{"id":7015,"date":"2022-11-04T18:41:16","date_gmt":"2022-11-04T13:11:16","guid":{"rendered":"https:\/\/www.instamojo.com\/blog\/?p=7015"},"modified":"2023-05-25T19:38:21","modified_gmt":"2023-05-25T14:08:21","slug":"how-to-calculate-freelance-rates","status":"publish","type":"post","link":"https:\/\/www.instamojo.com\/blog\/how-to-calculate-freelance-rates\/","title":{"rendered":"How to calculate your freelance rates: a practical guide"},"content":{"rendered":"

As a freelancer, setting a price for your project is a tough task.<\/p>\n

While freelancing gives you flexibility, it’s difficult to determine the price for your project. In this post, let’s explore ways to calculate your freelance project price.<\/p>\n

Consider these factors before calculating your freelance rates<\/strong><\/h2>\n

Before setting your rates, here are a few things you should know:<\/p>\n

1. Industry rates<\/strong>: Find out what others in your industry charge. You can refer to survey reports that give a detailed idea on this.<\/span><\/p>\n

Here’s a survey report<\/a> by a freelance writer’s community. You can find out what are the average rates for a blog post, whitepaper, and other long-form content.<\/p>\n

2. Your offer<\/strong>: You should have a solid offer before you set a price. Your offer is basically a bundle of services that you will offer to prospects, for which you will get paid. You need to be specific about what you offer.<\/span><\/p>\n

For example, if your service is video editing for beauty influencers, here\u2019s what a specific offer looks like:<\/p>\n

“4-6 edited fashion videos for IGTV and YouTube, of 5 minutes each; The videos will be edited in alignment with the personality and personal brand of the influencer.”<\/p>\n

This is basically what you offer and the value your clients receive. Now let\u2019s get started on setting your freelance rates.<\/p>\n

Different pricing models for freelancers<\/b><\/h2>\n

1. Hourly pricing<\/strong><\/h3>\n

You can calculate your freelance project’s price on the basis of the number of hours you have spent on the project. You can use oDesk<\/a>, a time-tracking software that allows you to track computer activity as you work on the project.<\/p>\n

Charging on an hourly basis is most recommended for people who are just starting out. There are many time management apps<\/a> which help you to be on track when you work independently.<\/p>\n

Hourly billing is not good for profit or for efficiency. We do not recommend this because you cannot charge in advance. And the total amount may surprise the client later.<\/p>\n

2. Project-based pricing<\/strong><\/h3>\n

In project-based pricing (or value-added pricing), you charge the customer on the basis of your experience and expertise required to complete the project. You\u2019ll need to consider the full scope of work and quote a fixed fee to the client. You can also ask them to pay you in advance, be it 50% or 100% (or whatever you feel comfortable with).<\/p>\n

This approach works best for experienced freelancers because you calculate a price that takes into consideration not only your time but also the value you offer to the client. Project-based pricing is a little tricky to get right on the first try.<\/p>\n

3. Retainers<\/strong><\/h3>\n

A freelance retainer agreement is a contractual relationship between you and a company, guaranteeing a certain amount of work (either agreed via a predetermined amount of hours, or a project with agreed tasks to be completed) at a specific rate for an agreed amount of time.<\/p>\n

This is best suited for freelance professionals who are industry veterans and highly sought after.<\/p>\n

How to calculate freelance rates<\/strong><\/h2>\n

If you’re planning to do freelancing full-time, here are the steps you can follow to set a price.<\/p>\n

Step 1: Calculate expenses<\/strong><\/h3>\n

Make a list of every little expense you incur as a freelancer. This can be internet fees, website hosting, and software costs to more general costs such as rent and office equipment.<\/p>\n

Begin by fixing the amount you need to earn per month to cover basic living expenses by selling your handmade products online.<\/p>\n

Also know what the income tax will be. Here’s a guide to income tax for Indian freelancers<\/a>.<\/p>\n

If you’re unsure about what the expenses may be, network with other freelancers and get started.<\/p>\n

Step 2: Number of working days<\/strong><\/h3>\n

How many working days per year or per month will you be working?<\/p>\n

In general, the working days in a year will exclude the number of weekends, bank holidays, festivities, sickness, and vacation days. This will be an average of 200 to 250 working days a year.<\/p>\n

Step 3: Calculate your minimum acceptable rate<\/strong><\/h3>\n

This is the absolute basic rate you’ll be willing to work for.<\/p>\n

Here’s a formula to follow:<\/p>\n

((living costs + expenses + target salary \/ (hours worked a year)) + tax = minimum rates<\/p>\n

Simply apply the results of what you got from the other calculations and find your minimum rates.<\/p>\n

Remember, this rate can increase based on your experience and skills over time.<\/p>\n

Related read: 5 secrets to make more money as a freelancer in India<\/a><\/p><\/blockquote>\n

Resources to help you determine your freelance rates\u00a0<\/strong><\/h2>\n

Here are some data, survey results, and tips from real freelancers to help you set your own rates:<\/p>\n