Are You Earning Enough as a Freelancer?
I’m sure a lot of us have searched through the web and the job boards out there to find out how to pick an hourly rate for our freelance work. Normally you are told pick a number that you want to make in a year, subtract your expenses and voila you have a number. It’s certainly more complex than I’ve described, but in a nutshell that is how it can be done. For your help here is a great page that can help you determine your rate should you need help: Freelance Switch Hourly Rate Calculator.
What I wanted to blog about today was to determine if you are finding enough work to be a successful freelancer. Let’s use an arbitrary example, John Doe is a new freelancer on the block and he took on his first freelance project. He made $679 for 7 hours of work.
Not bad for a one days work he thought. The only problem now is that was his only client in that first week. If we do some simple grade school math we can find out whether John is actually having success.
So, in a normal job John would normally work 40 hours a week. This week John worked 7 and made $679. With the math:
We divide 679 into 40 and we get 16.975, which rounded up is $16.98 per hour.
After having what he thought was a great week with his extra time off and almost $700 in pay for one day of work, it turns out he’s working for $16.98 a day.
Now in addition as a freelancer he is responsible for his own health insurance, employment insurance, pension plan and not to mention his rent, food, clothing and other living expenses.
So at $16.98 was he really successful?
Freelancing is a bit weird as some weeks are hectic and others are not so hectic. So my advice is on top of your rate planning, make sure you store some money in a rainy day/week fund. You never know when you will have a slow week.
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Ok, i haven’t really had any experience with freelance jobs, or any other job for that matter… (I’m a university student)
But the guy made ~650$ in a week. In my country(Greece) this is a little below minimum wage.
His real problem is to find 2-3 other jobs like that in a month…
Freelancing is a good gig to have right now. You have to keep looking for week so you can make a decent living.
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Excellent and sobering advice. The solution is to use the free time looking for other methods of monetization (i.e., more clients), and to set money aside for rainy days, as you say. Both require an uncommon level of self-discipline, which I’ve always believed is a prerequisite to success as a freelancer.
@Stephen – You are right, the time spent looking for other avenues of revenue should also be a factor in your pricing. Sometimes as one does freelance, I do find that more times I am not as “rich” as my bank account states. I have to factor in taxes, health insurance, business insurance, and much more.
Hopefully the smart freelancers are charging more than $50 at least. In the end you have to account for your extra costs that an employer would pay for otherwise.
Which is why I shake my head at all those out there who do the job for less. I don’t understand how they can feel successful at those rate.
It’s a trick of psychology, I suppose. When you’re a freelancer and you charge $50 for an hour of your work, you assume you must earn twice as much as your friend at the $25 per hour job. Just like you say, though, the math isn’t nearly that simple. In fact, your friend is probably much better off.