case that your client wants to bid up, so that they are your “favourite” client and they are your priority over your other clients – someone you’re afraid of losing. It doesn’t often happen – but it happens!
Under charging on projects.
Sometimes people under charge on projects, and this is why I recommend working out a daily/hourly rate, even if you don’t share it with your client.
I once met a freelance social media manager at a business show who was charging £100 per client, for full social media management. I have less than 10 social media clients, it would be extremely time-consuming for me to manage 10. Before he’d even started working at full capacity, this man had decided that 100 a month would be a reasonable rate. To receive a living wage, he would have to take on 13 monthly clients, it would be an impossible amount of work for a salary he could get working in a bar. If you choose an arbitrary number for your project, which is either too low or too high – it could bite you in the arse when you’re either run ragged from work, or are scolded by the client for not putting enough hours in/ getting results.
But I’m not price shaming, if you are a student or are working on a side hustle and you’d be chuffed with £100 a month for some clients in your free time, then do it.
Raising your prices.
When you become fully booked, your prices naturally go up. As you start to get busier you need to put your prices up. It would make no sense at all working for 10 people who pay you £400 a month when you could work for 10 people who will pay you £1000 a month. Hiring you becomes a competitive situation. Think about it, if a restaurant made Michelin star food but only charged £20 a meal, they would be fully booked all the time and over run with work. People are prepared to pay £200 + for a meal just for the privilege of eating at an amazing place.
Then you’re in a situation where you may have to drop some of your older clients if they aren’t willing to keep up with your prices. You need that time for higher paying people. It’s not nice but that’s business.
This is where freelancing starts to get fun and where it becomes much better than working in a regular job. Your income is reflected in your talent and drive. The more money your business is making, the more money you can make. In employment, your boss may be willing to pay you extra in order for you to stay on, but we all know that getting a pay rise at work is like pulling teeth.
Your income is as good as you are.
You can never earn as much as a freelancer as you could as a business owner, there’s the lack of scale, but you do have the potential to make seriously good money.
However, remember that your rates are reflective of your experience, portfolio, demand, skills and equipment. If you are just starting out, don’t expect to get a £250 day rate just because you want it, or that’s what other freelancers are earning, or that’s what the leader of the internet course you took told you you should be earning, or because #girlboss told you you need to charge more.
I say this from a place of love, because there is a demand for freelancers of all price ranges. There is absolutely nothing wrong with charging £10-£15 an hour if that’s where you feel the most comfortable. At the end of the day you need to charge whatever can get you the work and more money = more pressure to do the job well.
If you aren’t sure what to charge your client. Just be honest. I did this very thing a couple of weeks ago. I admitted to the client that I wasn’t quite sure what to charge, as I had never done this particular project before and I had no existing pricing packages in place. In the end the client offered me a figure, and it was one I was very happy with.
In my search for other freelancers, I’ve also had two people admit that they don’t know what to charge after they gave me a quote.
What looks better? Admitting you don’t know what to charge straight off the bat? Or admitting you don’t know what to charge after the client has told you the price is too high? One looks honest, the other looks like you’re being deceptive.