So to break even, I’ll need to make $3,000 a month, right? Nope—don’t forget the taxman’s slice. If I assume I’ll lose about 30% in tax, then I’ll need to aim for$4,300 a month—that will leave me with just over $3,000 take-home pay.$4,300 x 12 is an annual salary of $51,600. Remember, that’s not your aim—that’s the absolute minimum you need to make to survive. (And also remember, these numbers are just examples—costs of living, of course, vary widely depending on your circumstances and where you live.) ### Work Out Your Billable Hours Now consider how many hours you can work in a week. But here we’re only interested in billable hours, i.e. direct client work that you’re getting paid for. Remember that, particularly if you’re just starting out, you’ll need to spend time on marketing, searching for jobs, making unsuccessful applications, etc. So even if you’re planning to work 40 hours a week, perhaps only 20 of those will be working directly on projects. You can’t charge for the time you spend updating your website or networking on LinkedIn. So let’s say 20 hours a week, times 50 weeks in a year (you need at least two weeks’ holiday!), so you have 1,000 billable hours in a year. ### Divide! Now just divide the first number by the second one.$51,600 divided by 1,000 is $51.60 an hour. That’s the minimum hourly amount you can charge. That figure is the one you’ll apply to every project from now on. For this particular one, we’ll multiply the$51.60 by the 30 hours we expect to spend on the white paper, for a minimum project estimate of $1,548. Our final amount will probably be higher, but it’s good to start with a baseline. ## 4. Consider the Non-Financial Benefits This tutorial is about pricing your work to make a profit, but there are plenty of reasons why you might want to reduce your rate, or even in some cases work for free. Maybe it’s a non-profit whose mission you really believe in, for example, and you’re happy to give them a freebie. Or perhaps it’s a prestigious client who can give you good references. Particularly when you’re starting out, it can be worth under-charging to pick up assignments, add to your portfolio, and get some endorsements. Often it’s good just to get your name out there in different places. I sometimes write guest posts for writing blogs, for example. The pay is usually below my normal rate, and sometimes non-existent, but they’re quick to write, and they send traffic to my own website. Here’s one that got a lot of attention, and sent quite a bit of traffic my way. I also used it as a clip to help me get regular, paid blogging work. Similar considerations apply in other industries, of course. For example, see this recent Tuts+ article on when it’s OK (and when it’s not OK) for photographers to work for free. ## 5. Research the Competition Sadly, this is often the first and only step freelancers take. When I was starting out, I often based my charges on what I thought the “standard rate” was, and then got depressed about how little money I was making. ### Price Isn’t Everything Here’s the thing: there is no standard rate for writing (or design, or any other field). There are general guidelines, but the prices vary widely based on the client’s needs and resources, your experience level, the type of job, and a host of other factors. Even for something as simple as writing a blog post, the “standard rate” could be anywhere from$5 to $500, depending where you look. It’s like asking what the standard price is for a necklace. At a high-end jeweler it could be thousands, but go around the corner to your local street market and you can probably pick up several nice pieces with the change from your pocket. The quality of the gems and the beauty of the necklace account for a large part of the price difference, but not all of it: it’s also about brand positioning, customer perceptions, the power of advertising, and more. To give another example, I’m writing this from Rome, where you can visit the majestic St Peter’s Basilica free of charge. But for many of the other sights, you have to pay a hefty admission fee. The people who run those other sights don’t think: “St Peter’s Basilica is free, so we have to be free as well to compete.” They charge what they need to charge, trusting that people will be willing to pay for what they offer. Judging by the lines outside the Colosseum, it seems to be working. So please don’t make price your only consideration, and feel you have to undercut everyone else. However, you do still need to take the market and your competitors into account. Here’s how to find out what other people are charging. ### Do the Research When researching prices, I recommend starting at the top, with the equivalent of the high-end jeweler. Even if you don’t think you’re experienced enough or skilled enough to charge those prices, it helps to know what the real pros charge. If nothing else, you can use it as a bargaining chip in your negotiations, by showing what a discount you’re offering. Pretty much every field has a professional organization representing it, and sometimes several. In my own area of writing and editing, there’s the Society of Authors, the National Union of Journalists, the Society for Editors and Proofreaders, and more. And that’s just in the UK—other countries have their own organizations. These organizations often do surveys of the rates charged by their members, and they often make the results public. Here are some great resources for writers: As you can see, there’s a wealth of information on the prices of different types of work. I sometimes quote these rates directly to clients. It gives more solidity to my estimate, because it’s backed by a professional organization, not just something I pulled out of thin air. For our white paper project, we can see from the last document that the average rate for writing a white paper is between$2,500 and $10,000, so we have plenty of scope to charge more than our$1,548 baseline (more on that later).

If you’re working in a different industry, or in a different part of the world, look for a professional organization that’s applicable to you, or at least the closest you can find, and research the rates as much as you can.

If you are using a freelance marketplace site like Elance or ODesk, of course it’s easy to search through old listings and see what the price has been for similar jobs. But be very careful when doing this. You’ll come across a huge range of figures, including lots of bargain-basement prices. Once again: please don’t feel that you have to race to the bottom. Think about what you offer, and how you can position yourself as the high-end jeweler, not the desperate street vendor.

## 6. Decide on Your Profit Margin

Now for the fun part. You decide how much profit you want to make. There’s no right answer here—it varies from job to job, depending on the competition and your experience level and other factors.

We’ve already calculated that the minimum amount we can charge is $1,548. But you want to do more than just keep the lights on, of course. You want to save up for those times when work is scarce, and you want to treat yourself and others in your life, and not just be scraping by. So we can go beyond our baseline here. It’s not exploitative—it’s charging what you need to charge in order to thrive as a freelancer. If you do a good job, it’ll be worth it to the client. To decide how much you can charge, you’ll factor in all the other things we’ve considered so far. This is where all that research comes in. You know that other professionals are charging from$2,500 to $10,000 to write a white paper, so there’s scope to charge more. Also take into account your own level of experience. If you’re one of the best white paper writers in the business, you can position yourself towards the top of that range, or even beyond it. If you have less experience, maybe start out towards the bottom of it. You’ll still turn a healthy profit. You’ll also want to take into account how much you really want this job. If you need the work, or if there are other non-financial benefits, you can go closer to your minimum. If you're almost fully booked and this will be hard to fit in, maybe charge up. Also consider the client's deadline—it's OK to charge more for rush jobs. This part is not very scientific—there’s no formula to apply that will spit out your final estimate. The number you decide on will be based on plenty of research and data, but will also involve an element of personal judgment. For this particular white paper job, an estimate of$2,500 would seem reasonable to me. But as I said, it depends a lot on your individual circumstances, and the client’s expectations, and the prevailing norms in the market in which you’re operating.

## Conclusion

Putting together an estimate for a freelance job doesn’t have to be a nightmare. Just follow the process I’ve outlined, and consider all the different factors like your costs, your experience level, how much you want the job, and any non-financial benefits.

The important thing is not to go below your baseline fee unless there’s a very compelling reason to do so. And no matter what the job is, be ready to walk away if the client can’t or won’t pay the fee you need. For more tips on negotiating with clients, see these 12 negotiation tips for freelance writers.

## Resources

Graphic Credit: Math icon designed by OliM from the Noun Project.