Expenses, acquisition, professional experience and industries: Calculating the right hourly rate can be a real challenge for freelancers. Find out what factors you need to consider to determine an appropriate fee.
Table of contents:
- Why is the freelance hourly rate so important?
- Calculate hourly rate
- Factors affecting the hourly rate
The most important answers to questions about the hourly rate for freelancers:
The freelance hourly rate determines how many hours you have to work in order to have enough money to live on. The hourly rate also influences how your brand is perceived by potential customers.
The first step is to calculate how much you will spend on social security, voluntary insurance and personal items such as rent. Then determine how many working days per year you can actively earn money from client work. Finally, you can first calculate your personal minimum rate and then a profitable hourly rate.
Education, professional experience, region, project duration and company size affect how high a freelancer’s hourly rate can be.
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Freelancers are always faced with the question: What is my work actually worth? And: How much can I charge my customers? In order to get a smart answer, freelancers first have to use a calculator. We explain clearly how self-employed people choose and evaluate the right factors to calculate an appropriate hourly rate.
Why the freelance hourly rate is so important
Don’t sell yourself short - this is probably the most common tip you hear again and again as a freelancer. But what does that mean? To avoid selling yourself short, you must first know how much your service is worth. However, there are so many factors that determine this that many self-employed people don’t even know where and how to start. However, a specific hourly rate tailored to your own business is essential. Because: Freelance hourly rates determine how much you have to work to achieve your desired salary - to lead the life you imagine. And: A freelancer’s hourly rate determines how his or her brand is perceived. This in turn affects how high you can set your hourly rate. For a successful business, it is therefore important to calculate the correct hourly rate. How does it work?
Calculate hourly rate: Here’s how to do it in four steps
How to calculate a freelance hourly rate that is worthwhile for you and your business:
1. Calculate expenses
To know how much money you should make, you first need to know how much money you spend. In other words: First calculate how much money you need to support yourself. You should take these costs into account in particular:
Social Security
While employees pay their social security automatically through their employer, as a freelancer you have to take care of it yourself. To calculate your hourly rate, add up the expenses for health and nursing care insurance. These are mandatory in Germany. The costs for this are calculated based on your income. Statutory health insurance takes 14 percent of your salary. Nursing care insurance is a good 3 percent. To get an estimate of the costs, look at your income from last year. Is this Your first year as a freelancer , estimate more cautiously so that you don’t have to make high monthly payments. With a Contribution calculator you can calculate the exact contributions.
Voluntary insurance
In addition, volunteers can participate every month Insurance occur like
- accident insurance,
- Unemployment insurance,
- liability insurance,
- Professional liability insurance and
- Occupational disability insurance.
You also have to secure your pension privately. Because: You no longer pay into the pension fund through an employer.
Personal expenses
Now add up all the other expenses you have in everyday life. These include, for example, rent, food costs and money for vacations.
2. Calculate working days
The hourly rate of freelancers is directly linked to the days of the year on which they can or want to actually work. In practice, this means: Identify the days of the year on which you can work for customers and earn money. The year has 365 days, of which 104 days are Saturday or Sunday. Depending on the federal state, there are also between nine and 16 public holidays. On average, Germans are sick for around 20 days a year. He found that AOK Absence Report 2021 out of here. And: plan vacation days. Depending on the job, this is between 20 and 30 days a year for employees. On average, the value is just under 29 days. That’s what they determined Technician health insurance company in a study . To ensure that you are always up to date with the latest technical developments, you need time for further training. This varies from industry to industry. For example, engineers need one to two days of training per month. Fast-moving industries such as media and IT require two to three days per month. Let’s assume an average of two days per month, i.e. 24 days per year. You now have the number of days you can work. Now not all work is paid work. Because: You have to spend time every now and then to find the projects. So include time for project acquisition in your freelance hourly rate calculator. On average, that’s two days per month.
3. Calculate your personal minimum rate
You now have the number of days you can work and the costs you need to cover. You can now calculate your personal minimum rate that you must earn in order not to make a loss. For example, let’s assume that with all expenses for your business and your private life you come to 6,000 euros per month. Let’s assume that you work 8 hours per day for the 141 working days per year. Then we get 94 hours of working time per month. To calculate your personal minimum rate, you have to divide the amount of money by the number of hours: 6,000 euros: 94 hours = 64 euros / hour. Your personal freelancer hourly rate calculator says: You must estimate at least 64 euros per hour for your services.
4. Calculate a profitable hourly rate
With the personal minimum rate you only cover your costs. If you want to make a profit from your work, you have to calculate your hourly rate higher. You should plan for at least a ten percent profit markup. Complete. You have now calculated a freelance hourly rate that is tailored to your life and your business.
Which external factors influence the freelance hourly rate?
You cannot completely solve freelance hourly rates from the market. Because: Depending on your job and industry, there are certain average wages and therefore expectations that potential customers have. Basically, it is primarily the factors that have an influence
- Experience,
- Education,
- project duration,
- Region and
- Company size
the hourly rate. You should keep this in mind when calculating your hourly rate online.
