Not many people talk freely about pricing out freelance work. It’s this scary and unknown place, but honestly, everyone wants to know. I plan on covering a variety of topics regarding money over the next few weeks, so definitely check back for more! Before I sart, let’s get real : pricing is 100% different for everyone. No two people are alike. Creatives have different work ethics, skill sets, and experience … all of which need to be taken into account. It is my goal to give you a general sense of how to approach things.
Let’s start first by thinking of the big picture : your ideal income. According to AIGA’s annual survey, a fresh designer right out of school makes an average of $35,000 – $45,000 annually or about $20 – $30 per hour. If you’re starting out as a freelance creative, these numbers are a great starting point for you to look at. However, keep in mind that these averages are for those who are working with a company, have benefits, and a set work week for the most part. They’re not freelancers. People working for themselves do not receive benefits, have extra expenses, work odd hours, and are required to pay self employments taxes. Plus, not all hours put in are paid. There’s nobody above you paying you to promote and market yourself … It’s all out of pocket. With that said, although the yearly income averages I mentioned above are a very good starting point for research, a lot more needs to be taken into account.
The first thing I did when I decided to work for myself full-time was set a “goal income.” You know, what did I want to make, within reason. And because people rarely talk numbers ( even though everyone wants to know ), I’m going to be completely open and honest about my process. So here it goes : After a lot of thought, I told myself that I would be happy with at least $30,000 after one year of freelancing. That may seem low ( I kind of did that on purpose to myself ), compared to the $35,000 – $45,000 estimated earlier, but I knew that a LOT of my time would be unpaid dedicated to networking, research, and the development of my own business throughout that first year. I realized that I was building something from the ground up and money wouldn’t appear from thin air. My ideal yearly income has since changed, but hopefully this gives you some sort of starting point. Think about what you want to make, what’s reasonable, and find a happy medium. Who knows, you may surprise yourself and exceed your ideal income at the end of the first year. If I can do it, you can do it! Hard work pays off. Gain experience, learn as you go, and your ideal income will increase easily over time.
The second thing to conquer is setting up an hourly rate, which is the most challenging part by far. Sure, you could figure out how many hours you think you’re going to work per week, on average, and do some math with your ideal income to come up with an hourly rate. Or you could plug in some numbers to this free rate calculator. But here’s the thing : doing math will only give you a good starting point. It’s not an answer. There is absolutely no way to know exactly how much you’re going to make as a freelancer. There are just too many variables.
What I can tell you, though, is that you need to compensate yourself fairly. The $20 – $30 an hour estimate from AIGA does not work in this case, because working for a company and being a freelance creative equal different things when it comes to money. In my opinion, if you’re working for yourself, your hourly rate needs to be somewhat higher than the averages found on AIGA’s survey if you’re wanting to reach your ideal income. It’s the truth. While a designer working for a company could reach $35,000 a year by working at $20ish an hour, a freelance creative would have to work even more hours to reach that same salary. The reason for this is simple : not all hours a freelancer works are paid for. There are the hours you’ll spend endlessly marketing yourself and the times where you work more than you initially estimated on a project ( unpaid overtime ). There’s value and work ethic. Long work days and phone meetings. Because of these reasons, and many more, you need to adjust your price appropriately. It’s up to you how you interpret all of these things, but know that they need to be accounted for and added. Don’t undersell yourself, or you won’t survive.
I could go on and on about each and every little detail that goes into figuring out rates … from expenses to your own value as a creative, it’s all relavent! I hope that this post has come across as honest and raw. I know that not everyone will agree with my thoughts on pricing, but it’s good to get it out there and open for discussion. Remember, I’ll be back in a few weeks for even more on pricing!