Calling it quits with your corporate job is a decision you’ll have to seriously think through. As much as it’s enticing to go solo and ‘live your life’ there are certain big adjustments wherein you’d have to embrace as you transition, jump in and operate.
Costing for your services is another. As much as we all patronize and keep on reminding every proprietor not to sell themselves short, you shouldn’t also over-price.
“How much do I charge?”, the million dollar question.
When I started my freelance venture in 2012, puzzling questions were a constant recurrence: Do I charge hourly? By the day? By the project? What do other people charge? What’s a fair rate? Should I lower my rate to get more work?
Alongside, you’ll be questioning your self worth. For a faceless company, how could you make your services sound appealing? There isn’t a one-size-fits-all solution but with a little contemplation, research and use of available tools, you can calculate your rate and start getting paid.
You also need to pay attention to how much services are commercially being served. That’s a good start.
Get your basic needs met
You’ve quit your job but not your lifestyle necessities. First things first: you need to figure out how much money you need to live. While you’d initially think that you’d want to at least earn as much as you’re getting from your corporate job, it’s important to remember that as a freelancer, there’s more to just a salary. You’d have to cost in government obligations such as taxes, health insurances and retirement contribution that your former employer have been covering as legit fully-operational organization.
Think through your personal monthly expenses and add them together as constant non-negotiable expenses:
- transportation (car payments, insurance premiums, gas, toll)
- utilities (electricity, water, internet, phone)
- subscriptions (cable, web hosting, netflix, spotify)
- health insurances (premiums)
- Government obligations (taxes)
As you add up all the constants which costs may vary + taxes, you’d have to add about 30% to make room for cost adjustments. Then, divide that number by the number of hours you want to work each month and voila: You have the minimum hourly rate you need to charge to stay afloat.
But, what if it’s too costly for the services you render?
This is where you’d have to divide it all into separate accounts. How many accounts can you handle in a month?
You’re not just self-employed, you’re also the self-employer.
As you think through your overhead, you’ll also have to consider the number of non-billable hours you put in for yourself each day. There will be other additional work which will be rendered for your own business operations such as marketing and administrative work to document invoices, send out billings, looking for clients and networking.
Don’t just put in 8 hours for you to render. You’ll need to manage your time more as a proprietor.
Ask your network and do your research
Knowing what others are charging is incredibly helpful. This way, you’re competitive and know that you’re reasonable and within reach. Remember, you’re building your portfolio as a proprietor.
There are a handful of proprietors online who already showcase their services and costs; having to research on these individuals will give you a sense of what they’re charging for work. You may also join social media groups, professional organizations to broaden your network, discussion forums and attend to conference to build, find, and encapsulate yourself with like-minded individuals.
It takes time to find people you can trust, but it’s worth it.
You can then adjust your pricing based on your experience, because the value you bring to the table should be a big consideration when you’re pricing your work.
Identify your service menu
You will need to layout your strengths and move around it. Don’t look at what others are doing, but rather, offer your core strength and make it into your ‘best-seller’ amongst the menu. This way, you’ll be able to target, know your client and know their needs.
Consider as a project based proprietor
You’ll need tidbits of projects to build your portfolio for retainers. Sometimes it makes more sense to bill on a per project basis because different types of work have different demands and there’s more straight-forward objective on the results rather than retainers.
Remember: Manage expectations, as clear as possible.
To set the project rate, you’ll have to lay out what the clients’ needs, what you can do to meet those needs and propose the process which will entail, the value you will bring, expectations and timelines. This way, you and your client will have a roadmap and avoid the expectation of you not delivering what was needed.
If you’re offering photography, an hourly rate sounds reasonable but don’t forget to cost-in the time you’ll allot for post-processing and documentations (e.g USB, cloud drive space).
I’m guilty of this entire ‘I’m a freelancer, I’m a workaholic, I can handle my time and do my deliverables whenever, wherever, just as long as I produce results.’ And, got tired and compromised my health.
A lot of people think of freelancing as a work-when-you-want type of gig, but for many it can be more of a work-when-you’re-awake thing. Which is why it’s even more important to take care of yourself when you’re working for yourself.
As much as you put money aside and plan for expenses, you’ll also have to allot time for self-love and self-care. Without you, there won’t be services rendered. As a freelancer, you are your biggest business asset. Factor in weekends and holidays as a breathing space rather than ‘an opportunity to do more while client is on a holiday’.
It’s critical to have a time-off to avoid burn out, get to have space for more insights, and broaden your interests out of your usual workload. Rest will make you perform at your best.
Need help? Drop me a message and I’d be glad to guide you through.