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3 Pro Strategies To Calculate Your Freelance Rate As A Beginner

by | Last updated Mar 28, 2021

You have made up your mind: You want to leave the 9-5 office job behind you. You also know what kind of job you want to do as a freelancer. Everything is set and ready to go. There is just one thing that you are still a bit uncertain of: What hourly rates can you charge as a freelancer? It’s true, there are so many factors that come into play. There is no one-fits-it-all approach. However, there are a few common strategies that you can apply to calculate your freelance rate easily, even as a beginner.

Check out the following methods and see what works best for you.

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Hourly Rates

This first strategy might be the easiest and most common to calculate your freelance rates and is often used by professionals like virtual assistants. There are many calculators online where you can type in a few numbers and get your hourly rate calculated within a second. Check out this one by the Your Rate.

The idea behind it is pretty simple. You use your desired annual income and divide it by the number of weeks you want to work each year and then by the number of hours you want to work each week.

For example, You want to earn 50,000 USD a year. You are willing to work 48 weeks in that year and want to do no more than 20 hours each week.

50,000 / 48 / 20 = 52.08 USD

If you want to make 50,000 USD you need to charge about 52 USD per hour.

That sounds simple, right? But what do you need to take into consideration?

Working Weeks Per Year

When you are a freelancer you only get paid for what you work, no paid vacation or public holidays. That’s why you shouldn’t calculate with 52 weeks. Take a few weeks out of that for vacation, public holidays and a few sick days.

Working Hours Per Week

You want to have a nice work-life-balance, right? So going for a 50-hour-week probably wouldn’t make you happy on the long run.

Another reason why I always recommend to assume fewer hours is the fact that you will have to do work which you won’t be charged for. Unless you have long-term clients, you will have to look for new projects all the time. That mean doing research, apply, maybe interviews, keep your portfolio site updated, learn new skills, keep up with industry news, doing marketing and accounting…

That can easily take up a few hours each month or even each week and is unpaid work. So bear in mind that the hours you can charge for, are not as many as you actually work.

Annual Income

Ah yes, your desired annual income. This is where it gets interesting, right? You could either just throw in a random number that sounds ok for you or you could be a bit more strategic.

When you want to calculate how much you need to earn per year, take the following factors into account:

Private Expenses

  • Your monthly rent, incl. bills
  • Food & Drinks
  • Transport, such as car, scooter or public transport
  • Entertainment, e.g. going out for drinks or movies
  • Insurance, think of health care, legal expenses or life insurance
  • Extra expenses, such as a shopping trip, weekend tour, or Christmas presents for your family

Business Expenses

  • Equipment, e.g. laptop, headset or mouse
  • Internet plan and/or mobile hotspot
  • Expenses for calls, such as Skype or phone calls
  • Workspace, for instance a coworking space membership
  • Special software or licenses, depending on your job

Also don’t forget to add your income tax! This will strongly depend on your country of residence. As an example you could go with a tax rate of 25%.

Shhh…If you are a digital nomad you might be able to avoid income taxes entirely – all legal, of course. Check out the linked post to learn how.

You might also want to add another percentage to that annual income that you can put aside. Money that you can save for special occasions, retirement or when things get a bit rough in your freelancing career.

Once you have added all of your expenses you can now divide it by the number of weeks and the number of hours you want to do per week. This comprehensive tool by Freelance Boost helps you with the calculation.

Please bear in mind that this strategy how to calculate your freelance rates only considers your personal financial situation. It doesn’t reflect your skills, the market or clients’ needs.

Have a look at the last chapter of this article to see what factors can and should influence your rates.

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Project-Based Rates

Instead of asking for hourly rates you could also charge a project-based rate. There are advantages and downsides for each approach.

It also depends a lot on the kind of work you are doing. A virtual assistant with diversified work is surely better up with an hourly contract. It’s hard to tell in advance what the VA has to do and how big the workload is going to be.

A graphic designer on the other hand, who has often a predefined work package or needs to deliver a certain result, can also go for a fixed project-based price.

But not all long-term contracts should automatically be hourly based! Another factor that influences this choice would be the learning effect. When you work with a client for a while and you keep doing the same work, you will soon get more efficient and faster.

If you charge hourly rates, you will earn less because you don’t need that much time anymore as in the beginning. A project-based price will guarantee you the same income for the same work.

A Clients’ Opinion

Speaking from a clients’ viewpoint, I definitely prefer project-based rates. I hire freelancers, too, every once in a while and never do hourly contracts.

First of all, there is a healthy lack of trust, especially when we work together for the first time. I don’t want the freelancer to spend hours of useless work only to get more money. That happened to me once and I wasn’t impressed.

Second, I couldn’t care less how long the freelancer takes to do the job. I’m interested in the result and nothing else. I pay for the performance and the outcome. How he or she gets there really doesn’t matter to me.

Calculate Freelance Rate as a beginner, Digital Nomad, What to Charge as a Freelancer, Average Freelance Rates, Freelance Rate Calculator

Industry-Based Rates

A third approach to calculate your freelance rate depends on the nature of your job. Most people will be ok with hourly and project based rates. In some industries other methods might work better.

Take the translation industry for example. Here you usually don’t find hourly or project based rates. Translators often charge per word that has to be translated. That means you have to find the perfect rate that you can charge per word.

