When you first start freelancing it’s very difficult to determine what to charge. You have no previous context, and colleagues are often tight-lipped about their own financials.
Many freelancers make the mistake of using an online rate calculator to set their freelance hourly rate.
First off, when you’re a freelancer, you are also running a business. You are doing everything: administration, marketing, accounting, proposals, quoting, and networking. If you used to be an employee, you either didn’t have to do those things, or you got paid to do them.
Time to get back to reality. Forget your preferred salary or even your baseline living wage. Your hourly rate should have very little to do with how much you think you’d like or need to earn. What really determines your rate is how much value you offer your clients.
You can only command a rate that clients are willing to pay.
They have to perceive enough value in you to justify that rate, otherwise you’ll get no work. And no work at a high rate is worse than some work at a fair market rate. The amount of money you think you need to make doesn’t enter into that equation.
That said, change your frame of mind towards value, not time. We need to stop thinking about this backwards. Stop framing the decision about rates around what you need to earn and how much time you can work. Instead, start thinking in terms of value on offer. Your rate is a reflection of your value to your clients compared to the value of your competitors and nothing else.
With this frame of mind, we can see that rate calculators based on expected earnings divided by time don’t account for the value you give your clients. The only assumption is that more time equals more value. But we know from experience that this is rarely the case.
Rate calculators don’t take into account skill, experience, professionalism, or effort, when in fact those things are the largest contributors to the rate you can command.