I had a very interesting question come into me via social media. Sarah, a client of mine asked “How do you know what to charge per hour?”

I felt I should answer this question for everyone. The reason it interested me was because, I to had encountered the same problem when I started Freelancing. Knowing your numbers and your worth is difficult and making sure to charge correctly is key to succeeding as both a freelancer or an entrepreneur.

As freelancers we do not just want to make ends meet, we want to get paid our worth!

For me I have 3 tips on how to charge and how to find out your worth. So lets start with how we go about finding our hourly fee.

1. First things first, we need to decide on what we want our annual salary to be. So for this example I am going to go with $70,000. Remember everyone has different expectations. Just make sure you choose the salary that would make you happy.

2. Next we add up our annual expenditure. So this will be your overheads, insurance, health care, office, programs, software. Anything at all that is an expenditure. When you get this number you add it to your salary.

So Salary $70,000 + expenditure $20,000

After this you need to think how many weeks you wish to work a year and how many hours per week. So I go with 49 weeks and 40 hours per week. Now we divide the above by this:

So Salary $70,000 + expenditure $20,000 = $90,000 / 49 weeks  x 40 hours p/w = $46 hour! So now we know what our expected hourly fee is!

Great! So your still with me. Now we know what our hourly fee is when quoting clients for our freelance work.  You mentioned 3 tips on charging? I did, and now to explain them.

My 3 Tips For Charging Clients

Type #1: Per Hour.

So the first way to charge client is per hour. Above we found out how to get our desired hourly fee. So this method is quite simple. You quote a client hourly. We do the work and then we send them a bill for the billable hours that we worked.

Tip: I always make sure to get at least 50% of hours paid upfront as a deposit!

Always remember, we do not want to overwork and be underpaid, which occurs way to often when speaking to freelancers.

So many freelancers no matter what there skill undercharge or leave money on the table. For example, I use to charge $500 for a standard website. I would then spend 40 hours in a week building it. I wanted $75 an hour as a freelancer, yet here I was at the end of the week working for $12.50 an hour, minus any plugins or other fees I encountered. So probably making $9 an hour in the end. Why?…Cause I didn’t know my numbers. Always know how long tasks take and the expenditure involved.

Always know how long tasks take and the expenditure involved.

Type #2 – Per Project

My second form of billing is per project. Again this is sort of like per hour charging. However we are giving a full quote to the client up front and not charging after the work has been completed.

A client approaches you with a website idea. We sit with them to discuss and come up with a plan for development. We calculate how many hours we expect this project to take us in advance, allowing for some extra hours for unforeseen circumstances and then we quote the full total. Remember to include any hours spend closing the client and meeting with the client before development and during also. Again always remember to get at least 50% payment upfront.

Sometimes clients will come to you with a budget that they have and they will not budge. So you need to make sure that as stated above “you always know how long tasks take”. It’s very easy to jump straight at a job for $1000-2000 without thinking how long this project will actually take you and in the end 9/10 times, it turns out to not be that profitable. So always know your time!

It’s very easy to jump straight at a job for $1000-2000 without thinking how long this project will actually take

Type #3 – Solution Selling

Solution selling, what do you mean by this? Let me tell you. There will be times when you will be approached by prospects that have a problem or an issue that they need resolved. Large businesses will usually have already outlined a budget to get said problem resolved.

Now this is where we need to be smart and not lose out on tonnes of money. Lets do an example.

Company A contacts you and they are looking to get a new platform developed for their website. The current platform that they are using is costing them $10,000 monthly. So now they wish to develop their own and take all aspects in house.

Freelancer A charges $50 hourly and calculates that this project will take 100 hours to develop. Freelancer A quotes Company A $5000 and the company accepts the quote. Freelancer A is delighted, he has got his desired per hour fee and has a nice project on his plate. However! Some of you may have realized, freelancer A has probably just left over $15,000 behind! Companies don’t care about hours, they care about solutions!

Companies don’t care about hours, they care about solutions!

So now lets approach this in a new way. Lets think about it like this, company A have a problem they want resolved. This is a $10,000 a month problem. So if and when you fix it, they will be saving $10,000 that month and every subsequent month here after. So your saving them thousands in yearly spend, yet you only quote them $5000 to do so?

The easiest way to solution sell is to simply ask, What is your budget?

They will have already discussed this and will have a budget in mind. If their current platform is $10,000 monthly, they will 100% have a budget of at least $10,000 and then they may even have a budget of 2 months spend so at least $20,000. So of course when freelancer A quoted $5,000 they would jump at it.

Our job is to ask, what is your budget. Can you see how freelancer A left thousands of dollars behind because her quoted per hour? Company A have a problem and we are the solution. So find out the problem, find out the budget and sell them the solution!

Craig Murray

Digital Marketing Specialist