Are you a freelancer or considering becoming one?
More people are taking on freelance roles, completing projects for companies on a short term or contract basis, as opposed to working for one company in traditional full-time roles. A 2010 study done by Intuit predicts that 40% of the U.S. workforce will be comprised of freelancers by 2020—and Canada shouldn’t be too far behind.
A challenge you’ll experiences as a freelancer is determining what you should charge your clients. While it may sound easy coming up with a rate to charge, in reality it’s far more complicated than just picking a number.
Calculating a Value Based on a Full-Time Employee Compensation
Exchangeserverpro.com provides a calculation that takes into consideration what you would make as a full-time employee, including all your benefits, and then what the hourly difference is to compensate you as a freelancer. While this formula is the easiest, straightforward, and most logical process, it may lead to you leaving money on the table if you’re providing a valuable service that can be translated into revenue for your prospective client.
This process is what you might want to use to create your minimum rate.
Pricing Yourself Based on Value
Brennan Dunn, a freelancing guru, recently shared his expertise on how to cost yourself based on value so that both you and your client win. In his post, Dunn shares an example of how you can approach a client’s problem and position yourself as the solution before even drafting the quote or proposal.
Intuit predicts that 40% of the U.S. workforce will be comprised of freelancers by 2020—and Canada shouldn’t be too far behind.
Dunn believes that if you can establish the value of what your work will bring to the organization, that a healthy cost for the project will be not just palatable, but also welcomed by your prospective client. The welcome response, however, relies on how well you position yourself and the expertise you provide. Your proposal should read like a story that presents how the future is going to be once you’ve completed your work; this story justifies your costs.
Even myself, a somewhat successful freelancer, learned a little something from Dunn’s article—but I also know the reality: sometimes there isn’t enough work, sometimes there is too much. On other occasions, you might want to take on something that’s quick and easy for you to do even though the rate is lower than your average.
Remember that these scenarios are business negotiations and both you and your client should walk away feeling good.
Are you a freelancer? How do you determine your project rates?