How do you determine what to charge for a freelance assignment?
Well it depends. There are several formulas out there for creating your pricing structure, but they all boil down to a combination of several things: the going industry rates, the local market, your own education and experience, and your company’s need to make a profit.
What doesn’t really change is the concept of billable hours. There’s only so much work time that you can actually charge to the client. The hours you spend marketing your business and going over the books don’t count in terms of direct income generation. This means that for your business to be profitable, your rate has to account for that lost time.
In addition, your compensation needs to cover your other business expenses, such as advertising, employees, taxes, software, printer ink, telephone and Internet access. You need personal wages to cover your living expenses and build your savings, and over and above your personal pay you should allow some flexibility for profit. This is where you can decide whether you can afford to run specials or offer discounts to select clients, such as students or charities. Clients who come in expecting to pay rates closer to common salaries in your area need to be reeducated. You’re not just working for salary; your personal wage is the tip of the iceberg.
I have sometimes chosen to offer discounts and specials specifically to help students with their academic work, but the lower pay means I have to be cautious about how many of those types of assignments I accept. It’s all about finding a balance, and it’s up to you to do the research to learn what your own household must budget for expenses and what the market will bear.
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