Freelance Confidential - Amanda Hackwith [7]
But you'll need to consider more than just other people's numbers, of course. You will need to consider all the standard expenses of running your freelance business. These expenses can include business costs for assets and resources, and also general costs like taxes, insurance, and personal cost of living. Also consider what your business strategy is and who you're targeting as potential clients. Your rate may be different if you're targeting time-intensive large corporate projects, compared to smaller one-off projects which can be turned over quickly. Ideally, your business plan should include a primary market and also a variety of smaller projects to diversify your business. (See chapter on Diversity)
So how do you know if you're charging enough or too much? There are several tools available for comparing your rates with similar freelancers:
Check out the full appendix at the end of this book for specific rates according to industry, experience, and more.
Try out the Freelance Rate Calculator on FreelanceSwitch to find out how much you need to cover your business specifics: http://www.freelanceswitch.com/rates
Ask! If you're rejected for too many legitimate jobs or clients, ask what the winning estimate was and follow-up with the potential client. While freelancers may not always be willing to talk numbers, happy clients sometimes are.
Check out the Further Resources in the Appendix for more ways to reach out to freelancer communities and get support.
How do you estimate a project?
The overwhelming majority of freelancers discuss estimated costs with clients using a mix of hourly rates, fixed quotes, and general estimates. This variety is why freelancers frequently answer "It depends" when asked about a project's budget.
How do you initially discuss price with clients?
In most cases, estimates are built off of a firm understanding of your hourly rate. If you have a solid hourly rate, you can quickly generate an estimate based on the projected time it will take you. Some tips for creating estimates include:
Break down the project into parts. Don't attempt to estimate the project as a whole—it can often lead to underestimations. Instead, break it down into steps and estimate the time for each step.
Provide an itemized estimate to your client in order to show them where the time and money is being spent, and to give your client a better grasp of the scope of the project.
Include a small amount of time for revisions. Virtually every project will require revisions after getting client feedback, so it's good to include a couple hours worth in your estimate.
Save your estimates. If a similar project comes up, you'll be able to refer to a previous estimate, and know from experience if that was underestimated, overestimated, or right on track.
Rates can also differ according to industry—writers are much more likely to use fixed quotes than other professions, and virtually never use hourly rates. Full-time freelancers who have been in the business for more than eight years are more likely to use fixed quotes than new or part-time freelancers. Overall, however, the results are fairly consistent: it's important to be flexible, and offer estimates based on the specifics of the project.
How do I grow my business?
The first few years of a new freelance business can be full of growth. But no matter how successful and experienced you are, you'll encounter a point that your business plateaus. No matter how much you advertise or how many hours you work, you can't seem to reach the next level. Experienced web designer, Benek Lisefski, explains that plateaus are normal:
I'm always striving to earn more without working more hours, and I'm beginning to achieve that, so that is some level of success. But I also see that there's a plateau that I'm close to reaching. I don't want to keep trading hours for dollars for the rest of my life. To truly advance you've got to find a way to break out of that cycle, which means some kind of passive or residual income.
Plateaus