What is your work worth?

    As someone who is looking at going into the design industry, I’ve always been interested in the idea of doing freelance work.  But I and many beginning freelancers face the same question: What should I charge for my work?  There is no one answer.  Rather, the answer to this question is different for each freelancer.  But, the answer usually follows similar principles and factors.

SOURCE: http://millo.co

     Before you even start thinking of coming up with a number to charge, you first have to look at what your costs are.  Using an article of the Design Shack titled, “Freelancing 101: What Does It Cost to Be a Freelancer?”, I was able to get a good idea of the equipment a freelance needs as well as an idea of what this equipment would cost.  What I found was that a freelance design typically needs: A computer, software, high speed internet, web hosting, resource accounts, printer/scanner/copier, and general office supplies.  I tried to then get a rough estimate of what all this equipment would cost, but it is very difficult.  This is simply because each designer is going to get a different computer, different software, etc, as well as there being countless numbers of web hosting services, internet providers, and resource sights.  

     The next factor you have to consider is taxes.  As a freelancer who is working for themselves, they have to pay an extra tax.  This tax is called the Self Employment tax.  I found information on this tax on the IRS’ site on a page titled “Self-Employment Tax”.  The Self Employment tax, in reality, really applies to everyone.  However, when you work for a company or firm, you only pay for half of the tax while your employer pays for the other half.  When you work for yourself, you have to pay the whole tax.  The tax is 15.3% but is split up with 12.4% going to Social Security and 2.9% going to Medicare.  The tax also applies to different amounts of income, which I explained in an earlier blog post.

     Once you consider your equipment costs and taxes, the next question you must answer is, should I charge a project fee or an hourly rate?  Using an article on Freelancers Union titled “Hourly Rate or Project Fee: What Makes Freelancers More Money?”, I tried to come up with an answer.  What I found was that there is no clear winner between charging hourly or per project.  There are pros and cons to both, but ultimately what I found was that there are certain situations where one option is better than the other.  Typically, an hourly cost is beneficial when a project is ongoing and is long term as well as when project goals are unclear.  On the other hand, a per project rate seems to be more beneficial when you have multiple clients who you are charging differently, your client doesn’t know what you do, you want to maximize productivity, your client is on a strict budget, or when you work fast.  I explained all of these different scenarios in greater depth in one of my earlier posts titled, “Hourly or Project?”.

     At this point in the process, a freelancer would probably have some rough idea of what they are going to charge.  As result, I looked at ways that you can maximize your price.  I used an article on Freelancers Union titled “Everything You Need to Know About Freelance Rates, Pricing, and Fees” that provided a good list of practices.  What I found was that one way to maximize your fee was to not use zeroes.  Doing this makes it seem like you have tailored the fee to your client’s needs.  I also learned that knowing how to negotiate well is important.  This includes being able to understand your client’s goal and representing yourself as a business rather than an individual.  Another piece of information I found was a list of good provisions to include in your contract.  These included provisions such as who has ownership of the work, what the scope of the project is, how payments will be made, information on early project terminations, as well as a couple other important provisions.

     Through my research, I have found that there really is no definite answer to the question of what determines what a freelancer gets paid.  While there are similarities, such as equipment costs, taxes, etc., it almost always comes down to circumstances.  Overall, I found that before setting a fee, you need to look at expenses and then think about your work ethic as well as your profit goal.  Once you know these, you can start really thinking about what to set your fee at.