You're Probably Calculating Freelance Rates All Wrong

With a suite of tools designed for freelancers, Moxie can help you get a clear picture of your finances and get those rates just right.
You're Probably Calculating Freelance Rates All Wrong

Hero image by Neosha Gardner

Ah, the sweet smell of freelancing. It’s like a freshly brewed cup of coffee — invigorating, filled with promise, and a slight jolt to your everyday routine. But, and this might hit a little close to home, what if you've been brewing that coffee all wrong? Or, in freelancer lingo: setting your rates all wrong.

"Not me," you might be thinking, “I've got this down to a science!” Oh, go-getter freelancer, while I admire your audacity, let's get something straight. Even Einstein made mistakes, and even he had help. 

That’s where Moxie comes in. With a simple suite of tools designed for freelancers, Moxie can help you get a clear picture of your finances and help you get those rates just right. Sign up today! In the meantime, let’s discuss those rates, shall we?

1. The ‘Eyeball’ Method

You can't just pull a number out of the air.

The 'Eyeball' method in setting freelance rates is much like throwing darts blindfolded, hoping to hit the bullseye. Occasionally, you might get lucky, but more often than not, you'll miss the mark. Instead of relying on pure guesswork, setting freelance rates requires a keen understanding of the market landscape. 

By diving deep into market research, you can gain insights into where you stand among your peers. It’s essential to recognize your unique selling proposition: is your expertise that rare, vintage record found only in niche stores, or is it the popular hit that’s played everywhere? Each has its value and audience.

Moreover, the nuances of freelancing costs often go unnoticed. That high-speed internet subscription, the ergonomic chair supporting your back, and even the ambient music playing in the background, all contribute to creating the ideal workspace for maximum productivity. While these costs might seem peripheral, they collectively influence the holistic freelancing experience and should be accounted for when determining your rates.

2. Not Factoring in Everything

There's more to your rate than just your time.

Jumping into freelancing with a narrow focus is akin to running a marathon while only preparing for the first mile. Sure, the primary work is central, but there's so much going on in the peripherals. Those unseen hours — sorting emails, aligning with client visions, refining your skills — are as much a part of the process as the main task. 

Those client interactions? While they may seem like informal chats, they're significant time investments. They mold the shape and direction of your work. As you chart your freelancing path, consider every step, every twist, and turn. After all, success isn't just in delivering; it's in understanding and evolving every step of the way.

3. Forgetting about Uncle Sam

Taxes, taxes, taxes!

Thinking of your earnings as a freshly baked pie, each slice representing a portion of your hard work is indeed enticing. But before you get too engrossed in savoring your financial dessert, remember there’s a slice that's already reserved. With his ever-watchful eye, Uncle Sam (or wherever you pay taxes) ensures he always gets his piece. 

It's crucial not to get too swept up in the allure of gross amounts and to remember the net sum that remains post-tax. For those in the US, Uncle Sam claims at least 15.3%, and that doesn’t even account for the state tax.

Being a freelancer means wearing many hats, and one of those hats must be diligent accounting. It’s imperative to earmark a percentage of your earnings specifically for taxes. This foresight ensures that when tax season rolls around, you're not caught off guard. Luckily, Moxie has your back, learn more about those freelancer taxes with us or sign up for one of our workshops.

Being methodical with record-keeping, saving every receipt, and meticulously organizing every invoice isn't an eccentricity; it's the mark of a seasoned professional. And if numbers and ledgers feel like a confusing maze, consider seeking guidance from a professional accountant. They can be the lighthouse guiding you through the foggy waters of freelance taxation.

4. Undervaluing Your Worth

You're worth more than you think.

Imagine yourself as a painting. To some, you might appear as mere streaks of color on canvas. But to those in the know, every brushstroke tells a captivating story. Your freelance work isn't simply the hours you log; it's a reflection of your years of experience, learning, and passion.

Your unique perspective makes your contribution singularly invaluable. It’s this distinct flavor in your work, whether it’s a unique design style or a recognizable voice in writing, that clients pay a premium for. As you invest years honing your craft, your work becomes akin to an aged wine, deserving of a higher price tag. 

Let’s not forget the golden power of word of mouth. Every positive testimonial and feedback from clients? They amplify your worth, showcasing the trust, reliability, and quality you bring to the table.

In a Peak Freelance earning survey, the majority of freelancers undervalued their work or charged less for a project than it was worth. It can be hard to see yourself as a beautiful work of art, but the truth is most freelancers are already there. It is time you get what you are worth!

5. Setting and Forgetting

The world of freelancing is ever-evolving.

Think of the music industry. While classic rock songs have their eternal charm, the beats and melodies keep changing, introducing fresh tunes and rhythms. In the same vein, your core freelancing skills may remain timeless, but the surrounding ecosystem constantly shifts.

Market dynamics play a huge role. As industries change with new tools, technologies, and practices, your skills might find heightened demand. This calls for a re-evaluation of your rates. Moreover, as inflation creeps in, altering the value of money, your rates should adapt to reflect the rising costs of living. And as you polish your skills and expand your repertoire, remember that increasing expertise demands a heftier price tag.

Join our Email List

Recap Time:

To all the go-getter freelancers out there, here’s a quick rundown:

  • Ditch the ‘Eyeball’ Method: Use a systematic approach.
  • Factor in Everything: The journey matters.
  • Remember Uncle Sam: Taxes can’t be overlooked.
  • Value Your Worth: You’re the main dish, not the garnish.
  • Regularly Review: Keep up with the times.

At Moxie, we’re all about supporting your hustle with that cheeky wink and nudge, making sure you've got your bases covered. From client management to finances, we have something every freelancer can use. Because at the end of the day, freelancing shouldn’t feel like trying to whistle with a mouth full of crackers. It should be harmonious, rewarding, and, let's be honest, profitable.

So, keep it authentic, and remember: Every cup of coffee tastes better when you know you're brewing it right. Cheers to getting those freelance rates just right! 🍻

Share it!
Our team of career freelancers writes about best invoice practices, what makes a great client, and repeats the mantra, "never work without a contract." We're opinionated about the future of work and will always be on the side of freelancers.
More By This Contributor
Getting everything from your brain in one place
Moxie makes all your systems work together seamlessly with better software, education, and community.
hectic app logo