How to Set Your Rates as a Freelancer

Freelancing gives you the opportunity to enjoy varied work and a flexible schedule without the confines of working for a traditional employer. It also allows you to control your own income instead of accepting what an employer determines your efforts are worth. As a freelancer, you are responsible for finding your own clients and determining how much you will charge for your freelancing services. Simple strategies can help you set your rates to become profitable as a freelancer.

Things You'll Need

• Index Card
• Pencil/Pen

Instructions

1. Check the websites of freelancers that offer similar services and look for a description of the freelancers' rates. By noting the rates charged by several similar freelancers, you can determine the average market rate for the freelancing services you provide.

2. Review completed project listings on freelancing websites such as Guru, iFreelance and Elance. Completed project listings typically show the winning bid amounts, which can show you how much clients are willing to pay for completion of similar freelance projects.

3. Assess your experience level. If you are just starting out as a freelancer, you may not be able to command high rates. Conversely, if you have years of experience and an extensive portfolio, you may be able to justify charging premium rates.

4. Review your monthly expenses to determine how much you need to earn from freelancing projects. Determine how many hours per month you can devote to freelancing projects, and divide the income you need by the number of hours you can work. This will give you the minimum hourly rate you need to earn.

5. Add 25 to 30 percent to the amount calculated in Step 3 to cover your monthly expenses to pay for taxes on a quarterly or annual basis. As a freelancer, you are responsible for paying all taxes on your earnings -- your clients will not deduct taxes before paying you for projects.

Tips & Warnings

• Review your rates quarterly to determine if they are appropriate for your experience and the quality of your work. As you build your freelancing portfolio, you may be able to command higher rates for your work, which can help you make more money without increasing your work hours.

• Avoid setting low rates in an attempt to secure more freelancing projects. Although low rates can be attractive to some clients, they may take advantage of your underpricing by expecting you to complete additional projects at the same rate. They may also disclose your rates to referral clients, who will likely expect you to provide work for the same low price.

References

• "Six-Figure Freelancing"; Kelly James-Enger; 2005
• "Freelancing for Dummies"; Susan M. Drake; 2001