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Business How to Freelance Pricing and Project Proposals Establishing a Baseline Price

Nicholas Olsen
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Nicholas Olsen
Front End Web Development Techdegree Student 19,342 Points

When establishing a baseline price for freelancing, what do we count as expenses? What do we count as personal profit?

In the video "Establishing a Baseline Price" in the "How to Freelance" course, this basic formula is provided:

(Expenses + Profit) / Work-Hours = Hourly Rate

I am unclear on a couple things.

  • Do we count our own salary as an expense - in other words, are we basically counting ourselves as an employee of the business?
  • Is the "profit" in the formula mine or is it the businesses profit?
  • Can I, or should I figure in costs of my own education, conferences, seminars, meetups, etc?

Please excuse my ignorance.

2 Answers

Matt Pill
Matt Pill
15,689 Points

Not being a total expert in this field myself (...yet!), but I would define your own salary in your expenses and see yourself as an employee. By looking at this formula, you can then define your own salary and base the hourly rate on this. This would also make it easier should you decide to grow you're business and take on a few employees.

It's a tricky one, because if you're freelancing then it's your own business so surely the profit is yours anyway? I would however assume that adding in your profit as an expense would be a much cleaner and much more straightforward way of doing it, as you know exactly what your salary is and also can define how much of a profit the business is making.

As I said, I'm not an expert on this so I could be totally wrong, but this is the way I'd do it! It would be interesting to see how other people have defined this though.

Nicholas,

There's a great Treehouse blog post that goes into detail about how to calculate your freelance rate. It's here: http://blog.teamtreehouse.com/calculate-hourly-freelance-rates-web-design-development-work

As a learning project, I created a calculator that does what the article describes: http://thinkhuman.github.io/whatsmyrate/

Cheers, -james