How much should I charge?

546883Know that magic feeling that surges through you when you’ve triumphed and done something absolutely brilliant? Well, you’ll get that exact same hit of happiness by creating the perfect pricing strategy for your business because it’ll make your business hum and a humming business means less money worries, more toys and becoming a hero by helping our limping little economy grow.

To get your pricing strategy spot on the first thing you need to do is completely ignore the hourly rate you were paid working for someone else. If you don’t get this out of your head then you might as well stay in a job or you’ll be taking a pay cut because freelance prices need to cover so much more than just your time:  

  1. Take a few seconds to list what you expect the obvious stuff to cost you over the next year like your equipment, computers and software.
  2. Then dig a little deeper and list other things like the cost of running your car, internet and phone.
  3. Don’t forget the nasty stuff like Tax, Accident Compensation, professional indemnity Insurance and, the biggest kick in the you-know-whatzits which is, Bad-Debts (yes, those nasty people who’ll never pay you).
  4. Chances are you’re already thinking smarter so have a quick check to make sure you’ve included absolutely every cost you can think of before taking a deep breath and  totalling it all up to see what your business costs to run.
  5. Now it’s time to add in the fun number; what you actually want to earn.
  6. And finally, divide your Total by the number of hours you’ll work for clients if you’re going to charge an hourly rate.  You might like to aim for around 1000 to 1500 hours a year because although you’ll clock up far more it’s unlikely you’ll be able to charge every hour.

Wah-lah!  You’ve got your hourly rate sorted and now know exactly how much to charge!

If a little example helps, then let’s say your total costs are around $20,000 and you want to earn $80,000 so you’ll divide $100,000 by 1200 hours to get an hourly rate of $83.

Calculating your freelance hourly rate isn’t the only way to charge and there are heaps of business models to consider which we’re always more than happy to give you the lowdown on.

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