Blog

Admin
19/03/2020
Blog No Comments

How Much You Should Charge as a Freelancer in Any Industry?

The term freelancer comes from medieval times when you had knights on horses fighting with lances. The freelancers would simply fight for whoever paid most.

As a freelancer, you have to consider a series of elements to make sure you can survive. Part of being a freelancer is seeing your value and finding a way to present it to your clients. Your confidence will grow with experience.

Demanding fair pay for your job could feel uncomfortable. It doesn’t have to feel that way.

In this article, I will guide you through one setup that I have found successful when bidding projects.


Types of Agreements

Fixed-price

A fixed price means that you bid a final amount for the job and deliver the product for that price. Whether you spend one hour or 100 hours is up to you. The clients pay for the product.

Most companies I have freelanced for want this setup. They need to know the total the job will cost them and then it is up to you how you finish it.

Don’t forget:
If you use this model, make sure you set up milestone deliveries with approvals. You also need to agree on how many correction rounds you will accept. If you don’t, the client never needs to approve any work and you will enter a loop of endless corrections which will cost you a lot of time and money.

Hourly pay

Hourly pay is not common in my line of work, but it might be in yours. You can agree on an hourly rate and invoice once a month, for example. With this setup, the client wants the project to be done quickly because it can cost them, while the freelancer might want to do a proper job and not worry too much about the hours. It will end up as a compromise.

Mixed pay

Mixed pay might not be the correct term for this, but you can agree on a fixed price with a time limit. This means that you agree on a price and if the project flows smoothly, everyone wins.

You should track the project in detail and agree on the direction you are taking the project. In this situation, both parties need to have dailies or weeklies to check the status of the project so you can work out how to proceed at all times.

It is quite comfortable to present a work-in-progress piece to the client and tell them to pick between A and B.

You can spend X hours on A or you can move on to B. Which is more important to you?

This will allow the client to carefully choose where to put their money.

How valuable is the product for the client?

If the product is extremely valuable for the client and will make them millions, you might want to consider this when bidding.


Photo of a hand holding 6 dollar bills.

Photo by Jp Valery on Unsplash

How Much Do I Charge for a Job?

To be honest, part of bidding is to get a number on the table. It doesn’t always have to be the correct number. What is more important is how you track it and adapt to any unforeseen events. I’ve probably bid more than a thousand assets in my career and to say that all of them turned out to cost exactly what was bid would be a grotesque lie.

If you work as a masseuse or masseur, a massage table is your MacBook.

In this article, I base my examples on the digital art industry, but it can apply to any industry. You just transfer the factors over to your line of work. If you work with massage, a massage table is your MacBook.

Let’s have a look at the factors involved in the bidding process.

1. Time

Yes, time itself. Consider the task and how long it will take you to finish it. If you are creating an architectural piece based on a CAD drawing for a presentation, you might break it down in your head. What is the preparation time to get the CAD working in your 3D pipeline? You have a modeling step, a look development step, scene setup, animation, lighting, renders, and presentation.

Do you just multiply the time it takes with an hourly rate then?

Kind of. You need to factor in all the other factors to get to that hourly rate. The hourly rate can be calculated by combining all of the expenses you have and then scatter this number over all the jobs you do in a given time frame.

In this article, we will set our calculation period to three years. All amounts are in U.S. dollars.

I include a 15% buffer for unforeseen events. This means that if you have a bid for 35 hours, you multiply it by 1.15 and get 40.25 hours.

A day is a day is a day

Remember, one day is 7.5 hours (though it varies from country to country), not 15 hours. When you bid one day you are bidding 7.5 hours. I even see professionals with ten years of experience fail this. If you bid one day and you work 15 hours you have worked two days on that day. This means your numbers are completely incorrect — a threat to yourself and your co-workers.

picture of a wall clock
Photo by Ocean Ng on Unsplash

2. Equipment

Equipment will be one of the factors that will often cost you the most as a freelancer. For example, a photographer might need a mobile workstation, like the MacBook Pro, a DSLR, lenses, tripods, memory cards, backpacks, flashes, lights, remote controls, cables and more. This could easily set you back $10,000–$15,000.

