How long is a piece of string? The key is how many hours a week and a year you can work.
This is a great tool to help you decide:
It lives at http://freelanceswitch.com/rates/ and it is currency agnostic. You just enter the unit of currency you want. I did a little example based on a young Julius, one that spends less than $100 a day on incidentals like beer and food.
You start with prosaic annoying expenses, like office rent, travel, software and insurance, to name a few.
Legal costs, accountant, office supplies, advertising, promotion, and Anything Else. We like that one!
Then it gets down to business: Personal Costs!
Being based in Sydney, the rent is 35,000 a year and daily expenses 25,000. I don’t want to save anything for retirement, since I will be half way into a pine box before I stop work! And another Anything Else: This time I’ve lumped 5000 in there.
Aha! How many hours can you ACTUALLY bill? This is the meat and potatoes. Being Julius, I want to work 4 days a week, have 4 weeks holiday a year, allow myself 5 sick days and add on a few public holidays. Thus I will be working 167 days a year. Arduous!
Now: How many hours per day will I work? I choose 6.5, and determine I can bill 100% of those hours. I think it is realistic – a friend of mine works 8 hours, and manages to bill 9.5. Go figure!
So here we go: 1086 billable hours per year. Plus I decree I want to accumulate 7500 in profit for the year. And the answer is:
I have to charge just 86.41 per hour, above my break even amount of 79.50.
But note: this tool does NOT calculate your TAX……
This is such as useful tool! Enjoy.
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