By Allison VanNest, Grammarly.com
One of the hardest things about freelancing is deciding what to charge for your services. We have a tendency to lowball our potential clients in the hope of scoring our first few jobs. Unfortunately, when you underbid, you also undervalue your work. While there are some clients who simply hire the cheapest bidder, many more are willing to pay a fair price for your work. But first, you need to figure out what a “fair price” means to you.
Step One. Write down all your expenses for an average month, including housing, transportation, and utilities. Add your budget for groceries, entertainment, and incidentals. This should give you an idea of the minimum income you need to get by. Add another 25 percent for taxes, which you will have to pay either quarterly or annually. You won’t have taxes deducted directly from your paychecks, so remember to set that money aside.
Step Two. Determine how long it takes you to complete a job. Clock yourself to figure out your page per hour pace. For example, the Editorial Freelancers Association estimates that the average proofreader will be able to correct 9 – 13 manuscript pages per hour. If you don’t have much experience, this can also be a great time to take on some pro bono projects. Offer to do work for free in exchange for portfolio fodder and a customer testimonial. You’ll get practice and begin building your professional reputation.
Step Three. Research the going rates for your services. Writer’s Market and the Editorial Freelancers Association both have excellent resources to help you. These sites provide average rates for professionals; depending on where you live and your level of experience, your rates might be higher or lower. Some resources may also give you per page or per project rates (e.g. a minimum of $5000 for ghostwriting a novel, according to about.com).*
Step Four. Get out your calculator and run some numbers. If you know your average pace, you can calculate an hourly rate based on the minimum amount of money you need each month. Divide your monthly expenses by four (that gives you the amount for one week), and then divide that number by the number of hours you can realistically work in a week.
Many freelancers find that they end up working more hours than they would at a full-time job. Remember to take into account the time it takes to search for jobs, email clients, or perform other administrative tasks. You won’t be directly compensated for that time, especially if you work fixed-price jobs.
Step Five. Whether you use the back of an envelope or an online calculator, you’ll now have your minimum hourly rate. Compare it to the suggested rates from Step Three. Is your number much lower? Then you need to raise your rates! If your rate is higher than the industry average, you should make sure you’re being realistic about the number of hours you can work, your pace, and your monthly expenses.
Step Six. Once you’ve figured out a reasonable rate that’s both competitive and able to cover your expenses, you’ll be ready to take on clients. You may feel embarrassed about asking a stranger for what seems like a lot of money, but if you’re dealing with professionals, they’ll understand that your expertise is worth it. While it may be tempting to offer bargain basement prices in attempt to score your first clients, in doing so, you only sell yourself short.
Okay, how do you set your rates? How do you feel about what you’re charging right now? Let’s talk about it in comments.
* Experienced ghostwriters charge much much more. ~AW