Most people who start freelancing after work are good at something and terrible at pricing it. The first instinct is to charge what feels fair, which is usually about half of what the client expected to pay and a third of what a company would have charged. We learned this the slow way, by underpricing a bookkeeping side business for a year and then discovering what the client's previous provider had been paid. The formula below is what we use now, and it has held up across three different kinds of work.
The formula
- Start with the hourly pay you would want at a job doing this work. Not what you make now; what the work is worth. Say $30.
- Add 30 percent for self-employment taxes and the hours nobody pays for: emails, invoices, quotes that go nowhere. That takes $30 to about $40.
- Estimate the hours for the project honestly, then add a quarter. Everything takes longer than the estimate. A job you think is 8 hours is 10.
- Quote by the project, not the hour. Ten hours at $40 becomes a $400 quote. The client sees a price for an outcome, and you are not penalized for being fast.
- Round up, not down. $400 becomes $450. Nobody has ever turned down a quote because it was $50 too high; plenty have taken one that was $200 too low and never respected it.
The rule for the first three clients
Charge the full rate and over-deliver. Not a discount rate with a plan to raise it later. A low rate is nearly impossible to raise with the same client; it becomes what you are worth in their mind. A full rate with a delighted client becomes a referral, and referrals are how after-hours freelancing actually grows, because there is no time for marketing.
What to say when they push back
Some will. "That is more than I expected" is not a no. Ask what budget they had in mind, and then offer less work for that budget rather than the same work for less money. "For that amount I can do the first two sections and you can decide whether to continue" keeps the rate intact and usually leads to the full project.
Things that quietly cost money
- Unlimited revisions. Two rounds are included; the third is billed. Say so in the quote.
- Scope creep. "While you are at it, could you also…" is a new quote.
- Late payment. Half up front for new clients, the rest on delivery. Established clients get 14 days.
- Software and tools you buy for one job. Price them in or ask the client to provide access.
How much after-hours work is realistic
About eight to ten hours a week, in our experience, before it starts to eat the family. At $40 an hour, that is $1,300 to $1,600 a month, which is a meaningful number and also the point where it stops being a side income and starts being a second job. We keep it under that line on purpose.
The mistake to avoid
Comparing yourself with the cheapest listing on a freelance marketplace. Those rates are set by people competing globally for the smallest jobs. A client who found you through a neighbor or a former colleague is not shopping there. They are paying for someone they can call, and that is worth the full rate.
