What is an acceptable rate?
Deciding how much to charge for your precious time is one of the hardest parts of freelancing. What you deem as an acceptable fee can often determine the success of your business venture.
Working out your rate isn’t as easy as thumb-sucking some number that sounds appealing to you, as this can leave your potential and soon to be ex-client at a loss for words. First, one has to ascertain what a full-time employee within the industry earns annually. Divide this amount by 52 (the number of weeks in a year) and then by 45 (the number of hours in a working week).
Add approximately 25% for a medical aid or hospital plan, retirement policies, overheads and the barren times. Then add more to cover the time it takes to secure a client â-the networking, sending out marketing collateral, telemarketing and email enquiries, as well as the time it takes to get paid once the job is complete – this includes sending and tracking invoices and waiting not-so-patiently for the payment.
It’s obviously in your best interest to get as much as you possibly can for the work you do. However, if your rates mean that you’ll miss out on a job you really want, you may want to consider settling for a lower fee or even using a sliding scale that is based on measurable outcomes. So, before you make an offer, find out as much as you can about the assignment. If this is a long-term project that will guarantee a sustainable income, will look fantastic in your portfolio, or teach you new skills, then consider charging less. However, if it is a smaller project that will only take 15 hours a week, then charge more because it cuts into the time you’d need for bigger projects.
The danger of charging on a sliding scale is that word will get out that you’e willing to work cheaply. So, be careful about how you represent yourself. Make sure discounted clients know your usual rate and know that this is a one-time only deal.While some freelancers like the security of a retainer, others favour a project-by-project basis, or an hourly rate.
In some industries, companies have no choice but to pay an exorbitant hourly fee for a job they think could possibly take half the time. However, there are other organisations that insist on paying per project, or alternatively on a retainer basis. And yes, there are freelancers that are prepared to compromise and accept the arrangement. The downside for the freelancer is that if you get stuck with a difficult project, your hourly rate can sink into the realm of the ridiculous. Some advice: rather offer a well-defined estimate for the hours a project is expected to take.
Make sure your contract protects you from as many likely delays as possible. Also, try and divide up the lump sum into deliverable independent mini payments where each deliverable represents a completed phase of the project. If the project should derail for some unexpected reason, life will be much easier if you’ve already been paid for the work that you have finished. Don’t become greedy! Some work can only be done on flat-rate payments – if you are producing a project, it may be difficult to separate what you do into neatly packaged hours.
You could be brainstorming in the shower, sending emails while watching TV, or even making calls from your car. When your job is fluid like this, try to get a day-rate based on how long you think you’ll be working.
But rates aren’t the only factor. If you overestimate both your worth and the time it will take to complete a project, and if you’re the type of person who enjoys flying by the seat of your pants, you may find freelancing is not the career path for you.
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