Now HERE’S a website some of you might find really helpful, especially those of you embracing the “free agent nation” concept and going into business for yourselves — as well as those pursuing temp/contract work as a stop-gap measure while you continue to search for a permanent role. One of the most common questions that comes up in these scenarios? Figuring out exactly what hourly rate you should charge as a freelancer, contractor, or consultant.
If you click here, you’ll find a handy Hourly Rate Calculator tool offered by the folks at FreelanceSwitch that purports to solve this problem — or at least help shape your thinking the right direction. This simple but well-designed application asks you a series of questions designed to assess your financial needs, spending habits, and profit expectations, and then it spits out two numbers: 1) the hourly rate you’d need to charge to reach your desired take-home pay (e.g. profit) goals; and 2) the hourly rate you’d need to charge simply to break even.
Now granted, there are certainly many other factors (as the site itself explains) that one might need to consider in deciding what to bill for their time, but this tool gives you an excellent starting point for conducting your analysis. It’s quick, it’s easy, and the results seem to be pretty reliable in terms of what the tool spits out compared to what I’ve seen various consultants charging out there these days. So I’d strongly encourage you to give it a whirl, if you’ve found yourself toying with the idea of taking on projects at an hourly rate.
Want to explore the topic in even deeper fashion? If so, then I’d recommend you combine some exploration of the above tool with some additional reading related to the challenge of figuring out what to charge for your time. You’ll find one great article here at Salary.com that provides some keen insight into this issue. There’s another good article on TechRepublic, available here, that discusses some of the more “intangible” issues in establishing your rates. And lastly, there’s my all-time favorite, an article from Kate Wendleton that is getting a little dated now, but talks at length about how to puzzle out the “what should I charge?” answer. You’ll find this last article here.
Ultimately, there’s no magic eight-ball one can shake that will tell you EXACTLY what you should be charging your clients on a contracting basis, just like there’s no foolproof source for determining the exact salary you should ask for when negotiating for a new permanent position. It usually comes down to a little bit of analysis, a little bit of instinct, and a willingness to quickly change gears if the number you throw out there leads to lots of shocked looks from your customers — and turns out to be a consistent deal-breaker!