If you’re wondering how to calculate your hourly rate as a freelancer, then you’re in the right place.
In today’s article, we’ll look at an example to help you figure out how much you should charge per hour.
Here’s a summary of what we discussed in part 1 of Working as a freelancer: how to calculate your hourly rate:
- include additional expenses
- don’t undercharge
- calculate your profit and risks
- no one works 365 days a year
- plan for unproductive phases
Calculating your hourly rate
Now it’s time for the maths. We’ll show you how to calculate your own hourly fee step by step using an example. As discussed in part 1 you can’t work all year round. So the first step is to calculate the number of working days correctly. If you subtract weekends, public holidays, days off and sick leave, you are left with just 17.5 actual working days per month.
You can read more about how to calculate the exact number of working days in part 1. As a freelancer, it is of course up to you to decide whether you want to work at weekends, but in our example calculation, we have given you weekends off.
Working out additional costs
If you assume a gross monthly income of 3000 euros, you have to calculate the 20% employer costs (600 euros), as well as your fixed costs. Fixed costs include rent, advertising, phone bills etc. We’ll estimate 1200 euros for this. This means you have to earn 4800 euros per month. If you now break this amount down into 17.5 working days, then you will need to earn approximately 274.30 euros per day. For an eight-hour working day, that would be 34.29 euros per hour – this is the minimum hourly rate you need to charge.
Don’t forget unproductive days and profits
It’s important to remember that you will not always be 100% productive and that you will also have to work on tasks you are not paid for. If we assume that 70% of your working time is productive, then your 17.5 working days will be reduced to just 12.5 days for actually working on projects for customers. This means you have to increase your hourly rate to 48 euros. But that’s not all: you need to make a profit too! Let’s say you calculate a profit of just 10% on your income, then you need to charge at least 52.80 euros per hour.
The calculations summarized
To make things a little clearer, here’s a list of the calculations:
Monthly costs: 4800 EUR
Divide by 12.5 (working days per month, including unproductive phases)
Then divide by 8 (working hours per day)
Add 10% profit
Your hourly rate: 52.80 EUR
To sum up, there is a lot more to an hourly rate than just estimating a basic amount. You have to take additional costs, unproductive phases and profits into account. Your hourly rate will increase as you gain experience and upgrade your professional equipment. Don’t sell your services for less than they are worth and don’t take on every project that comes your way just for the sake of working. It’s not worth the effort if you won’t make a profit.
Working as a freelancer: how to stay motivated
If you have been working as a freelancer for a while, perhaps you’re starting to feel demotivated. Or maybe you’re still thinking about whether to start your own business and are unsure how you would deal with low motivation. In our next article in the ‘Working as a freelancer’ series on Friday, 18 October 2019, you’ll find ideas on how to stay focused and keep positive about your freelance career.