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How To Calculate Your Rates as a Freelancer

February 27, 2019 Posted by Uncategorized 0 thoughts on “How To Calculate Your Rates as a Freelancer”

How much should I charge as a freelancer?

Setting your price as a freelancer should not be an arbitrary task. How much you charge is a reflection of your experience, your brand, and the type of clients you’re trying to attract. Not taking the time to research what you should be charging will impact several outcomes, most important of which is your bottom line.

How do I calculate my hourly rate as a freelancer?

You should never be guessing how much to charge. There’s a slightly more calculated approach that will give you the best chance to convert potential clients.

  • Know your market – Research what other people charge. Make sure they’re in your industry and in your region. Geography affects rates so comparing yourself to local businesses is important.
  • Cover your costs – Understand that your price has to cover more than the hours you spend working on a given project. It should also cover vacation days, sick days, time for business development and administrative costs, and, of course, your taxes.
  • Start where you want to finish – If your goal is to make $100k over a one year period, then you need to take the following into account:
    • 2 weeks vacation plus 5 sick days
    • 3 working days/wk, 2 days doing business development and admin work
  • Here’s a step-by-step example of a freelancer rate calculation:
    • Goal = $100,000
    • Weeks worked = 49
    • Average billable days per week = 3
    • Average hours per day = 8
    • 100,000/49/3/8 = $85.03

To reach your goal of making $100,000 in a year, you’ll need to charge $85/hour. Keep in mind this doesn’t include taxes you’ll need to pay. Being self-employed means you won’t have an employer automatically taking deductions from each paycheque. You are responsible for tracking and submitting your taxes, but that’s where Sorted comes in! We’ll be tracking your business expenses so there aren’t any surprises come tax time. You’ll know exactly how much you’ll get to keep and how to save money so you can better plan for the next 12 months.

 


Prepared by: Katie Tingley
Katie Tingley is the Founder and President of The Tingley Advantage Inc. and her personal mission, KatieTingley.com. For more than 20 years she has been building successful teams and improving the way her clients do business. The Tingley Advantage Inc. delivers profit improvement through analytics, performance measurement, and process management. KatieTingley.com focuses on her life-long passion for developing and managing results-driving, high-performing and engaged teams through training and coaching leaders to become their best selves so they can build awesome teams that deliver outstanding results. You can learn more about Katie and both companies at The Tingley Advantage Inc. and KatieTingley.com.
This article offers general information only and is not intended as legal, tax, or other professional advice. A professional advisor should be consulted regarding your specific situation. While information presented is believed to be factual and current, its accuracy is not guaranteed and it should not be regarded as a complete analysis of the subjects discussed.
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Sorted makes tax time easy for Self-Employed in Canada. Simply swipe to sort your business expenses, then get a summary of your business expense deductions. Plus know what sales tax you owe and when it’s due!


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