This is second article that I am writing about setting freelance rates. The reason I am writing another article is because of numerous questions that weren't answered in previous article. I will first summarize what last article was about and then I will go on to new details.

Determining how much to charge for your services is often one of biggest challenges for a new freelancer. If you charge too much you won't get hired and if you charge too little you'll starve. Take time to read this article and you will figure out what you need to charge to thrive.

If you are a new freelancer, you have probably searched Internet trying to look for average rates of professionals in your field. Don't even bother. I will let you in on a secret . now that Internet is here, there aren't any "average" rates because demographics are too widespread. The United States has banned competitors from discussing rates amongst each other based on Antitrust laws. This is why you are having such a hard time finding rate surveys, there aren't any. Instead I will show you how to figure out what your rates should be by using a formula.

Start by figuring out what you want your annual salary to be. To determine your salary, you might want to pay yourself what you earned as an employee or take a look at salary.com to find out what an average salary for your profession is.

For this formula, you will need to figure out what your overhead is. Overhead is an expense that cannot be found billable to a client, it is just a cost incurred by running your business. Please fill out following form. If you aren't sure what your overhead is, then look back on last year's credit card bills and checking account statements.

MONTHLY OVERHEAD:

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Rent

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Income Taxes (Use 45% of your annual salary)

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Utilities

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Insurance

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Office Supplies

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Marketing

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Postage and Shipping

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Telephone

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Accounting / Legal

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Travel

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Office Furniture

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Dues & Memberships

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Licenses

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Health Plan / Medical Insurance

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Disability Insurance

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Retirement Savings

======================================================= | | Multiply above by 12 to get yearly Overhead | | | | =======================================================

NONPRODUCTIVE TIME

There are duties that must be completed for each client that are not productive towards completion of project. Figure out actual work hours are spent on following duties. You will need this total later, so keep number handy.

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Sales

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Emailing Customer

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Phone Calls

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Meetings

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Administrative duties

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Training

======================================================= | | TOTAL | | | | =======================================================

PROFIT

Now you will need to figure out how much of a profit you wish to make. Profit is amount that you make over expenses. I recommend 20% in order to make an acceptable profit margin. Profit is necessary for a successful business so make sure to count profit into your formula.

VARIABLES

There are always variables that you will need to take into consideration when figuring out what you will charge. You must take into consideration following:

1. What does your competition charge?

2. What is your niche?

3. How many years experience do you have under your belt?

4. What skills do you have?

5. What clients do you want to attract?

6. Are you working online or local?

FORMULA 1

Follow these steps to figure out what your hourly rate should be.

1. Subtract nonproductive time from Annual Hours to get Billable Hours.

2. Add Salary and Overhead Together

3. Multiply Total By Profit Margin (10% - 20%)

4. Add Total (1) and Total (2) Together

5. Divide Total (3) by Billable Hours (the amount from #1)

For example, if following is true:

1. Salary = $30,000

2. Annual Hours = 2,080

3. NonProductive Time = 500 hours

4. Profit Margin = 20%

5. Overhead = $15,000

Then this is how you figure out hourly rate:

1. 2,080 - 500 = 1,580

2. $30,000 + $15,000 = $45,000

3. $45,000 X 20% = $9,000

4. $45,000 + $9,000 = $54,000

5. $54,000 / 1,580 = $34 / hour

FORMULA 2

(c) by Laurie Meade

1---The importance of a schedule and staying focused. Keeping on task. schedule promotions Plan and make a task schedule for project ideas. schedule purchases -- (don't buy on impulse, offer will still be there in a day or so!) schedule time -- (remember to schedule time for family members as well :o) schedule breaks from computer -- (not just physical breaks, take your mind of your business and have some fun --, you'll be more fresh and productive when you go back to work!)

2---The importance and value of keeping good records, Financial Promotional Backing Up Files Affiliate Information Passwords Contacts

3--- Don't try and run an online business with AOL. I personally have nothing against AOL It is a great service for computer illiterate newbie. However, once you get basics down, you can be much more productive with a different ISP. AOL does not allow you to filter email way it needs to be filtered.

When I was doing my business through AOL, I sometimes would be dealing with over 500 emails a day. No way to send them to different folders as in Outlook Express, MailWasher or many other email programs. Unless they have drastically changed things in Version 8, it is one of few that doesn't work with third party email programs. This just leads to wasted time and frustration.

4--- Speaking of wasted time.

Get a DSL hook up.

The extra cost is worth it in matter of time saved. Instantaneous downloads.

Web pages that come in as fast as click of a mouse.

It means more productive time spent on computer. More productivity means more money.

5--- Learn what a great tool Yahoo can be. I have read good comments and bad, about Yahoo. All I know is from my own experience. When I first started online, I exchanged a review for a copy of FrontPage 2002. While reviewing it, I put up a "practice site" on geocities. You can visit it here:

http://geocities.com/laurieslegends

I read where you had to have a domain name for people to take you seriously. I agree. However, I learned that a free site is very beneficial to your business as well. Putting links on a free site will bring traffic to your domain name. If you use Geocities.com, it will help you get listed in Yahoo Directory eventually. Two of my pages at above mentioned site, are listed in Yahoo Directory. They are also two that get most traffic. By putting links on these pages to my other domain names, I can take advantage of all that free traffic.

You will also able to access this site from any computer, even when yours is down.