There are really only three ways that you can charge for freelance work:
1. For your time
2 For your output
3. Per project
Before you even begin to think about charging a client for a job, you need to decide what you need to earn from your freelance work. If you already know this, you can skip the first step.
First of all, how much money do you need to earn from freelancing in a month in order to survive? As a freelancer, you should have a good idea of what your living expenses and overheads are, and whether you have other forms of income.
If you are a videographer or photographer that needs to use expensive equipment, your overheads would be high. If your work requires a lot of travel, that cost needs to be factored in. Don’t forget your tax deductions, and you also need to factor in a budget for maintenance, upkeep, insurance and savings.
So your very first step as a freelancer is two-fold: how much money do I need to survive, and how much time can I realistically spend working? Can I put in an eight-hour working day, or do I have other demands on my time?
Once you have worked out your expenses and the number of hours you can realistically spend working, you will have arrived at a rough hourly or daily rate. You can then compare this to the Safrea Rate Card rate for the kind of work you do, and this will let you know how much wiggle room you have to negotiate.
As an example, if you need R20 000 a month in order to cover your expenses and overheads, and you are able to work a realistic five hours per week day (just remember that working hours are not just the hours you are sitting in your office or in front of your computer, or preparing to work, but the actual time you spend working. Most people can put in a maximum of five to six hours of productive work a day.):
R20 000 monthly expenses – 5 hrs per day = 100 hours a month
20 000 ÷ 100 = R200 per hour
This means that you can work 25 hours a week, or 100 hours a month. In order to earn R20 000, you will need to charge R200 per hour. That is your absolute baseline and you cannot charge less than that without compromising your earning ability. And this is also on the understanding that you are working all those 100 hours in order to make that amount of money.
However, from here onwards you need to consider a number of variables:
- Are you skilled and experienced and can therefore charge more than your base rate?
- Is the work difficult or complicated which would justify a higher rate?
- What is the Safrea rate for this kind of work?
- What is your client’s budget?
- What kind of relationship do you have with your client? Can you discuss the budget with them?
- Is the work going to keep you busy for an entire month so that you in fact earn your basic, or it is a much smaller job? A rule of thumb is that the smaller the job, the higher your base rate can be. A lot of small jobs require more preparatory work, and perhaps more marketing and correspondence.
Now that you have determined your base rate for charging, you need to decide the following:
1. Do I charge for my time?
2. Do I charge for the output?
3. Do I charge for the project?
These three elements are essentially different ways of saying the same thing, but they will determine what the final charges are that you present to the client.
1. Charge for Your Time:
On some jobs, it is better to charge for your time. These are jobs when there is a lot of preparation or research or planning, or perhaps client consultation. You might be asked to come up with a logo or pay-off line, and it will require three days of thinking and trying out, but only half an hour of actual work. Or you might need to wait three hours to get a particular photograph. Then you need to look at the amount of time you need to spend on this job, in comparison with an accepted rate for this type of work. So, if the result that the client wants from you is not really in relation to the amount of time, effort, skill and experience that you need to expend on it, then you charge for your time.
So now you need to think realistically about the amount of time you will spend on this job. By now you have a fair idea of your speed and efficiency, so you should be able to come to a fair guess of how long it will take.
BUT! There is a payoff here. If you are a very fast and efficient worker, you will complete the job in less time than someone else. Do not disadvantage yourself by under-charging. It is sometimes difficult, as a freelancer who works alone, to decide if you are quicker or slower than average, but you should have a fairly good idea. So you can adjust the time you take, as opposed to the time you SHOULD take.
Charging for your time is the simplest and quickest way to charge, as you have already worked out how much you need to make in an hour to live.
2. Charge for Your Output:
Some jobs, mostly writing, get paid for output: in other words you get paid for your finished work regardless of how much effort you put in.
Most writers charge per word, most publications pay per word.
Some jobs, like editing and proofreading, get charged per page and clients prefer to pay per page.. Sometimes a photographer will charge per photo.
In these cases, the Safrea Rates Card will give you a guide about how much to charge for this output. However, be aware that there are other elements at play before you finalise your charges:
Some publications have a set word rate
Clients have differing budgets. A large multinational corporation will have a bigger budget than a small local NGO. If possible, ask your client if they have a set budget.
There is a variable here that is important: the output charge must also match your base rate for your time. For instance, if you are being paid R2 per word it might sound quite good. However, if you are getting paid R800 for a newspaper article of 400 words, it would be extremely reckless professionally to spend R100 on a long-distance call, to spend five hours doing online research, and then do numerous re-writes and edits. According to your own baseline rate, you need to make R200 per hour, which does not include your costs of doing business. If you spend R100 on gathering information, and a further seven hours on research, writing and editing, you will have reduced your baseline rate to R100 per hour, which you already know if not enough to live on. So when you are charging a rate for output, make sure that the output rate also roughly matches your time.
3. Charging a Project Fee:
This is by far the easiest way to charge for a large or complex job, and usually depends entirely on the budget that your client has available. A project fee is usually based on an evaluation of the amount of time it will take to produce the result along with the scale of the actual result. It might include setting up a team and organising the logistics. It is unlikely that a client would not have a pre-determined budget for a completed project, so that would be your first question. If they do not, then you need to break the project down into its component parts and charge for a combination of the time required and the desired result.
Why you might charge below market rates:
Your balancing act here is how badly you want this job. If you know the budget is low, but you need the money, you can charge below market rates. You might also have a good relationship with this client, or you want a good relationship with this client, and you are prepared to work for a lower cost in return for greater rewards down the line. Or you might be entering a new field and you would like to create a profile or identity within that field.
On the other hand, the danger of quoting low is that a client who sees you undervaluing yourself will not value you either. If you have started by charging low in order to get the job but the rate does not increase to a reasonable rate within time, then you need to ask yourself if you should become more assertive and ask for a revised rate. Give the client the opportunity to give you reasons why they cannot raise your rate.