When you decide to start a freelancing or consulting business on Zoondy, one of the early decisions you’ll need to make is how much to charge for your services. Your hourly fee must not only reflect the time and effort you put into a specific project; it must also cover your business expenses and overhead. In addition to familiarizing yourself with tax requirements for self-employed individuals (see our previous post), you should consider the following when setting your hourly rate:
- Determine your overhead and business expenses, including office supplies, equipment, software, office space, marketing, shipping, bookkeeping, taxes, insurance, etc. While these expenses may be peripheral to the actual project, they are part of the cost of doing business. If you fail to recoup these costs in your hourly fee, they will come out of your profit and you may find yourself losing money.
- Consider your personal expenses such as mortgage or rent, utilities, food, clothing, car payments, medical bills, insurance, etc. You need to know how much you need to make each week, month and year to cover your living expenses. Determining a target income will aid you in setting your hourly rate and give you an idea of the amount of business you’ll need to generate to be profitable.
Knowing how much money you need to make to support yourself is just half of the fee-setting equation. To attract business, you also have to price your services competitively.
- To find out what other people are charging for similar services, go to the U.S. Bureau of Labor Statistics website which offers wage data by state, region and metro area.
- Search LinkedIn, Career Builder, Simply Hired and other job sites to see what others are charging.
Your goal should be to price yourself close to your competitors to weed out customers that demand premium services for bargain prices. Initially, you might want to price yourself on the low side of average to attract new business; increasing your rate as your client list grows.
Find more tips on starting a freelancing or consulting business at The Zoondy Daily.