Rethinking your rates? Here are some things to keep in mind
The last thing I’ll mention in regards to hourly rates is the inefficiency of them for small or quick projects, especially if you’re a freelancer that travels or leaves the house for work, such as a photographer or videographer (this one isn’t as big of a deal for editors or designers who work from home almost entirely). For instance if someone hires you for an hour shoot you will spend well over an hour prepping gear, getting there, doing the project, driving home, unpacking, and so on. You can’t fit more than a couple of these smaller gigs into a single day, so while you might be getting paid your hourly rate you’re only doing 3 or 4 billable hours of work a day. This can be wildly inefficient, so my recommendation if you want to charge hourly is to have a 2 hour minimum or something like that so it’s much better use of an entire day for you.
Charging by the Day
Charging by the day (or half-day) is really common in freelance industries too. This, like hourly rates, is easy for both clients and freelancers to understand. If you work one day you make a certain amount of money. If you work a half, you make half that amount of money (kinda). Easy for you, and easy for the client.
Some of the biggest benefits for working a half or full-day are getting hired for a guaranteed more amount of hours. You literally just get to work more than if you were hired for an hour. Yeah, you actually have to work more, but it’s a better and more efficient use of your time overall. Typically half and full day rates are a little more cost-effective for the client too – you’re kind of providing a ‘bulk’ service to them so it should be cheaper. Like shopping at Costco.
I like to offer a slight discount for my half-day rates, and an even bigger discount for my full day rates. Let’s say I charge $100 / hr normally, well my half-day rate would be $350. I like to offer ‘up to’ 4 hours of work for a half-day rate, and I know some freelancers who offer 5 hrs as a half day. So the client gets a discount on my services, a win for them, and then I get hired for a half day and make more money than I would for just an hour shoot, a win for me. Full days are pretty much the same, but I would maybe extend the discount even further and offer $650 or even $600 for a full day shoot. An even bigger cost savings for the client. Typically I offer this further discounted rate for multi-day shoots – so a one-off full day would be $650, and then if you hire me for two consecutive days in a row I’ll drop it down to $600 for both days.
Yes, I know technically I’m not making my ‘full’ hourly rate during those times, but it is RARE for a freelancer to have 40 billable hours of work in a week, and if I can find someone who is willing to guarantee me two full days of work I’ll give them a little discount. If a client is willing to hire me for an extended period, say 3-5 days I will usually give them an even bigger discount, and I’ve dropped my rates down to $500 / day for longer projects like tradeshows that I am guaranteed to be working for 4 or 5 days that week. Obviously, do what you’re comfortable with and keep the bottom line in mind, but I know I’m not the only one who fluctuates their half day, full day, and multi day rates like this.
Charging by the Project
“What’s your budget for the project?” is a question I think every freelancer has asked a client at some point. Essentially we want to know how much the client is willing to spend for the entire project. This isn’t so we can get filthy rich by keeping costs down and hoarding all the money for ourselves, but rather so we can begin to itemize the costs for everything the project will require – equipment, crew, editing, etc. I have asked this question literally dozens of times and I think only twice have I been told what a client has in mind for their project budget. Expect to hear a “What would it cost you to do it?” or something along those lines, as a response. Ah, the age-old dance between client budgets and freelancer costs.
Charging by the project is pretty standard too, and a lot of clients like this way of looking at a project. Itemized lists of equipment rentals, hours of editing, and so on, are minutiae they don’t want to handle – that’s your job. So if you tell them you can do the project for $2,000 and they accept then they want the job done for $2,000 and don’t care what it costs. This rate structure can be great, until it isn’t.
Let’s say you quote a project at $2,000 – it’s a video editing project that you assume will take you up to 20 hours. You actually finish in 16 hours, so you’ve come out on top in this scenario. But unless you have strict guidelines or a contract in place, a few revisions here and there can add up and you can easily go well over your estimated time for a project, and ultimately this means making less and hour.
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