I've known for a while that Freelance Switch offers this super-nifty calculator that will help you determine how much money you should charge per hour based on your cost of living and quantity worked. I hadn't really taken advantage of it yet, because when you first get started as a freelancer there's about a million and one things on your to-do list that don't make money directly, and this was nowhere near the top of the list. But last night I made up for it by running the calculator several times, and recording the output. Putting the data I pulled from the calculator, I made three separate charts: the first was based on bare-bones survival (no eating out, no health insurance, etc.), the second was based on a decent living (hiring a bookeeper, budgeting for retirement) and the third was for "making it' (budgeting for concerts, higher rent, decent Christmas gifts). Considering each chart, I plugged in different combinations of potential hours worked per day (my hours are on the low side because I'd like to devote a few hours daily to my blog or novel). This gave me hard numbers for how much I need to work to survive/succeed as a freelancer. Or conversely, how much I need to charge to work the hours I want to work. I think this will help motivate me to either work harder or negotiate harder for more pay. It may also allow me to not stress out and work 24/7 because I know when I'm making a living wage.
I thought I'd share this as it is a way of using the freelance calculator that maybe you haven't thought about.
My client yesterday questioned how much I charge per hour (but not to me directly, to my partner)
Which seems a bit odd, given that I charge well under the standard going rate for what I do ($40/hr, as opposed to $60-100).
Given that I have no direct competition – being an independently certified Green Business that does 3 separate services (hauling, delivery and handyman) I suspect I could get away with charging even more, but I don’t because I am somewhat anti-capitalist and I don’t believe in charging the most one can get away with. I charge what I think is fair compensation for my time, and what I think everyone should make.
I asked my internet friend Mr Money Mustache what he would recommend I do different in order to retire early like he did. He looked over my financial numbers and said that spending-wise, I’m doing better than him, and my rates are good; the one thing I need is hours. I just can’t seem to be motivated to search out work. Hypothetically, if I had aggressive advertising and tried to work the American standard 40 hours a week, 50 weeks a year, I’d be making about 80k a year, but there is no way in hell I could be convinced to voluntarily work that much. But on the other hand, the 10 or so a week I work now is perhaps a little too far in the opposite extreme. I make plenty enough for rent and food and health insurance and retirement, but not enough for Early retirement (which is what I would call “making it” – financial independence, so that further work becomes voluntary instead of mandatory!). I have to keep reminding myself whenever I get a chance for hours that I’m not enthusiastic about “hours – that is what gets you a step closer to your goals”. I still haven’t started doing any kind of marketing yet. Maybe having read this will help inspire me.
Anyway, given that you put retirement into category two, (which is good!), but then went on to call making it voluntarily paying higher rent and buying expensive gifts – and given that you are a blogger yourself and therefor probably read them – I’m going to recommend you read MMM too. Its the only blog I read regularly – I started when he was 6 posts in – you will notice my comments throughout.
http://www.mrmoneymustache.com/
Notice the “welcome new readers” on the right sidebar. That’s a good place to start.
Thanks, Jacob. You’re not the first to recommend Mr Money Mustache to me. I’ll hope on over there.
People talk about how freelance rates have to be higher because of the hours you work that you don’t get paid for, but I didn’t–couldn’t–really understand it until I was living the life. It’s not surprising you procrastinate on looking for gigs: that’s work you have to do that you don’t get paid for.