Become Freelance

You no longer have a boss leaning in to you every day and yelling at you to make quota.  Wrong!  You are the boss and YOU MUST SET GOALS.  If you do not set up realistic expectations, then you will never meet them.  You are also the sales force as an independent contractor, so you have even more reason to keep raising the bar for what you wish to achieve.  Stand over your own shoulder every day to ensure that you remain on par with what you wish to achieve for the year.

Everyone has a different system for doing this.  Find one that works for you.  I like to write down a dollar amount on a desk calendar that I expect myself to make that week.  The figure is written on Friday’s spot.  My goal is always attainable and realistic.  I use past year’s figures to determine which months of the year will be more lucrative than others.  Each day (or every few days) that a client pays, I write down the total earned dollar amount (TEDA).  Once that money hits my checking account, I highlight it.  Looking at a calendar full of money highlighted in bright yellow and orange (like the sunshine) makes me happy.  Maybe that’s a little strange but it works for me.  You’ll find your own system of tracking finances that works for you.  Make it fun!  It is exciting to work for yourself, especially if you can find fun ways to keep track of what you earn.

THE SIMPLE METHOD TO CALCULATE PRICES:

• First - Think of a number you want to MAKE this year.  Let’s use $50,000 because it is a realistic, round number that looks pretty good for a first year Freelancer.
• Second - Divide that number by 52 weeks in the year.  You should have $961.53.  Let’s just call it $970 to round up higher.
• Next - How many days will you work during the week?  Let’s say you will work 5 days. Divide $970 by 5.  Now you should have $194.
• So - you should be making $194 per day, and let’s say you will work 8 hours.  That equals $24.25 per hour.  Should you be charging at least $24.25 per hour?

NO!

You need to remember that $50,000 per year is gross, not Net.  Those accounting classes you took in high school and college are finally coming to good use.  You have seen what takes place in your paycheck stub.  You thought you were getting an $800 check and by the time they steal all of your hard-earned dollars for taxes, your check just shrunk to a measly $500-ish take-home total.  Don’t forget to deduct taxes, expenses and payroll from your $50,000.  Your Gross Total should be higher if you want to bring home $50,000 at year-end.  Figure expenses to be roughly 20% of your business and 30+ % for taxes.  Add that to your $50,000.  $50,000 x 30% = $15,000 + = $65,000 x  20% = $13,000 + = $78,000.  Use the same calculation system as you did above.  Your total hourly rate should now be $37.50.

Keep in mind, that some Freelance assignments you will make more than your minimum hourly rate, while other times you will make much less.  There has to be a fair balance between the two, and that is why a weekly goal is so important.  To stay on pace to make $50k you will need to generate at least $1500 per week, just for yourself.

This is just one method.  Feel free to develop your own system.  The important thing is that you have quotas to meet.  Otherwise, your boss (you) will frown on you with disappointment.  Work more hours if you have to.  Work six days a week instead of five; or ten hours a day instead of eight.  You don’t have to ask for overtime pay as an independent contractor, but there should be plenty of overtime hours in your first couple of years in business.  These are crucial building years… work now and play later.  Or not!  If your spouse earns a good income and you’re only Freelancing to earn a little extra money on the side, then you don’t need to go to this extreme.  You should still set goals but always make them attainable.

If your business is a product rather than a service, you will need to figure out how many items you need to sell in one week in order to meet your goal.  And in those weeks that you don’t hit it… don’t fret.  Make it up next week or next month.  The sooner the better, so that you can achieve an attainable expectation.  Every year, make sure you give yourself a raise!  You deserve it.  Set your sights in the six-figure range.