By Bigg Success Staff
For all you freelancers, consultants, and service professionals, an hourly rate calculator is a great tool to calculate the rate you need to charge to make the money you want. We originally wrote this post about a tool called the FreelanceSwitch Hourly Rate Calculator, but that seems to no longer be available online. However below are the steps an costs that calculator used to crank out a number for you.
And we found a new tool to plug those numbers into: the Freelance Hourly Rate Calculator. You’ll see the steps are similar, and what is on this page will help you better understand the steps on their page.
You’ll need to gather up some information beforehand. Specifically, know what it costs you to do business as well as your personal costs of living. You’ll also want to think about your work patterns – how much you want to work and when. Finally, you’ll want to think about your goals for retirement savings, major purchases, and the like.
Now you’re ready for the hourly rate calculator! You’re less than twenty minutes away from knowing how much you should make!
Step 1 – Calculate your business costs
You’ll be asked, item by item, to enter your costs including:
- Rent for your office
- Furniture and equipment, including computers
- Communications, such as internet and cellular phone
- Insurance on your business
- Professionals, like legal and accounting services
- Miscellaneous costs not covered above
Step 2 – Calculate your personal costs
Then, you’ll be asked to consider your personal costs, like:
- Rent / mortgage
- Daily expenses.
- Occasional expenses – repairs, holidays, etc.
- Other expenses not covered above
Step 3 – Determine how many hours you can bill
With all your costs in, you’re ready to determine how many hours you can actually bill out each year.
You’ll be asked to break that down by:
- work days each week
- personal days
- work hours each day
- your billable percentage
Step 4 – Set your profit (savings) goal
How much profit do you want? If you don’t have enough profit, you won’t stay in business. If you get greedy, you’re unlikely to attract clients in the first place.
Be reasonable, but still allow for enough money to fund major purchases, like cars, home remodels, or anything else you would like to do.
Step 5 – Click to calculate!
You’ll end up with two numbers – your ideal hourly rate and your break-even hourly rate.
Now you have to use your instinct. What will it take to make you happy? What are clients paying now for services like yours? What’ are competitors charging? How does your reputation, skills, and experience compare to theirs?
These are all factors you should consider in setting your hourly rate. Ultimately, you must rely on your gut instinct, but at least you have a scientific way to get to it if you use this great tool.