With a down payment plan of three years, as stated earlier, we get these numbers:

  • 7.5 hours per day
  • 37.5 hours per week
  • 162.5 hours per month
  • 1,950 hours per year

If you remove roughly three months of inactivity during the year (holidays and lack of jobs) you have 1,462.5 hours left of your year. If the period was three years, we can multiply this by three and get 4,387.5 hours. Let us round that up to 4,400 hours.

If we picture a down payment of $15,000 and divide that by 4,400 hours, we get roughly $3.50 per hour.

Hardware rate/hour: $3.50

picture of a man with a DSLR and a laptop

Photo by JESHOOTS.COM on Unsplash

Remember that a desk, chair, mouse pad, speakers, pens, paper, Post-its, notebooks, and watches are also classified as equipment. If it is made from a physical material and you use it while working, it is work equipment.

3. Software

The price of software will vary a lot.

You can get a long way with a Photoshop and Lightroom bundle for $10 per month. Some additional software might put you back another $500 per year, so let’s say you spend $620 on software per year, which is $1,860 over three years.

This number can skyrocket when you work with more expensive software. A 3D artist might need Autodesk Maya, Adobe CC, Substance Painter, Substance Designer, Mari, Nuke, and so on. This means you are looking at thousands of dollars per year.

Software rate/hour: $0.42

4. Services

When it comes to services, you might find yourself categorize them between nice-to-have and must-have. Remember that some of those nice-to-haves might be a good idea to acquire to appear more professional.

If we look at file-sending services like WeTransfer, having password-protected files that will delete themselves after so many days and a custom design to match your business profile seems more professional than the free version.

WeTransfer sets you back $15 per month or $150 per year.

Other examples of services you might consider:

  • Online storage (iCloud $9.99/month(2TB))
  • Music services (Spotify $9.99/month (Or you can use Youtube or other services.))
  • Tracking (Trello (Free version will do))
  • Omniplan($399/one time)
  • Communication (Slack $8/month)

Adding all of these together over three years will give us roughly $1,185.

Services rate/hour: $0.27

5. Rent and loans

Phew. We’re done with tech factors. Now we need to invite the being-an-adult factor to the party.

Chances are you either own a place or you rent one. This varies a lot, but let’s put down $500 a month on either rent or part of a loan down payment.

$500 a month for three years divided by 4,400 is equal to $4.10.

Rent rate/hour: $4.10

6. Power and electricity

Your house and your gear need power. This is another factor that will vary a lot based on your location and the current deal you have. I pay somewhere between $100-$200 on average per month. Let’s put down $150 a month for electricity. You might argue that your business should only account for the power it uses to get the job done and not all your power expenses.

Power rate/hour: $1.23

7. Insurance

When you are a freelancer, you are not covered by the same laws and safety nets as permanent employees.

If you get sick, there is no paid sick leave, so you lose money from the second you call in sick. You need insurance to handle this and you need insurance for a lot of other events: travel insurance, insurance on your equipment, life insurance, serious damage. The types of insurance you feel you need should go into this pool — and probably the ones you don’t feel you need, as well.

Let’s estimate an annual total of somewhere between $1,000-$1,500.

Insurance rate/hour: $1.00

8. Travel

If your work involves travel, you need to pay for that as well. A freelance photographer will most likely need to travel to the location of the shoot. You can either lash out a lot of money for a car or pay around $80 per month for a bus pass (in Norway). You might want to add a taxi buffer of $50 per month as well. If you only travel a few times per year, you might want to consider renting a car for those occasions. In this example, we will stick with the bus pass and taxi buffer.

Travel rate/hour: $1.05

9. Food

No food, no working body. When it comes to nutrition, there are so many drivers on price. Do you eat out all the time? Do you make your own meals? Do you buy in bulk? Do you only eat Russian caviar with truffles, or noodles with ketchup? Hopefully, somewhere in between. Let us put aside $400 a month for food.

