Home Business - Pricing Your Freelance Projects - Continued

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Home Business Basics Categories:

Setting Your Hourly Rates | Pricing Your Projects
How to Quote a Freelance Project | Should You Take the Job | Naming Your Home Business
Legal Considerations for Your Home Business

VARIABLES

There are always variables that you will need to take into consideration when figuring out what you will 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 under your belt?
4. What skills do you have?
5. What clients do you want to attract?
6. Are you working online or local?

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 (the amount from #1)

For example, if the following is true:

1. Salary = $30,000
2. Annual Hours = 2,080
3. Nonproductive Time = 500 hours
4. Profit Margin = 20%
5. Overhead = $15,000

Then this is how you figure out the hourly rate:

1. 2,080 - 500 = 1,580
2. $30,000 + $15,000 = $45,000
3. $45,000 X 20% = $9,000
4. $45,000 + $9,000 = $54,000
5. $54,000 / 1,580 = $34 / hour

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