You need an hourly writer rate. While you don’t tend to give that to private clients, it will help you determine the costs for projects.
Determining your hourly rate takes time. That last thing you want to do is set something that is too low for your needs. Think past the idea of minimum wages and what other people set and determine what you need to make per billable hour that you work. Yes, there are some hours that will be unbillable.
You don’t just need to make sure your rent is paid for. You’ll have electricity and internet costs, business purchases, and other needs throughout the month. I’ll go through how I set my minimum hourly writer rate so you can determine yours.
My regular outgoing costs determine my true hourly writer rate
All freelancers will have regular outgoing costs. You need to make these back just to help your business break even. My costs include:
- Rent costs
- Internet costs
- Energy bills
- Phone bills
- Work insurance
Some of these costs are higher than the business use. For example, I could break down my rent into the percentage used for office space, but the whole of my rent needs paying. So, the full rent costs per month are used.
Work insurance is really important. It covers me if I get sick. I’m currently looking into other types of work insurance and to cover more money should I not be able to work but at the moment the amount I pay is enough. I’ve never actually had to use my work insurance for my costs. Usually, when I’m ill I will still work or I’ll move the work onto a different day. It’s there, though, just in case. The last thing I want is to get so sick that I can’t work for a whole week or two. But it’s a business outgoing and the total costs are included in the breakdown when working out my hourly wage.
These are just basic costs. I also have subscription services, website running costs, and more. Let’s move onto them.
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My business expenses
My true hourly rate will also involve my business expenses. These are things like stationery, printer ink, and subscription boxes.
All businesses have expenses of some type or another—not including your regular expenses listed above. You’ll need the stationary, even if your work is predominately online based. You’ll need business cards for networking and then there’s the cost of travel and exhibition fees for work-related functions.
This can be difficult to work out. I’ve taken the amount I’ve paid over the last 12 months as an idea and then rounded it up slightly for the next year. As my business grows, my expenses are likely to follow suit.
The amount you want to earn for the month/year
You’ll likely have an income goal for the month or year. Say you want to earn $50,000 for the year, minimum. You would then need to break that down into your daily rate. Remember that you won’t work every day of the year so divide it between the days that you will work.
104 days of the year are weekends and about 10 days are holidays. You’ll then have your own holidays on top of that (say between 10 and 20). If I work on that basis, I have 231 days of work during the year.
If I wanted to earn $50,000 within those 231 days that’s $217 (rounded up) that I have to earn per day. To work out the hourly writer rate, I’d then need to work out how many hours I’m going to do that are billable. Say that’s just four, that’s about $54 per hour that I would need to make.
That’s just a general guideline. It depends on how many days you’re willing to take off for the year and how much you want to make. I’m not saying that’s how much I definitely want to make but you get an idea of how I work it out.
Sometimes for bigger projects, it’s better to know your daily rate instead of your hourly writer rate for pricing, so having both worked out is extremely useful.
What about savings and retirement?
And now comes the future. As a freelancer, you don’t have a work pension plan and you need to think about your savings. If you simply earn the basic amount, you won’t have any money to put food on the table, let along save for the future!
Work out how much you want for retirement and then divide that by the number of years you have left. That shows your yearly figure and you can work out the daily/hourly figure using the same method above. Savings work the same—how much do you want to save each year?
Your hourly writer rate actually includes so many little things. It’s not just about breaking even in the business. You need to feed your family, pay the full amount of rent and cover the bills, as well as plan for the future.
I’m lucky that I don’t have medical costs to cover but you may have to think about that too! I’m also lucky that my husband works full-time now so he can cover some of the costs but you may be a single parent with three mouths to feed or you may be lucky enough to live on your own! Your hourly writer rate depends on your personal circumstances as well as business costs.
It’s always better to aim higher than your hourly writer rate. You’re not going to get clients who want to pay it all the time so by earning more, you increase the chance of averaging out at the right amount.
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