Freelancers: 6 Tips to Think About When Setting Your Rate
<p><em>How much should I charge? This is certainly one of the questions that freelancers most often ask themselves whether they are beginners or not. And just because you set a rate for one customer doesn't mean it has to be the same for others. One of the most common mistakes is not charging enough when you become a freelancer. So, what should you think about when you want to set an appropriate rate for your contract?</em></p>
<h3><strong>Do you prefer a rate by word, schedule, or project?</strong></h3>
<p>Let's start at the beginning: how do you want to charge? It can be by the word, </p>
<p>hour, project, package – you decide. Each of the options has advantages and disadvantages, which is why you have to take the time to see what is best for you. For example, if you are a translator, many ask for a rate per word. However, for a large project, it is perfectly acceptable to ask for a rate for the entire project, especially if you have prepare or research beforehand. Other freelancers will offer packages that include several hours of work or time banks. The important thing at the outset is to clearly identify what you need to carry out this contract.</p>
<h3><strong>Does that include your administrative time?</strong></h3>
<p>If you've ever worked in a company, you probably didn't take care of the billing or administrative matters. Now that you are on your own, you are the one who has to take care of these tasks. Therefore, it is important to think about adding this time in your rate, because it is time worked! This includes not only your time for billing, but also all the reminders/follow-ups you send to your customer for example. Also, keep in mind the cost of your means of payment (PayPal, Stripe) to avoid unpleasant surprises.</p>
<h3><strong>Does that include your general expenses?</strong></h3>
<p>Another important point when you want to set your rate: does it include your general expenses? This can be the cost of renting your office, furniture, electronic devices, internet, electricity, stationery, etc. Basically, you may think that these are minimal fees, however when you add them up, the amount quickly goes up. Start by going through all these general expenses, then divide the amount by the number of working days. This will give you an idea of how much to add to your rates. It would be a shame to forget that when you tell someone what your fees are, wouldn't it? </p>
<h3><strong>Do you know how much you need to live?</strong></h3>
<p>Now let's go through an essential question: do you know how much you need to live?</p>
<p>No doubt this will have a very big impact on your rate. For example, it is likely that you need more money to live in downtown Montreal than in Gaspé or Shawinigan. By knowing your cost of living, you can know the amount of money to target when <a href="https://www.momenteo.com/blog/how-do-i-set-my-rate">you set your rate</a>. There is a small mathematical rule that can help you with this: Target annual salary + taxes + expenses divided by the number of hours worked in a year.</p>
<p>For example, if you want to aim for an annual salary of $50,000, pay $15,000 in taxes and have $7500 in expenses, you have a basic need of $72500. Let's say you want to work 35 hours a week for a total of 48 weeks (that's 4 weeks of vacation for you), this gives 1680 hours of work for a year. When you divide $72500 by 1680 hours, this gives an hourly rate of $43.15.</p>
<h3><strong>Do you know the average rate in your market?</strong></h3>
<p>Another interesting point when you want to establish your rate is knowing the average rate in your market? This can depend on several things, including experience. Some professions also have more expensive basic rates such as psychologists or lawyers. So, before you give your prices, try to see if you are either too high or too low. Ask other members of your profession and do some research on the web. As mentioned in our article on the <a href="https://fr.momenteo.com/blogue/les-10-commandements-du-nouveau-pigiste">10</a> <a href="https://www.momenteo.com/blog/the-ten-commandments-of-the-new-freelancer"> commandments of the new freelancer</a> although it may be tempting when you start, avoid at all costs under-charging to get your first contracts.</p>
<h3><strong>Are travel expenses included in your rate?</strong></h3>
<p>Finally, have you thought about your travel expenses? You may never have to go see some customers. For others, you'll have to travel. Are trips then included in your rates? It's up to you. You can also add a mention in your service contract explaining that all travel will be charged extra at a specific rate.</p>
<h3><strong>Why not explain everything in a service contract?</strong></h3>
<p>No matter what you decide to include in your rate, don't forget to write everything in <a href="https://www.momenteo.com/blog/the-importance-of-having-a-good-contract-of-services">a service contract</a>. This will avoid any unpleasant situations in the event of disagreement. Many freelancers believe that their email communications with their clients are sufficient, but this is often not the case. In summary, a service contract should include a precise description of the service, the course of the service, the terms of payment, everything your fees include and the extras, intellectual property issues and the terms of termination of the contract. In short, it is therefore an essential element for your career as a freelancer or self-employed individual.</p>
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<p>In conclusion, we know that it is not easy to set your rate, but we hope that with the points mentioned, it will be easier to ask for a price that is fair. Some people may want to negotiate your rate. Before you panic, take a deep breath and try to understand your customer's position. Maybe they don't see what you can off. Discover our tips on this subject in our article: <a href="https://www.momenteo.com/blog/my-client-is-trying-to-negotiate-my-rate">They want to negotiate my rate</a>!</p>
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