8 Steps to Calculate Your Hourly Rate
One of the most important things in your work as a freelancer is to decide what your services cost. There are two major ways to charge your client - by hour or by project. Here is a way you can calculate your hourly rate in few easy steps. First one is to determinate what will be your life cost for one year. Calculate your costs for the following categories:
01.Personal costs – how much you will spend for accommodation, food, rent, daily expenses and so on.
02.Business costs – how much you will spend for office supplies, travel, software, business cards, mobile phone, Internet and everything else that you may need.
03.Taxes – here you have to include insurance, retirement savings, debts and all other taxes that you carry on your shoulders.
04.Sum It –this is the amount that you need to make each year just to break even.
05.Now you have to determine how many hours you can actually bill. You have to be careful with this step, because if you work 8 hours today, but 1.5 of them you spend applying for projects, one for branding yourself in the social networks and half an hour for bloging then at the end of the day you will have 5 billable hours.
06.Divide – now you have to divide your costs by your billable hours. The result is your hourly rate if you want to survive a year.
07.The Profit – Lets imagine that at the end of the year you want to save some money. Then you have to recalculate it. Sum your costs with the amount that you want to have at the end of the year and then divide it by your hours.
08.Charge – the amount is your final hourly rate. Please note that this number will varies depends on your skills, experience, market demand, your service and business strategy.