I’ve seen a few posts circulating around about how to get started pricing yourself as a freelancer. I wanted to share the formula that I’ve used for over 3 years to make sure that I pay myself, can pay my business expenses, have a profitable design firm, as well as pay those pesky taxes (kidding!).
So here goes! Today, I’m going to show you how you can come up with the rate to craft a logo branding suite.
The formula that I use to find out how much to charge for a project has the following variables:
T = Time: how long a project will take to be completed
R = Rate: my hourly rate
P = Profit: how much money can be made AFTER covering expenses and labor
E = Expenses: things like salaries, software, coffee etc.
Here’s the formula (I’ll break it down further):
(T x R) x 1.P x 1.E = My project rate.
A lot of people get stuck on what and how much to charge on a per hourly basis. I say… charge what you want… AFTER you’ve done the following:
- Looked at what the industry charges
- Looked at what you’ve charged in the past
- Looked at what your skills and capabilities are
Now, you’ve gotten your hourly rate, a rate that YOU are happy with. Let’s say, after doing your research, you decide that your hourly rate is $35. It’s time to figure out how long a project will take to complete, including revisions, communication time etc. This is why it’s super important to track how much time it takes for you to finish a project. I use the free Chrome plugin toggl.
You look over at your time tracker – or past projects – and see that it takes you 8 hours, on average, to complete a logo branding suite. So, the labor cost of your project would be: $35 x 8 = $280. YOU NEVER SHARE THIS NUMBER WITH ANYONE ESPECIALLY CLIENTS! This is the cost for *you* to only do the work and get this project done. This number is sacred and also essential to know. It’s from this number that you can see when/if it makes sense to discount your services and have a sale, calculate what your profit rates are and much more. We’re in business, so we have expenses, salaries and a coffee habit to fund…
This post is getting long, so I’m going to share the rest of this sometime later.
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Got questions? Leave ’em in the comments section and I’ll answer them!