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Discovering Your Rate: a Step by Step Guide

by Margaret Penney | March 12, 2016

How to determine your rate

Coming up with an hourly rate as a freelancer can be an arduous task, but it is one of the most important things to figure out as you start out as a creative entrepreneur. The sooner you explore, research, and discover your hourly rate, the sooner you can have a clear perspective on how much money you should be making.

So, let’s get to it and figure out your hourly rate:

1. Expenses

The first thing you want to do is to add up your business expenses. If you have a home office then come up with an amount that is reasonable for the amount of the home you use for the office. You can come up with a total and then create a percentage of that for your home office.

The kinds of expenses you should include are: your promotion costs, online subscriptions and apps, contract labor, your rental or homeownership costs, utilities and Internet connection, equipment, travel/meals, insurance, business taxes, and car costs. You could also use your freelancer expenses from previous years as a guide.

2.  Salary

Do some research and come up with a salary that makes sense for you as a designer and is reasonable in the current market climate. Take a look at the Sessions College’s Salary Outlook for more of an idea of what the average annual salaries were for last year.

3. Calculate your Base

Combine your expenses with your salary and then divide it by the number of hours you estimate working for the year. The average hours people work is about 1600 hours, calculate your own hours accordingly. Once you are done this is your base rate, what you need to get by without a loss to your business.

4. Make a Little More

Ideally though you don’t want to just get by, you want to succeed as a designer and put money into savings and for your retirement or your children’s education. So add a reasonable profit margin to your base rate. Come up with a yearly amount you want to profit, divide it by the hours per year, and add that to your base rate.

Once you have finished you have your base rate and your ideal rate. Now when you go into a client negotiation you know how much you need to make, this should make it easier for you to clearly articulate your value and worth to a client.

Making enough money to thrive is an important way to create your best work, as well. If your calculations are reasonable and fair, it can be simple to explain your rate and the cost of your creative services to clients.


Margaret Penney is the Managing Editor of Notes on Design. Margaret is a teacher, designer, writer and new media artist and founder of Hello Creative Co.


Are you interested in sharpening your business skills? Sessions College offers a wide range of advertising and marketing courses. Contact Admissions for more information.

This blog is powered by Sessions College, the leading online school of visual arts.

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