With COVID still running rampant, the amount of people pursuing work from home is skyrocketing. And if you’re ready to make your income from home on a project basis, you might be wondering how to calculate your hourly rate as a freelancer.
This is one of the most asked questions from new freelancers, and the answer isn’t as simple as you think that it might be. There is no right or wrong answer. At the end of the day, the most important thing about calculating your hourly rate is running with something you’re most comfortable with.
But as a new freelancer you might not know what that is yet, and no one can blame you for that. So there is an easy way to get a rate to start off.
How to Calculate Hourly Rate As a Freelancer
1. Decide What You Want to Make Yearly
The first step to calculating your freelance rate on an hourly basis is to figure out how much money you want to make in a year. This is entirely up to you, but a great place to start is whatever you would have been making at a salaried job plus a percentage (I’d start with 10 or 20).
This number needs to take into consideration all of your expenses, along with money you need for other things. So, take a look at your budget and figure out how much you need. This is especially the case if you aren’t making enough at your actual job.
2. Figure Out What Your Expenses Will Be
Next you need to figure out what your expenses will be for the entire year. Your expenses will highly depend on what kind of freelance work that you do. If you’re a designer you might be looking at an Adobe Suite subscription, likewise, if you’re a writer you might be looking at something like a Grammarly subscription.
Every freelancer will also have to think about having an accounting software for insights. You’ll also want to think about things like websites, social media schedulers and email marketing platforms. You’re running a business.
3. Determine Your Yearly Billable Hours
If you’re going to freelance, especially if you’re going to do it on a full-time basis, there’s probably a reason why you’re doing it. I’m willing to bet that it has something to do with working less, making more and taking more vacation.
If you do it correctly, there’s no reason why you have to work a 40+ workweek. So, when you go to calculate hourly rate as a freelancer you need to figure out how many hours you want to work.
Let’s Do An Example:
Let’s say I want to make $60,000 yearly and my expenses are going to be $22,150 for this year. But I’m only looking to work around 30 hours per week but with four weeks of full vacation, then my hourly rate would be around $58.
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