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Setting freelance rates Polywork

How to set rates for your side hustle without selling yourself short

Having a side hustle is like running a small business. You may be your only employee, but you’re still selling services and you get to decide how much those services cost.

If you’re new to freelance work, setting rates can be overwhelming. For the most part, there is not a one-size-fits-all model for charging clients. There is a lot at play – experience, urgency, expertise and more. As someone who has hired freelancers at my full time job, I’ve seen people charge anywhere from $60 an hour to $1200 a day for the exact same assignment. So yeah, there’s always going to be a range.

But what range is right for you? Here are some ways to figure it out.

Step 1: Decide how to bill

Of course, you can ask your client how they prefer to be invoiced, but usually, it’s best to come with a recommendation. The way that you account for your work may make a difference in how you set your rate.

Should you bill hourly?

Billing hourly is great for work that is time consuming, but relatively easy to accomplish. The classic equation to come to a freelance hourly rate is to take your most recent full-time salary, determine the hourly rate by dividing by 40 (the typical work hours per week) and then divide again by 52 (weeks per year). Then multiply that hourly rate by 1.5 to account for all of the benefits you don’t get as a freelancer.

Calculating Your Freelance Hourly Rate

Step 1: (Full-time salary / 40 hrs per week) / 52 = Hourly rate

Step 2: Hourly rate x 1.5 = Your freelance hourly rate

Should you bill by project?

This is a good option for when there’s a job that won’t take you a ton of time, but it does require a certain level of strategy or expertise. That way you get paid for what your work is worth regardless of how quickly you’re able to accomplish it.

Should you bill by package?

This is great if there is a bit of an amorphous brief. This way you can define what you see the potential deliverables as and charge accordingly. For instance, when I’m first talking to a potential client, I often set up packages of what I could offer them.

As a writer and content strategist, my packages vary by how many options I provide, how many rounds of edits I foresee, how much research I do, etc. People almost always choose the package priced in the middle, so I usually put the work I want to do in that tier and base the other two around it.

Step 2: Think through the deliverables

Alright, you know how you want to bill, now it’s time to decide how much to charge.

Create a scope of work

Organize what’s being asked of you so you (and your client) have a clear idea of the job. I like making a simple table in a Google Doc with the project, the deliverables, anticipated hours and the timeline. Seeing it laid out helps me think through pricing and gives the client clear expectations of the scope of work. If you want to get really fancy, Smartsheet has a bunch of free scope of work templates you can download and use.

Pretend you're hiring yourself

Do some research on the going rates for your skill set. Getting an idea of what other people charge will help you decide rates – taking into account differences in experience or expertise.

Upwork's Freelance rate comparison tool

For creative freelancer comparisons, I like Upwork and Working Not Working. But you can also go to Glassdoor or LinkedIn to get the average annual salaries for your kind of role and then do 150% of that hourly rate to get a solid benchmark.

Watch out for imposter syndrome

Hustling for freelance work is really about being your own advocate, so don’t get nervous about asking for what you deserve. According to a recent study, women freelancers are more likely to charge less than men for the same job.

Source: ZenBusiness

In fact, the pay gap is wider in freelancing than in any other marketplace. No one wants to be that kind of statistic.

Decide what the experience is worth

Not all hours of work are created equal. What would you have to be paid to do something you don’t like? I might charge way above my hourly rate for a project that I know I’ll hate, but it’ll be worth it to me to do it anyway if I make a certain amount of money. Similarly, if there’s a client I really want to work with or if a job just seems fun, I’m fine with charging less than usual.

Trust your gut

There is no exact science. One client of mine, surprised by my low rates, offered one of the best pieces of career advice I’ve heard to date: ask for “the most amount of money you can say with a straight face.” Since taking on this tactic, I’ve made a lot more money and lost zero clients.

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We share 7 tips on the best ways to start building your side income. See more on the Polywork Blog.

Step 3: Look for external confirmation

Phone a friend

Have other freelancers in your network? Or people who often hire them? Reach out with your scope of work and proposed pricing to get their take. Sometimes I just need confirmation that my pricing is fair from a friend to feel confident going to a new client with my rates.

Pivot as you go

If you’re charging too much, people will tell you. It’s ok to pass on gigs that aren’t willing to pay properly, but if more than one client passes on you because of price, it may be time to relook at your rates. If a client refuses your initial proposal, you might also consider letting them know that you are open to negotiation.

Recently I’d scoped a $4,000 project with a client who told me the rate I gave was too high. I gave options for cutting costs and ultimately my takeaway was only $250 less than my proposal.

Give what you were paid for

Charging top dollar? Good, you should! Just be sure you’re delivering on those rates. When you do consistently good work in a timely manner and are just nice to work with, people are willing to pay a pretty penny. Consistency and competency are worth the extra money for most potential clients.

I should note that this guide is primarily directed at people who need help setting their rates for a side hustle. If you are looking to freelance full time, there are more expenses you have to account for and less overall leniency. Nation 1099 has a great guide to setting your minimum and goal hourly rates to reach your financial goals and keep your freelance business buzzing.

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