If you haven’t been doing this long enough to know what other people are charging for deliverables, here’s a formula I use. (When designers use this formula for the first time, the vast majority of them realize they’re DRAMATICALLY undercharging.)
Here it is:
- Add up your total monthly bills. Rent, groceries, cell phone, EVERYTHING. Don’t be conservative.
- Now divide that total number by 90. (This is because there are 20 billable hours per week and 4.5 weeks per month. 20 x 4.5 = 90.
- Now, multiply that number by 1.3 to cover taxes, etc. The result is your MINIMUM hourly rate.
Say, for example, your monthly bills came out to $3,000. That means your hourly rate needs to be at LEAST $3000/90 * 1.3 = $43/hour. That’s only if you want to break even and budget VERY carefully.
To determine what you want to charge for a specific project, simply multiply your minimum hourly rate by the estimated number of hours. (I like to add a 1.3x multiplier here, too, just to cover extra hours of back-and-forth, etc.)
You’ll probably find most of your projects are charging WAY less than your hourly/project minimums.
As you get a better handle on how much time it takes you to complete a project, do good work, etc., you’ll hopefully raise your rates.
So this formula should only be used as a starting point to determine minimums…. no one should go into debt overworking so clients can make money from your work.
Try the formula for yourself and see how you compare. Are you charging enough? How much should you charge to hit your target income?