I’ve been designing web sites in some form or fashion since 1999, but January will mark 6 months without the safety net of a full-time job. I’ve learned a few things; but one of the most important is what I like to call: Rate-to-Pay Quotient.
When you bill per-hour it’s easy: Hourly Rate X Billable Hours = Actual Rate
What happens when you bill a flat rate? $500 / Working Hours = Actual Rate
The problem lies within the “Working Hours“. Working hours have an infinite number of variables, so let’s break it down:
32.5 hours on a $500 project. Let’s do the math: 500 / 32.5 = $15.38 per hour
That’s more like “9-5″ money than the glorious lifestyle of a Freelancer huh?
Q. Why not just bill hourly?
A. Good luck with that. Studies show, less than 20% of potential clients are willing to work on an hourly pricing model.
Q. Then how do I know what to charge? Can’t I just make up a figure?
A. Do some research first! What are other designers in your niche charging? What are there abilities? Can you match their abilities? If so, then charge what they charge. Another really good way to look at it is, pretend you have a job interview with Acme Incorporated, a Fortune 500 company with offices all over the globe. You wouldn’t walk in and demand the CEO’s salary would you? Of course not, you have to pay-your-dues first. The same principle applies to Freelancing. Just because you know some HTML or own Photoshop doesn’t make you qualified to charge $95 an hour.
Pay your dues by doing crap jobs for other freelancers or design shops. They/We are always looking for “grunts”. Not only is it a great way to gain experience, you’ll start making contacts with folks higher up on the food chain than you.
Ultimately it’s up to you what you think you’re worth, but heed the advice of an old dog.
Q. So I have to work S*IT jobs? Come on, I’m better than that.
A. With an attitude like that, you might as well just forget it. Seriously. Stop reading this blog and go do something else.
Q. Can I raise my rate? When will I know I can?
A. Absolutely you can raise your rate! I’ve raised mine four different times this year! Use the Stress-to-Rate Quotient:
Current Rate / Working Hours X Sleepless Nights X Boiling Point = New Rate
I raise rates when I feel completely overwhelmed and underpaid. Usually the final straw is some douche-bag client who thinks it’s “OK” to work me like a helpless pack-mule.
Q. How do I tell my current clients my rate went up?
A. Start a newsletter. Email your clients monthly with updates about your company and/or changes in your life etc… This not only reminds them that you are alive; but it will also bring in business as they remember, “Hey I know a web designer, and I work done…”
Simply word it like, “Thanks for being a loyal customer! Business is really starting to take off, and because I want to continue serving my core group of clients (like you!) I’ll be raising my rates to $XX.XX per hour starting next month on the 1st…”
I’ve have done this FOUR TIMES this year and NOT ONCE have I lost a client. Period. In-fact, almost all of them reply with “Congratulations!!!”
Bottom Line:
Put in your time, work your way up the company ladder, and ask for “a raise” only when you reach a boiling point.
Bonus Advice:
The more you charge, the better clientele you attract, the less you have to work.
Recent Comments