by Rachel Smith
12 February 2016
I am truly crap at maths.
That probably won’t come as a huge surprise to you – after all, many writers find their eyes glaze over when numbers come into the picture – but it’s not acceptable when you’re in business for yourself.
Why? Because you not only have to (shock horror) talk openly to clients about money ALL THE TIME, you actually need to learn how to number-crunch so you can be sure you’re using your time effectively. For me, $30 an hour or 30c/word is not using my time effectively. It’s sending me straight to Two Minute Noodle Land and as a parent, I really need to be able to put decent food on the table.
So, how can you be sure you ARE using your time effectively and making money – enough money to live on and perhaps even a little extra to ensure you can travel, eat out, buy new underpants? You need to figure out your hourly rate. Nigel Bowen touched on this in his recent blog post, and almost the same day my freelance pal Kathy sent me a freelance rate infographic to check out. It was just the hand-holding type of resource a number-hater like me needs to see a) if I am charging enough (no) and b) what I need to charge in order to live comfortably.
You might find if you use one of these, you need to raise your rates. Don’t panic! That’s a good thing, and the start of the year is a good time to do it with regular clients. For new clients, you can just quote your new rate.
Freelance Hourly Rate Calculator by Motiv
If you want a tool that really gets into the nitty gritty, this is it. It’s split into sections such as Your Preferred Lifestyle (champagne is not an option, sadly), your Personal Expenses and your Business Expenses, then calculates what you should be charging. Check it out here.
The Your Rate Calculator
A super easy calcluator that simply asks three questions – the salary you’d like to make per year, the billable hours you can feasibly imagine working per week, and how much time off you want. It then spits out what you should charge as an hourly rate. One downside: it doesn’t take into account all your expenses. Check it out here
The RKM Hourly Rate Calculator
It’s not so pretty to look at, but it does the job in 30 seconds flat. You use pull-down menus to enter your preferred annual salary, super, business costs, profit you’d like to make, holidays you’d like to take, sick leave and billable hours to get what you should be charging hourly. Check it out here
The NAB Guide to Calculating Your Annual Rate
It’s not a calculator so you have to do the hard yards, but this infographic is clear and takes away the need to simply ‘pluck a rate out of the air’ (which I have been guilty of). It shows you how to start with your target salary, then add in all your expenses such as internet, phone, tax, laptop depreciation etc. You then get an adjusted salary (ie, your target salary + expenses). Then you factor in your billable hours, allow for time to be spent on non-billable things, and voila – you have your hourly rate. Check it out here.