Another example would be the content writing industry. Here you can find pretty much anything. Freelancers charge per hour, per project or per word that they write. Every once in a while you will find a per page rate. Clients give a topic, the freelancer writes about it and in the end charges per page he wrote.

Do some research and see if your industry has its own methods which work better for calculating freelance rates.

Calculate Freelance Rate as a beginner, Digital Nomad, What to Charge as a Freelancer, Average Freelance Rates, Freelance Rate Calculator

Influencing Factors

It doesn’t matter if you want to charge your clients per hour, per project of if your industry has its own type of rates, you should always take the following factors into consideration as they have a strong influence on how you need to calculate your freelance rate.

1. Experience and Skills

An important point is your experience and skill level. If you are a beginner and are not much experienced yet, you probably won’t be able to charge super high rates. Very few people are willing to pay senior rates for a junior.

Self-confidence is great. But don’t forget that your performance should justify the rates. And less skills and experience usually shows in your results. Start lower to gain some more knowledge and references.

Your rates are not fixed at all. After a while you can raise them in accordance to your increased skill and experience level.

2. Marketing and Negotiation Skills

It’s true, if you are able to sell yourself well, you can score higher rates. Do you have a professional portfolio site that shows your expertise? How good are you with networking? Do you have a social media presence? Are you willing to negotiate and good at it?

All factors that can influence your hourly freelance rate. Never underestimate the power of marketing and persuasive negotiating skills.

3. Deadlines and Working Days

If a client wants something to be done as soon as possible, he is most likely willing to pay more. And you should ask for more! You will have to move your schedule to do his work first.

The same goes for evening, weekend or public holiday work. Don’t be shy to ask for an additional allowance. If you were a normal employee, he had to pay that, too, and it is only reasonable.

4. Effort

If you have to put in more effort in a job than usual, you can also ask for a higher freelance rate. For example, you are a content writer and the client asks you to write an article about the company’s product. You don’t know the company or the product, so you have to do a lot of background research or deal with terminology that you are not familiar with, which makes it more complicated.

Or maybe you are a programmer and have to work with a special customized tool that you have never seen before. Of course, this will also reflect in the number of hours you will need to do the job. But if it gets significantly more complicated because of certain requirements, you could also raise your rates.

5. Workload

Another factor that you can consider when you want to calculate your freelance rate is the workload you are about to get. When a client asks you for ongoing, high-volume relationship, you could give him a discount. You won’t have to look for new clients and thus, save time and energy.

6. Copyright

That depends on your industry again. For instance, if you are a songwriter and sell your artwork, make sure you got the legal requirements sorted. If you give away your copyright when handing over the final song, you won’t be able to re-sell it later.

Maybe you have a client who doesn’t care too much about owning the result. In this case you could lower your rates because you can make money again with it later by selling it.

7. Clients

Yes, that happens, too. There is a huge different if you do a job for one of your friends or if you work for a stranger.

Maybe your client is a startup company, very cool dudes, and it would be great fun to work with them. They might not have to budget you would usually ask for. But the job sounds good and you can afford to lower your rates a bit, so you go for it.

Or your potential client is a big international company. Their requirements and standards might be higher, but so is their budget. In this case you could charge more. Often, they don’t care too much about the money but simply want to see good results. And if someone asks for very low rates they might be wondering if these rates influence the quality.

Before you tell them your rate, you could also ask them about their budget. If you don’t want to come off too direct, start with something like “The price will be somewhere between 1,500 USD and 5,500 USD. It all depends on what details you want to include in the scope and your budget.” From there you can negotiate a rate that works best for you.

One Note on Competition:

Many people tend to adjust their rate based on what their competitors are charging. I’m not a big fan of that, to be honest.

There is always someone who does the job for less or one who charges much more. Where do you want to start and stop? Look at freelancing platforms such as Upwork. You can make great money on Upwork but there are also hundreds of freelancers who do it for less than you.

Apart from that, these rates don’t reflect your individual situation. Maybe your competitor has 20 years of experience and you only 2 months? Maybe he is from India and has much lower living costs?

Sure, go ahead and check out some other rates to get a feeling for your industry. The website Contently has a nice database with average freelancer rates, mostly in the writing, photography or design industry. But don’t let these rates influence you too much.

Calculate Freelance Rate as a beginner, Digital Nomad, What to Charge as a Freelancer, Average Freelance Rates, Freelance Rate Calculator

Start to Calculate Your Freelance Rate

As you can see, there are a few different ways to calculate your freelance rate. Decide if you want to charge your clients per hour, per project or if there is a specific method in your industry.

Have a look at the influencing factors and make sure to take them into consideration. Don’t make the mistake and base your rates purely on your competition.

There is no single one bulletproof formula how to calculate your freelance rate. It’s something very individual that only you can determine. But if you follow these strategies you should be able to set a rate that justifies your work.

What are your experiences with your freelancing rates? Do you find it difficult to find clients that are willing to pay your rates? Or could you easily charge more?

Freelancer Rate, Freelance Income, Digital Nomad, Business Tips, Freelancing Money, Make Money Online, Remote Job, Side Hustle, Passive Income (2)

Denise Mai

Denise Mai

Founder of Digital Nomad Soul

Hi, I’m Denise – a travel addict and remote work enthusiast. I have been traveling the world since 2008 and explored, worked, and lived in more than 80 countries. To me, there is nothing better than the freedom and flexibility that comes with a location-independent lifestyle.

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