It's official — you’re freelancing. High five! Now comes a crucial step: setting your freelance rates. With 59 million Americans freelancing in 2021 alone, there is a lot of pressure to find the best rate to stay both competitive and pay your bills. We know it's a daunting task, filled with uncertainty, but don’t fret. We're here to give you some practical advice on navigating this critical part of your journey. It's both a science and an art, and with some good planning and the right tools, you'll be able to find the right balance.
Speaking of needing the right tools, this is where Moxie comes in. This freelance invoice software not only allows you to create and send invoices quickly, but it also lets you send recurring invoices, tailor freelance proposals, and even track time against invoice and see your hourly rate in real-time. Sign up today for a free trial.
First things first, know your value. Your skills, experience, and the value you provide to clients are instrumental in determining your rates. It's not just about the time you spend on a project — it's about the quality of your work and the value you add to your clients' businesses. Do your research, understand your market, and position yourself appropriately.
As your own business owner, you are on the hook for your own finances and they can be overwhelming at times. It is small wonder up to 75 percent of freelancers leverage software solutions for their finances. These expenses (including said financing software) impact your bottom line and should be considered. Indeed, all your business expenses should be factored into your rates. This includes things like software subscriptions, office supplies, travel costs, and more.
With Moxie, you can manually input all your expenses. We even automatically track credit card fees from connected payment providers like Stripe and PayPal. Having a clear picture of your costs is crucial to setting profitable rates.
Setting freelance rates is not just about covering your costs — it’s also about achieving your income goals. Your rates should reflect the lifestyle you aspire to lead. Calculate your desired annual income and break it down. Consider everything from your retirement contributions to vacations. Don’t forget you’re also covering things like health insurance and taxes.
As a freelancer, not all your working hours will be billable. Be sure to factor in non-billable hours when setting your rates. This includes time spent on admin tasks, marketing, professional development, and more. Moxie makes it easy to track your time in real time, giving you a clearer picture of how you spend your workday.
Knowing what others in your field charge can provide a useful benchmark. Understanding market rates helps ensure you’re not under or overpricing your services. Do your research and stay competitive. Bear in mind that you don't have to be the cheapest; it's about providing value. Learn more about how to understand the market in our free Freelancing Finances course.
An effective hourly rate can provide a wealth of insight. Using your effective hourly rate can help you tailor projects to maximize income. By leveraging Moxie's effective hourly rate feature with filters, you can see your earnings over a set period. This helps in understanding how different projects and clients impact your income, aiding you in making informed decisions about future work. For more on this, consider registering for one of our Workshops.
Remember, your rates aren't set in stone. Your freelance rates can — and should — change over time. As you gain more experience, expand your skills, or take on more complex projects, your rates should reflect these changes. Don’t undersell yourself (even if you hate selling) — your pricing should reflect your current skill set and experience level.
Finally, make it a point to revisit your rates regularly. Regular reassessment of your rates ensures they remain competitive and aligned with your value. Things change — your skills, the market, your goals — and your rates should adapt accordingly.
So, let's recap:
Remember, setting freelance rates is a delicate balancing act. It requires a clear understanding of your expenses, the value you provide, and your income goals. Tools like Moxie can provide invaluable insights into your expenses, time spent, and effective hourly rate, making the process less daunting and more data-driven.
Embarking on your freelance journey is both rewarding and challenging. Setting your rates is one of those challenges. But with careful planning and the best invoicing tool for freelancers, you'll be able to set rates that reflect your worth and support your business goals. You've got the skills and the dream, so let Moxie support the business side of your freelancing while you do the work you love. Sign up with us today.
Learn more about freelancer finances, including how to pay taxes, here!
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