Pricing Projects

Determining how much should you charge the services is often one of the biggest challenges for new freelancer. Charge them too much you won’t get hired, if you charge too little you’ll starve. Right?
Take the time to read this article and figure out what you need.
If you are a new freelancer, you have probably asked your colleages, browsing the Internet trying to look for average rates of professionals in your field. Don’t even bother, let me tell you the secret, there aren’t any “average” rates because demographics are too widespread. Even United States has banned competitors from discussing rates amongst each other based on Antitrust laws. This is why you are having such a hard time finding rate surveys, there aren’t any. Instead I will show you how to figure out what your rates should be by using a formula.

Start by figuring out what you want your annual salary to be.To determine your salary, you gotta know how much should you earn as an employee, you might get guide at salary.com, find out what an average salary for your profession is.

For this formula, you will need to figure out what your overhead is.
Overhead is an expense that cannot be shown to client, it’s just a cost incurred by running your business. Please fill out the following form. If you aren’t sure what your overhead is, then look back on last year’s credit card bills and checking account statements.

MONTHLY OVERHEAD:

* Note : use certain percentage regarding your own country taxes of terms.

NONPRODUCTIVE TIME

There are duties that must be completed for each client that are not productive towards completion of the project.
Figure out the actual work hours are spent on the following duties. You will need this total later, so keep the number handy.

* You may put any activities due to your needs. Not strictly followed the list above.

PROFIT

Now you need to figure out how much profit you wish to make. Profit is the amount that you make over expenses. I recommend 20% in order to make an acceptable profit margin. Profit is necessary for a successful business so make sure to count profit into your formula.

VARIABLES

There are always variables that you need to take into consideration when figuring out what price you charge.
You must take into consideration the following:
1. What does your competition charge?
2. What is your niche?
3. How many years experience do you have?
4. What skills do you have?
5. What clients do you want to attract?
6. Are you working online or local?
7. Are you working alone or got partners?

FORMULA 1
Follow these steps to figure out what your hourly rate should be.
1. Subtract Nonproductive time from Annual Hours to get Billable Hours.
2. Add Salary and Overhead Together
3. Multiply Total By Profit Margin (10% – 20%)
4. Add Total (1) and Total (2) Together
5. Divide Total (3) by Billable Hours

For example, if the following is true:
1. Salary = $30,000
2. Overhead = $15,000
3. Annual Hours = 2,080 hours
4. NonProductive Time = 500 hours
5. Profit Margin = 20%

Then this is how you figure out the freelancer’s hourly rate:
1. 2,080 – 500 = 1,580 (Billable Hours)
2. $30,000 + $15,000 = $45,000 (Total 1)
3. $45,000 X 20% = $9,000 (Total 2)
4. $45,000 + $9,000 = $54,000 (Total 3)
5. $54,000 / 1,580 = $34 / hour

FORMULA 2
This formula is the easiest of them all. However, I don’t recommend this formula unless you are a very established professional. This isn’t the way to start out your freelance business, only very skilled freelancers can get away with this.

Ask yourself the following questions:
1. How much money do you want to make on this project?
2. How many hours do you want to work?
Now all you need to is Divide these two numbers. Its that simple, you now have your hourly rate.

FORMULA 3
Use the following formula if you are interested on how to set the rates for your entire business.
Add up all costs to run business on an annual basis (including profits) by annual hours (2,080). This will give to you your pay rate.

1. Salaries + Overhead = Annual Costs
2. Divide Annual Costs by Annual Hours
So For example, if the following is true:
1. Salaries = $60,000
2. Overhead = $50,000
3. Annual Hours = 2,080

Then this is how you figure out the hourly rate:
110,000 / 2,080 = $52

posted by
John Gunawan W
www.dimensiplus.com
Excellent Taste

www.creativeclan.net
creative for creative