As part of our commitment to proving that freelancing can be breezy and knot-free, Friz is bringing you the Ultimate Guide to Calculating YOUR Rates in the month of March 2022!
We will be covering considerate factors to pricing, how to strategically use hourly versus project fee, and how to then get that price at the negotiating table. If you think any of your friends could use this advice as well, share this article with them before reading any further!
Factors to take into consideration while deciding your charge
This week’s topic will cover overarching factors that will affect the overall pricing strategy. These pointers could be as direct as adding the cost of a rental equipment to the final number or as indirect as how much you want this position and how familiar you are with the client.
Freelancing is just about billing and quoting as it is about the work you’re charging for. Friz aims to smooth out the actual invoicing and credit process so you can focus on charging fairly and strategically!
Time in Administrative/Preparation mode
It’s important first, to understand that in many cases, you will spend a decent portion of time doing tasks that are related to, but are not the assigned task itself. For designers, you may spend more time researching and pitching to your client than actually making it happen in your design software.
For writers, you may spend more time replying to emails and reading relevant articles; for marketeers, you may spend more time in meetings than actually drafting out the final working plans. The list goes on and on.
While it is not always advisable to explicitly state hours from these preparatory stages, it’s always important to keep these in mind when deciding on a billing strategy.
Example of Billing for Research/Pitching time.
One example where I explicitly stated these was recently when I was pitching to a small tuition agency about a motion-graphics based video ad.
As I was not confident if the client would go through with the idea even after I’ve proposed to prototype it, I suggested charging them an hourly rate for the storyboarding/research process. Using Friz’s Invoicing tool, the final quotation looked something like this:
As you can see, I could’ve easily charged 450 for the video itself, but having the video itself cost less could help persuade your client that your price is closer to their estimate. (Rule of thumb: always assume clients want to pay less than you’re offering).
Moreover, in this specific instance, since my client decided to forgo the idea of an ad completely, after the pitch, since we’d already agreed to paying the hourly rate, I could get paid for my time at least.
In essence, work out beforehand, out of the estimated work hours your project might take, which of those hours are billable hours. If the project timeline is lengthened due to your personal constraints, factoring those into your billing will only hurt you and your relationship with the client.
On the flipside, if you consistently undercharge for your researching hours, then you’re not letting yourself attain the fairest wages and it may cause clients not to understand what it is they’re paying for.
There’s a reason in almost any job application, skill and experience requirements are mentioned. Hiring someone with a closely-matched skillset and familiarity with the industry can increase work quality exponentially.
Watch this video below about why you should first and foremost understand your skill level and value that.
When deciding how to price, make sure to factor in both time, difficulty, or effort. If a project is well within your area of specialisation, and you have relevant past examples to back it up, feel free to charge higher for the assurance that you provide.
In the same vein, if you know that your particular specialisation is rare in your local market, feel free to price highly for your unique knowledge.
Remember, You are worth what people think you’re worth.
Remember to account for effort too. This is because the difficulty of the work matters. You should be charging liberally above your base rate as recompense for white hairs and sleepless nights.
Say you’re pitching to re-brand two different companies.
One of the companies is a local startup whose previous in-house designer did a bad job and quit, leaving the company’s branding half-done 10 days before the expected launch. The other company is a multinational corporation that only requires you to follow existing design codes to update their graphic design practices.
Assuming both companies are equally willing to pay you, you should probably charge the local startup a higher price. This is because:
- They are using your expertise to swiftly conceptualise and execute a creative direction,
- The job is probably rushed and will cause you to be stressed out.
However, in another lens, the multinational corporation might be so rigid and bureaucratic that even small edits constantly get stuck in development limbo, and the actual time you have to really get ideas down can result in an unhealthy, rushed crunch time.
If a project is difficult or rushed, as a rule of thumb, charge high, especially if they’re looking for you. 30 hours of work over 3 days is very different from 30 hours of work over two weeks, and you shouldn’t underestimate the importance of having a healthy work-life balance.
For tips on how to work towards that, check out our blog article here.
Purchases or expenses related to the project
A lot of projects may not seem to have obvious overheads especially in our current gig landscape, where collaboration is mostly done online and over the internet, cutting short the frequency of business travel and related expenses.
Likewise, technology has also made production tools more accessible. What was once tens of thousands of dollars of equipment can now be done on your personal laptop, and even powerful computers used to compile complicated programs or render 8K videos can be had for a mere fraction of the costs that we once had to pay. However, we should not think that projects no longer require overheads.
For example, we discussed the strengths of hotdesking in Singapore in a blog earlier this year and recommended multiple co-working spaces.
These spaces not only offer a desk and a power outlet, but strategic locations, act as meeting places, contain unique resources like photo studios, and often have networking opportunities which may well lead to your next gig.
If you find these features can help you generate more equity for your client, then why not propose, for long term contracts, to include a portion of the hotdesking monthly fee?
Some other overheads you might not be thinking about are petrol or transport costs. If the client isn’t able to give you an office space, then they should be able to at least pay for the transportation you take to and from meetings.
Additionally, if you’re working in any sort of production, scope out the client’s willingness to rent. Always propose to the client if you feel that budget could be better spent, since with better equipment, higher logistical expenses, and more hands on deck, you can more reliably deliver a satisfactory end product, and who knows, even make this project a standout piece of portfolio!
This last portion is the most straightforward, but also might be the hardest to come up with, which is how much do you intend to profit? This number depends wildly on your cost of living, current career goals, and the nature of the industry.
- Say you have a valuable specialised skill set. Take profits! Make sure you don’t just get what your work is worth to you, but what your work is perceived to be worth to your client.
- You’re a fresh graduate who will work for experience? Quote low. This will make the client notice your application and you can focus on nailing your first few jobs.
- Hands full with commitments and financially secure? Quote high. Communicate exactly how, if you took on the job, it would be an added workload, while still giving the client the ability to take up your offer.
This week’s article is a complete overview of factors. Of course, they may be industry specific ones we’ve missed out on, and do note that most projects will only involve a few, and not all of these factors for consideration.
Next week, we’ll be digging into the calculations: How you can calculate many different but reasonable hourly/project rates, and how to choose the right number for your project. Stay tuned by following Friz on Facebook or adding this blog to your bookmark bar!