Do you feel unsure about your hourly rate?
Is your intuition telling you that your hourly rate is too low, but at the same time, you can’t think of any justifiable reason to raise it?
It might be because you’re making common calculation mistakes that many writers make when they go from being employed to being a freelancer.
Most freelance writers don’t earn as much as they should because they undervalue the worth of their time. In this post, I’ll cover 3 common mistakes that freelance writers make when they calculate their hourly rate, and how you can avoid them.
Mistake Number 1: You think that you should earn the same salary as you did when you were employed
Many freelance writers, who were previously employed, calculate their hourly rate based on how much they were paid at their job. For example, if I made 12,000 NIS per month for 196 working hours, then my freelancing hourly rate would be around 65 NIS an hour.
This is not how you should be approaching your hourly rate. As a freelancer, your hourly rate needs to cover more than just your salary. When you were employed, your company may have paid for your phone. They may have given you a laptop and paid for your lunches. Now that you’re self-employed, business expenses come out of your own pocket. As a result, you’ll have to charge more per hour if you want to make a profit.
Mistake Number 2: You think that you need to work the same number of hours as you did when you were employed and take the same number of vacation days
Another BIG no! One of the main benefits of going freelance is that you don’t have to work 8-9 hours a day, 5 days a week, to earn your desired salary.
You are your own boss now. No one can stop you from deciding how much you want to work and when you want to work. You can work 30 hours a week and take off 28 days a year if you want, as long as you adjust your hourly rate to meet your financial goals.
Decide in advance how many hours you want to work annually and plan ahead so that you can take advantage of one of the biggest benefits of being a freelancer – a flexible work schedule.
I’m the first to admit that it took me a while to enjoy the flexibility of freelancing. I felt like I had to mold my freelancing career into something that looked similar to my previous in-house copywriting job. It wasn’t until my twins were born that I started to make some changes. I began working 5 hours in the morning and sleeping 4 hours in the afternoon while our nanny was still on duty. This gave me strength to be up all night with 2 crying babies. After living this way for a few months, I understood that I could bend my work schedule around my life and still make good money.
Mistake Number 3: You think that you must charge the market rate for your services
Knowing the going rates for freelance writers in your country is important. That’s why I created the freelance writers’ rates chart. Hundreds of freelance writers in Israel have downloaded it and I know it’s helping many of them figure out what they should be charging. But you don’t have to.
Market rates should be used as a benchmark. They are there to help you understand what clients are willing to pay for your services. For example, if you will aim for rates that are above the market rates, you’ll make sure to offer significantly more value to your clients in order to justify the higher rate. Otherwise, you might have trouble closing deals.
So, how do you get to that magic number? Your hourly rate should be the unit price that you will use to calculate fixed project rates and retainers, so it’s really the foundation of your pricing.
The best way that I know is to think about how much you want to earn in one year, how much you want to work in one year and reverse-engineer your numbers from there. I teach members of my Grow Your Freelancing Community to do this using an accurate formula, which takes into account expenses, profit, billable hours, sick days and vacation days. Once they calculate an hourly rate that is ideal, specifically for them, they can set their long-term financial targets and work toward them with realistic monthly goals.
Now it’s your turn.
What’s the biggest mistake you made when calculating your hourly rate and how did you fix it in the future?