How Much Should Freelancers Charge

August 22, 2011 by Kevin Michael Gray


We found this fascinating article on that makes a great point for working with Pomegranate (as a freelancer) - don't worry about any of this crap and let us deal with it!  Read more below:

How Much Should I Charge for My Freelance Services?

Dear Lifehacker,

After years of working as a corporate slave, I've decided to make the jump and strike out on my own as a freelancer. I already have some people interested in my work, but I'm not really sure how much to charge. Do I set my rate based on what other people are charging? Or how do I come up with the best price to charge?


Bitten by the Freelance Bug


Dear Bitten,

Congratulations and welcome to the exciting world of working for yourself. Putting a price on your services is one of the biggest challenges freelancers face. You don't want to set your rate so low that your business won't thrive, and it'll be hard to raise rates later when your business becomes more established, but you also don't want to set them so high you scare off clients. Here's some advice on establishing what to charge. Whip out a pencil and paper, because we're going to be doing some math.


1. Calculate How Much You'll Need to Cover Operating Costs


Salary: How much do you want to earn (pay yourself)? You might take a look at your current salary or check out a site like to find comparative wages. Let's say, for example, you want to take home $45,000 a year. (If you were to hire someone to help you, also add a line for that employee's salary, but for the sake of this example we'll just stick with one staff member—you.)


Taxes: When you're self-employed, you'll need to cover your own taxes. The IRS has helpful information on self-employment and taxes, including a worksheet (PDF) for calculating estimated taxes. As a rule of thumb, though, you can simply add a factor of 15% to your salary to cover tax contributions. In our example, 15% times the $45,000 salary is $6,750. Adding these together, our new salary with taxes is $51,750.


Monthly overhead: Overhead costs are those that you'll incur just in running the business. Depending on your situations, these may include:


  • Rent
  • Utilities
  • Office supplies
  • Postage
  • Advertising or marketing
  • Telephone fees
  • Insurance
  • Auto leases
  • Tally these all up and multiply by 12 to get your yearly overhead. Then add in any yearly costs, such as computer or software purchases. In this example, we're going to say it's $12,000.


2. Figure Out Your Average Billable Hours?



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