Two ways to set up your rate as a Freelancer

Here are 2 ways to calculate your salary rate. Learn about the most common estimation tools to calculate your effort and rate with a focus on the digital industry.

CONTRACT HIRING METHODS

Let’s start by explaining the two most common types of contract in the digital industry:

• Fixed Price Contract: Get paid for the work done. i.e.: I will create a Word document for you, and the total cost will be 10 dollars.
• Hourly / Time & Materials Contract (T&M): You will charge your customer by the hour worked. i.e., My cost is 10 dollars per hour. The Word document will take me 3 hours. So, the final cost will be 30 dollars.

CHARGE FOR YOUR WORK

I will give you a few steps of much charge for your work:

Define the type of contract

As I mentioned above, you should be able to tell your customer which type of contract you will use. Time and Materials or Fixed Price. To define this point, I will send for free a document to see what your customer does, how, the scope of the work needs it, and more.

This will help you set up a scope and expectations. Be sure to have a good contract template or Statement of Work to be specific on this matter.

Estimate your effort

Now, no matter which contract you use, estimate the effort needed based on the scope defined by the customer.

Although this is a mandatory step in Hourly projects, For Fixed-Priced contracts, you will want to know how much work you can release in a certain period, right? So, although it is not mandatory, it is convenient.

One thing that usually works with customers is to set up a best-case scenario, a most likely scenario, and a worst-case scenario. So, you have a range of hours/money instead of a fixed budget. Then, you can add what-if scenarios or assumptions to your proposal.

For instance, let′s say that you have to create a Word document with healthy food recipes. You can define with the customer that it will take you one hour to complete, and you will charge 5 dollars per hour.

If It is a fixed price, you can say: “The cost of doing this job is 5 dollars”. You don’t need to share how many hours. However, letting the customer know when you will release it is good. The approach that I am telling you is different :

For Hourly Contract: The best case scenario is 1 hour, Most Likely 2.5 hours, and the Worst Case scenario 4 hours. So, the cost will be between 5 and 20 dollars.

It will depend on if no more recipes are added after I deliver it. If you have a template, I can use it as a base for styling if you approve the document within a week after I deliver it. Just examples

For Fixed Price: It will cost you between 5 and 20 dollars depending on… the same above (or it could be different)

Calculate your rate

Based on the estimation effort, put a rate per hour. Then do the following calculation: HOURS NEED IT TO COMPLETE THE WORK X HOURLY RATE. If you want to have a reference hourly rate or price within your zone, experience level, and other variables, then you can query sites like Glassdoor.

Deliver your Work

Once you complete the work you asked for, you should send it and deliver it. While you are working on it, it is crucial to give visibility to the customer about updates or any specific issues regarding the job needed.

Although I usually set up intermediate validations with the customers, in case, it is work that would take many weeks, you can have a confirmation at the end.

Set up milestones and small releases to the customer to ensure that the scope and the requirements are well aligned throughout the work life cycle.

For instance – a Word document – first outlines the sections to be included, then the format with the company branding, then the content, and finally the first version with all the adjustments.

Could you deliver the document to the customer on each milestone for verification? This will reduce the risk of reworking at the end, making the fixes more costly.

FINAL THOUGHTS…

Here, you have two types of contracts or two ways to calculate your salary rate. Be sure to set up a specific scope and use a statement of work or any other contract type to arrange your conditions.

I recommend having working agreements with the customer in order to define “ways of working” or a Framework of respect, common sense, and a healthy environment.

Overall, do not make work for free, you are a rockstar, and your time is valuable, and you deserve compensation for your effort.ALWAYS!!

Do you need more information? - please reach out to me through Linkedin I would love to share my experience with you.