My general rate is $105 per hour.
I’m always fascinated by the range of reactions to my rate—anywhere from “Wow you must be rich” to “That’s way too low, you should be charging more.” Generally, I think that means I’m probably at a reasonably appropriate rate, since I don’t particularly receive one reaction over the other, and usually get no reaction at all. One of the considerations I've made in setting my rate is keeping in mind the kind of clients I want. I really like startup entrepreneurs and non-profits, and my pricing is kept low enough to appeal to them. I'm not trying to get rich, I just want to pay my bills and do meaningful work.
Agencies and larger companies don’t even bat an eye at my rates. They understand the cost involved in running a business (even a one woman show), and they’re used to paying such rates from their contractors. And of course they turn around and mark up my fees when charging their own clients so that they still make a profit.
I don’t think, however, that everyone else understands what goes into my rate, so I thought I’d put together what some of my considerations are/were when coming up with them.
Come April, the government will be looking to collect almost a quarter of my earnings. Gone—just like that. So keep in mind that I don't even get to keep almost a quarter of what you pay me.
Yep. My rates pay for my vacation days. Well of course they do! Just because I’m a freelancer doesn’t mean I don’t have a right to get away from it all like everyone else. If you work for a company, you are likely taking off from work several weeks a year and still getting paid for it. I want to do that too. And trust me, these aren’t cushy vacations. My idea of a vacation is a grueling road trip on my motorcycle to somewhere far away. Usually while camping—sleeping on a thin mat on the ground and eating from a can. Generally by the time I get home I need a vacation from my vacation.
Software & Office Supplies
Have you ever looked at the cost of design software? Probably not. Adobe Creative Suite isn't cheap. And there aren’t exactly a lot of alternatives. Generally speaking, if you can make a career at something, the software used to do that is priced accordingly. And once I’ve bought that, I need to make sure I have a speedy up-to-date computer (I get paid hourly, so the faster my computer works, the faster your job gets done, and the less you pay), a giant size monitor to scrutinize over my designs, a mouse that doesn’t make me want to toss it out the window, a keyboard that I can pound away at comfortably, a printer that can give me reasonably accurate proofs, and all the notebooks, pens, sticky notes and thumb drives I can handle. Oh, and don’t forget my coffee maker.
Most people have no concept of what benefits cost. Your employer, if you have half decent benefits, is spending thousands of dollars a year on you in benefits, whether you use them or not. Since I don’t have someone supplying me with benefits, it’s up to me to pay for those. Because the next time I do a header over my bicycle I might knock out my front teeth, and I’ll be grateful that I didn’t skimp on benefits.
There’s a lot of up front and post-project administrative time that goes into my job. I’m everything. I’m the accountant, I’m the secretary, and I’m the salesperson. I respond to a lot of email queries that never result in any work. I do research on new digital technologies and find more efficient ways to do my job. I do a ton of back and forth with clients and potential clients that for various reasons is never billed. I do time tracking and invoicing and estimates. This is all working time, and it needs to be accounted for in my rates, because I may work a 40 hour week that only includes 23 hours of billable project work. I still need to get paid for all of that time, however.
Last but certainly not least—that old adage “you get what you pay for” tends to ring true in the design world. I’m good at this, I’m knowledgeable, and I’m efficient. If you’re good at something, you should be able to make a decent living at it. You shouldn’t have to struggle. I try to charge what I feel my work is worth. If watching Home & Garden Network for hours on end has taught me anything, it’s that when you get renovations done on your home and you hire a cheap contractor, you tend to get shoddy work. Of course that doesn’t mean that everyone charging higher rates is worth it, but that’s why you have testimonials and portfolio pieces to help you decide if I have the skills and attitude to justify my prices. Trust me—anyone who’s really good at this isn’t going to come for cheap. Why would they? No one is going to charge less when they can be charging more, unless they’re doing it for charitable reasons. And since I haven’t won the lottery lately, I’m definitely not in a financial position to be charitable. Maybe someday.
In short, I can guarantee you that I’m not getting rich off freelancing. I’m not struggling either—I’d say I’m comfortable. There are occasional months when I go through lulls and things get a little bit tighter, but for the most part I’m keeping afloat and enjoying the (modest) things that make me happy.
Some added context for you
When I worked at an agency, my time was billed out to clients at $150/hour. I was salaried and my salary worked out to around $40/hour if I worked a 7.5 hour day (I almost never worked a 7.5 hour day, generally my day was around 9+ hours). Now I get paid for every hour I work, and I’m no longer working long (unpaid) hours to make someone else wealthy.
Work-life balance is really important to me, so now I try to keep to a 7.5 hour work day (which is usually between 4-6 hours of billable time, and the rest is administrative—answering emails, invoicing, time tracking, general organization, etc). I’m a much happier designer for it. Agencies have become a competitive bloodsport to see who can work the longest hours and suffer the most. It’s not healthy, and it’s not how I want to spend my life. I may love design but I love a lot of other things too, and no one lies on their death bed lamenting that they could have worked longer hours.