Food rate/hour: $3.27

10. Marketing

Maybe you don’t need marketing. I have never paid for marketing. Networking was way better for me when I walked around in my freelancer’s shoes. Today, some industries are very hard to get into, so you might need some marketing. It can be professional accounts on websites, or ads on Facebook, LinkedIn, and job listing sites. Let us put aside $20 per month on marketing.

Marketing rate/hour: $0.16

11. Telecommunication

No matter what you do, you will need internet access and a phone. For telecom, we can put aside $100 per month.

Telecom rate/hour: $0.81


photo of a man calculating numbers

Photo by Kelly Sikkema on Unsplash

Adding It All Together

It is time to add up the essentials.

Hardware rate/hour: $3.50

Software rate/hour: $0.42

Services rate/hour: $0.27

Rent rate/hour: $4.10

Power rate/hour: $1.23

Insurance rate/hour: $1.00

Travel rate/hour: $1.05

Food rate/hour: $3.27

Marketing rate/hour: $0.16

Telecom rate/hour: $0.81

Total: $15.81

But what does this mean exactly? This is the minimum amount you need to just stay afloat. It is normal to have a factor around 2–3 on the rate. I have operated with 2.6, but I am not sure what it is today. If we take the rate above at $15.00, it would end up at $41.00.

You need to earn money to be able to do research or develop tools for your pipeline. Without earning money, you can not invest much. We haven’t talked about events or tutorials. These might be important to you. Maybe you need an accountant or a lawyer.

All setups, are different so you need to figure out what you need and use this way of thinking to end up with your price tag.

Remember that taxes are not calculated here. I always put aside between 30–40% for taxes. This means you need to add these taxes on top to make sure you are left with enough to pay the bills. Pension is not included here either, but is an important part to consider.


What to Make of This

The numbers here are irrelevant. They will vary a lot from person to person. Where you are in the world will also dictate your prices and how your company is set up. Maybe you have some fees that other countries don’t have.

What is important is that you sit down and factor in all your expenses. I have seen this so many times. Freelancers who just set a random rate based on how low they can go and still get the job. In a lot of cases, they pay to work, as they are not earning any money. That is insane, but can be hard to spot.

For the example in the introduction, we could break it down like this:

  • Project management: 40 hours (There is a reason this is on top! Don’t forget to add this. Where else are you going to log hours spent on emails, phone calls, skypes, offers, writing contracts, and meetings?)
  • Prep work and file handling: 10 hours
  • Modeling: 70 hours
  • Look development: 37.5 hours
  • Animation: 15 hours
  • Render setup: 15 hours
  • Rendering: 100 hours (Render rate: $2 per hour. Yes, you are charging for the time the machine is occupied rendering your footage. It will prevent you from working on other things. Alternatively, you can bake in online cloud rendering.)
  • Compositing: 21 hours
  • Online: 15 hours

You can see how a project like this can easily reach between 150–200 hours. Multiply that by $41.00 and add rendering at $200.00 to end up at around $7,000.00 — $8,000.00.

Photo of a handshake

Photo by Cytonn Photography on Unsplash

Again, the numbers are irrelevant. What is important is this:

Do not miss any of the steps!

If you forget one step, it can cost you several dollars per hour!

Another very important part of becoming better at bidding is that you need to track all your projects. Every hour should be tracked properly. You need to know exactly what you did during these hours and what asset you worked on. This way you can look back at the project and learn from it. Why did it cost you 10 more hours on one specific asset? How do I bid a similar one later?

Remember, you are never done, you just run out of time. I have never witnessed a project where we are done. We always run out of time.

This means we have to do what we can with the time we are given. When time’s up, you’re done — but with proper management, that will work pretty well.

Thanks for sticking with me to the end. I hope this was valuable to you. If you have any questions or insights, please let me know. I am always eager to learn.

Source: Medium.com

Comments are closed.