September 21, 2020

How to Determine Your Rates as a Freelancer: Interview with Christina Gwira

When it comes to starting a freelance business, one of the most difficult – but important decisions you have to make is how much to bill your clients for your time and work. There is so much confusion and very little transparency around freelance rates. Charge too much and you risk losing the client. Charge too little and you end up selling yourself short. But what is too much and what is too little?

To facilitate a conversation around this topic, we interviewed three members of the Women Who Freelance community to share their best tips on navigating rates and getting confident about charging their worth as a freelancer.

The first interview is with WordPress Designer and Founder of NoyaDesigns -Christina Gwira. Christina shares her winning formula on calculating freelance rates.

Women Who Freelance: Tell us about yourself?

Christine Gwira: Hey Lana, thanks for having me! I’m Christina and I am a WordPress web designer. I’m the founder of NOYADESIGNS, a digital design company that creates beautiful, functional and bi-lingual websites for non-profit organizations and medium-sized business. In 2018, I started creating content to help web and graphic designers who were looking to turn their passion into a viable business. I started freelancing in 2010 and registered my business in 2016.

WWF: How did you figure out how much to charge at the beginning?

CG: When I first started I had no idea what I was doing or how much I should be charging, which is quite common to someone new to freelancing. I tried to base my rates on the market at the time, and was searching for gigs on websites like Craigslist and Kijiji (yuck!). At the time, these websites often included listings from freelancers overseas, who offered much cheaper rates. So in order to match their rates, I started offering my services for very low prices. To tell you the truth, there was never a time that I charged the cheapest rate possible and had a good experience with the client.

WWF: Is there a formula that you currently use to structure your rates?

CG: Right now, in my agency we take a value approach to our pricing, but we still need to calculate the human cost of the service we provide. This is how I came up with this formula. Every single person on our team has their own hourly rate and we use that, plus value pricing to quote organizations on their design and creative work.

Grab a pen, we’re going to break down this formula! The structure that I use to find out how much to charge for a project has the following variables:

T = Time: how long a project will take to be completed
R = Rate: my hourly rate
P = Profit: how much money can be made AFTER covering expenses and labor
E = Expenses: things like salaries, software, coffee etc.

So, the formula that I now use to dictate my base project rates is as follows:

(T x R) x 1.P x 1.E = My project rate.

A lot of people get stuck on what and how much to charge on a per hourly basis. I say… charge what you want… AFTER you’ve done the following:

1. Looked at what the industry charges
2. Looked at what you’ve charged in the past
3. Looked at what your skills and capabilities are

Now, you’ve gotten your hourly rate, a rate that YOU are happy with. For this example, let’s say that your hourly rate is $35. It’s time to figure out how long a project will take to complete, including revisions, communication time etc. This is why it’s super important to track how much time it takes for you to finish a project. I use the free Chrome plugin toggl.

Before you quote a project, take a look over your time tracker – or past projects – and see how long it took you to complete a similar project to the one that you quote. Let’s say that it took you 8 hours, on average, to complete a logo branding suite. So, the labor cost of your project would be: $35 x 8 = $280. YOU NEVER SHARE THIS NUMBER WITH ANYONE ESPECIALLY CLIENTS! 

This is the cost for *you* to only do the work and get this project done. This number is sacred and also essential to know..

We’re in business, so we have expenses, salaries and a coffee habit to fund…

From this, you can choose to add a certain percentage for expenses and a certain percentage for profit. I advise at least adding 60% to your labor cost and then move up from there. So, when you plug all these numbers in, the cost that you would charge your client – according to our formula – would be as follows:

(8 hours x $35/hour) x 1.3 x 1.3 = $473.20 (your project rate).

Now you have the price for your project! You’ve accounted for the manual work to do the job, you’ve accounted for your coffee and you’ve also accounted for the profit in your business. It is from THIS AMOUNT that you determine if you’ll do a 25% off sale, or offer a bundled deal or what have you. Why? You’ve covered all your bases, taken care of your business AND taken care of YOU!

WWF: What’s the advice you would give to freelancers to be confident and ask that amount?

CG: It’s definitely a mindset thing. Freelancers need to understand that though we can work from bed – or Bali – in our pajamas, we still have very real bills to pay. Go out there and have the confidence that when you charge from a position of reality, math and full understanding, you can properly invest in your life and your future.

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