How I created a freelance rate calculator for our community of awesome freelancers
My team and I are constantly thinking about ways to help out freelance creatives. That’s our whole mission at Coworkly.
And to keep things neat, we split the goals of our awesome freelancers into three buckets:
- Money (Pricing Schemas, Savings Goals…)
- Professional Satisfaction (Target Client Industries, Giving Back, Role types…)
- Worklife Balance (WFH Goals, Setting Work Boundaries…)
Notice, I listed “Money” first. That’s the raison d’être when it comes to working, right? So, it’s only natural that we first focus on helping freelance professionals maximize their revenue and pricing.
That’s why I spent my weekend engineering Coworkly’s first Freelance Rate Calculator!
- Starting Figure — The absolute minimum you need to make in order to pay your living expenses/bills
- Competitor’s Figure — It acts as a sanity check and is a key way we calculate your Base Raised Figure.
- Comfort Figure — Factors in all of your ideal savings/spending goals
- Client Figure — the figure that considers how much a specific client values your services
- Future versions will take geographic differences in living costs/rates into consideration. For now, the Competitor’s figures are based on freelance rates in the USA.
I used a fun and flirty mix of conditional logic and formulas on the backend. On the front end, it’s a form that takes less than 1 minute to complete and it returns a custom breakdown to the freelancer’s inbox with suggestions on how to up their pricing game.
I won’t get into the conditional logic formulas and or the work I did in Airtable (maybe in another post?), but if you’re interested, see below for the basic steps of the formula!
If you don’t feel like reading the steps, I won’t blame you! Just try out the calculator I built! That’s why I spent my weekend working on it!
Steps of the Freelance Pricing Formula:
Step 1: Ask what you need to make on a monthly basis in order to pay your living expenses and recurring bills. That’s your Starting figure. Convert this to a day rate by asking yourself how many days per month you want to work. Don’t worry. It’s going to go up.
Step 2: Ask what your peers (those who match you in experience and skill) are charging for the same service(s). This is the Competitor’s Figure.
- If this new Competitor’s Figure is more than your Starting Figure, bump up your rate to your Competitor’s Figure.
- If it’s NOT more than your Starting Figure, keep your Starting Figure.
Step 3: Ask what will make you SUPER comfortable — what do you ideally want to put aside towards retirement, vacation, extra spending, and any other savings goals per month? That’s your total savings goal.
- Add your total savings goal to your Starting Figure. The resulting amount is your Comfort Figure.
- If your Comfort Figure is more than Step 2’s final figure, take 25% of the Comfort Figure and add it to Step 2’s figure. This is the Base Figure. If it’s less, your Competitor Figure now becomes your Base Figure.
That’s the Base Figure you’ll start with when scoping out every project.
Step 4: This step occurs when you have a new client/project on deck. Honestly ask yourself how important the project/your service is to the specific client. Now, add $3/hr ( $24/day, $120/week, $480/month, $5,760/year) for each “Yes”.
- Is this a rush project with a quick turnaround? Yes/No
- Is this a crucial part of a larger project/campaign? Can they not complete the project with you? Yes/No
- Is this client a bigger business with a sizeable creative budget? Yes/No
- Are you in high demand? Are the client’s competitors knocking on your door? Yes/No
This is your Client Price. That’s the price you’ll quote to the client.
STEP 1 — What I NEED to make to pay bills
In order to pay my bills, I need to make $3,250 AFTER taxes.
Convert this to a day rate by asking yourself how many days per month you want to work. My answer is 4 days/week, for a total of 16 days/month.
$3,250/16 = $203.13/day = My Starting Figure
STEP 2 — Compare to my peers
After doing some research, I find that other mid-level designers make around $500/day on average. That’s more than my starting figure of $290.62, so we’re bumping up my rate to $500/day.
STEP 3 — Extra $ to achieve IDEAL comfort
Now, to calculate my Comfort Figure based on my “ideal” savings/spending goals. Remember I expect/want to work 16 days each month, so to calculate my day rate, I divide my monthly goal by 16 to get my daily total towards savings/spending. Here’s how mine breaks down:
- Retirement: $1,000/month AFTER TAX ($1,000/16 = +$62.50/day)
- 2 Vacations per year ( 1 x domestic, 1 x Foreign): $3000/year AFTER TAX ($3,000/12 months/16days = +$16/day)
- Extra Student Loan Interest = $300/month AFTER TAX ($300/16=+$18.75/day)
- Extra Spending/Savings = $300/month AFTER TAX ($300/16 = +$18.75/day)
The total additions = $116. $116 my Starting Figure($203.13) = $319.13. That’s less than the Competitor’s Figure, so we keep the Competitor’s Figure, but we take 25% of our total saving/spending additions and add it to the Competitor’s Figure to calculate our new Base Figure.
- .25 x $116 (Total Additions)=$29
- Base Figure = $500 + $29 = $529
Let’s go ahead and round it up to $530/day. That’s my base figure.
STEP 4 — The Client Price
Now that you’ve got your Base Figure, let’s calculate a price for a specific client. Let’s say I have a big client who definitely has a big budget and it’s a rush job. It’s not a part of a larger initiative/campaign and I’m not particularly a known rockstar in the industry (yet).
Here’s how I’ll add on to my rate:
- Rush Project? Yes. +$3/hr OR +$24/day
- A crucial part of a larger initiative/campaign? No. +$0.00
- Big budget? Yes. +$3/hr OR =$24/day
- Are you in high demand? No. +$0.00
I’ve said yes to 2 questions, so I’m going to add $48 to my day rate, for a total final figure of $578. You’re allowed to round up to a bit to $580 :)
Keep that Base Figure in mind when pricing out your next project. Oh, one last thing — every year, add an additional $5/hr to your Base Figure, and also don’t forget to factor in inflation rates and prices if you move to a different city/region.
Cheers to creating your own incentive structure 🤪
Check out the Freelance Calculator to make that whole process WAY faster. And I’ll send some smart suggestions as a follow-up.
Boy, oh, boy! I love helping freelance creative professionals hit their biggest and brightest goals. Sign up for Coworkly and we’ll come up with a personalized Worklife Plan.