How much should I charge as a freelancer? – BKK Web Meetup
This is the first part of a series of articles (hopefully) that will summarize the discussions going on in the BKK Web Meetup Group that is run by Jeremie Tisseau. Jeremie and I figured that it would be useful to publish a summaries to a wider audience every once in a while. Jeremie started with a ‘Question of the Day’ where discussions should focus on one specific and rather difficult topic for freelancers and developers. We both hope that providing summaries to a wider audience will open up developers, designers and customers minds for each other. So here we go “How much should I charge as a freelancer?”.
There is no definite answer – as most of the time. However by looking at several variables one can determine how much a freelancer should charge.
How much do you need to live?
That one is pretty straight forward. Find out how much you need to survive a month, two month, three month. Usually one has a couple of fixed expenses, rent, loans, and insurance things like that. Keeping track of your monthly expenses over a couple of month will provide you with a long list, likely, but it’s better to go through it. There are always expenses that occur in one month but not in the other. You need a new phone once in a while, your external hard disk breaks down, and your teeth decide to need a dentist. Keeping track over a long period of time will help you determine a pretty accurate average.
picture by Bart Hiddink
How much do you want to earn?
Find your comfort zone. What do you feel you are worth, how much would you be happy with. Carl (Webcourses Bangkok) suggested simply adding 1/3 to ½ to your living cost. While that might work for some, it might not for others. However, add something to be able to save money. Remember, holiday is always unpaid and your expenses are always pilling up, you probably want to retire at one point in time. Whatever you come up with, you need to figure out how to get there. Jeremie suggested calculating a personal hourly rate. On average a freelancer works about 5.4 hours a day/month, but that might be different from person to person. The way to calculate your average hours is again to keep track of the time your work on projects, after the contract is signed until the final delivery. Do this over at least six month to a full year and get the average.
This will give you a very simple equation (really):
Money you want / days your work per month/ hour you work per day
Example: You want to earn 50.000THB, you work 5.4 days a month, and you work 8 hours per day. 50.000/ 5.4 / 8 = 1157THB per hour.
picture by Ken Teegardin
How to charge the client?
The easy answer is fixed on by the hour. Most clients though seem to prefer project rates. By following up with the calculation above one can just multiply the hourly rate with the expected time spent on the project and use this as the quote, but there are some details to take care of. As a freelancer one should explicitly state what the project includes. What are you going to deliver and what is not included in your project are important parts of your quote. Everything beyond the scope of your proposal goes on a second invoice and is charged on top. Projects can take unexpected turns and it is advisable to add a margin of about 20% to every project quote. Time-tracking is again valuable, particularly if you just started freelancing. Track how much time you are really spending against the time you have quoted over a long period of time. This will help you be more accurate in your quotes.
Build Long Term Relationships
Long term customer relationships are valuable, one time cheap shots are less so. That is for a simple reason: The more your work with someone the better you know how they work. Communication time shortens, workflow improves, and trust increases among other things. You know what to expect and that is, particularly as a freelancer, something that can be very valuable.