What should you charge for freelancing?
Understanding what you should charge freelancing is a question that every freelancer asks. Your hourly rates for freelancing may vary greatly depending on your skills, experience, and services.
Use our freelance rate calculator to determine your target hourly rates and annual income. Setting your ideal annual freelancing income will help determine what you need to be charging per hour to hit your income and lifestyle goals.
Simple freelance calculator
Use this simple freelance rate calculator to determine your hourly freelancing rate. Input your ideal annual income and estimated expenses (don’t worry if you don’t know your expenses yet, we provide examples below!) to find your target hourly rate.
The average cost of health insurance for a single person in the United States is $440 per month (according to eHealth)
Estimated expenses for freelancers (minimum costs for low-overhead business):
- Computer and office equipment: $2,000 one-time
- Web hosting and website: $25/mo
- Software (PM, file storage, tools): $100/mo
- Professional services (bookkeeping, CPA, invoice management): $150-200/mo
- Internet $50-100/mo
- Miscellaneous costs: $50/mo (food, business cards, bank fees)
Self-employment taxes for the United States = 12.4%
How are your hourly freelance rates calculated?
Your hourly freelance rates are calculated using your target salary plus all your operating expenses and savings.
Start with your target salary, select information on how much you want to work, and your weekly billable hours and days off per year. Next, add your estimated monthly expenses, including operating expenses, health insurance, savings, and taxes.
From there, your total annual salary is calculated. The total yearly salary figure includes your target salary plus all costs, expenses, estimated taxes, and retirement savings. The total salary is your gross yearly revenue goal to reach your target salary.
Based on your total annual salary, you’ll be able to plan for your target monthly, weekly, and hourly rates.
Use the calculator sliders to adjust your goals, expenses, and savings to determine how much you’ll need to charge freelancing to hit your goal income.
What are the estimated freelancing expenses?
Freelancing expenses can range significantly. You might have minimal expenses if you’re operating a “low overhead” freelancing business or just freelancing on the side of your full-time job. However, if you’re running a high-income freelancing business, you’ll likely incur more expenses.
Here are some example expenses for freelancers and how to manage your monthly expense budget in 2021. Estimated costs for a low-overhead freelance business can range from $585-785 per month, excluding taxes and travel expenses.
Office equipment = total monthly expenses $200
Office equipment expenses include things such as your laptop computer, monitor, desk, and printer. These may be one-time expenses that you can factor into the budget of your monthly expenses to cover.
Web hosting = total monthly expenses $25
Web hosting expenses include domain hosting for your website as well as the website itself. Generally, hosting plans can range from $5-30 per month, depending on your provider. If you use a web building platform, such as Wix or Squarespace, your basic fees start around $13/month and go up from there.
Software = total monthly expenses $100-200
Software expenses include any online tools, apps, or software that you might use during your day-to-day freelancing business. This could include programs such as Grammarly if you’re a freelance writer or Asana as a project management tool. Software expenses can add up quickly so be sure to regularly review your monthly recurring expenses devoted to software and apps.
Professional services = total monthly expenses $150-200
Professional service expenses include items such as an accountant, bookkeeper, or invoicing software. These are necessary expenses to keep your freelancing business organized and running smoothly (and allow you to get paid!). Online invoicing with Freshbooks starts at $15 per month and Bench online bookkeeping starts at $139 per month.
Internet = total monthly expenses $60
The average cost for the internet in the United States is approximately $60 per month per household. This can decrease or increase depending on your level of service. If you’re looking for free wifi or trying to reduce your internet expenses, working at coffee shops, cafes, or libraries is also an option.
Miscellaneous costs = total monthly expenses $50-100
You’ll always want to factor miscellaneous expenses into your monthly budget. Miscellaneous expenses for freelancers might include food or coffee, business cards, bank fees, or gas for your car if you’re driving for work.
Depending on your level of revenue and type of freelancing, you may also want to purchase business insurance, which can add an additional $50-200 per month.
There are many other costs and expenses that can be necessary for running a freelance business, such as travel, education, and conferences. These expenses can add up quickly if you’re traveling regularly for clients, networking, or attending conferences.
If you’re aiming to run a low-overhead freelance business, it’s important to manage your expenses carefully and minimize costs where possible. This may be even more important if you’re only freelancing part-time and have limited business income.
How to manage your freelancing billables
When planning your monthly or hourly revenue goals, there are a few things to consider when managing your freelance billables. This includes how you charge for your freelance work and how you collect your client fees.
Typically, the most common ways to charge clients for freelance work include hourly fees, project fees, or monthly retainer fees.
Hourly fees are pretty straightforward where you have a set hourly rate for your freelance work and keep track of your time in order to bill your client. This is a good approach if you want flexibility in your work and charging for your time. Toggl is a good time tracking tool if you need to keep track of your hourly rates.
Project fees are generally billed on a per-project basis. This means you scope a flat project fee for a set amount of work and then bill your client when that project is completed (or consider collecting a 50% deposit upfront and 50% final payment upon project completion). Charging for freelance work by the project can streamline your workflow but there may be times where your actual work may be more or less than you originally estimated for that project.
The monthly retainer model is when you have a recurring monthly fee for a long-term retainer with clients. The monthly retainer model is our favorite way to engage and bill freelance clients. It’s the most stable when thinking about client retention and planning your recurring freelance income.
Getting paid for your freelance work
Once you have your freelancing services and fees planned, now we get to the most important part – collecting your freelancing income. As a freelancer, it’s critical that you get paid for all your hard work.
You need to have an airtight invoicing system in place in order to get paid in a timely manner. This includes an invoicing platform to help manage your fees and recurring payments. Our favorites are Freshbooks and Stripe for online invoice management. With Freshbooks, you can track your hours per client and automatically create monthly invoices.
Other features with online invoicing include sending automatic reminders to clients, accepting credit card or ACH payments, and charging late fees for overdue invoices. These are all things that you can set up automatically with your invoices to expedite the payment process.
What are the average freelancing rates?
Average freelancing rates vary greatly by industry, services, experience, and region. Depending on your niche or specialty, some freelancing or consulting services can charge much more than others. For example, the average hourly rate for virtual assistants is $15-30 per hour and hourly rates for freelance software developers can be anywhere from $50-300 per hour.
Consider your years of experience when planning your rates – your work experience has a major impact on your hourly rates. For example, in search engine optimization (SEO) consulting, your hourly rate can increase by almost 40% if you have two or more years of experience.
Many industries have regular studies and publications for annual freelance or consulting rates. Such as the Editorial Freelancers Association has published guidelines on editorial rates and fees for copywriters. For freelance writers, fees can range from 20 cents per word to $100 per hour depending on experience, projects, and editorial assignment.
Understanding competitive market rates is also important. Especially as you’re new to freelance, you likely want to have more competitive pricing (and continue to increase your rates as you get more clients). You can always see what other freelancers are charging by reviewing job sites such as Upwork, Freelancer, or Guru.