Reverse engineering your hourly rate

[Change18]

After 8 years as a freelance Website developer, I've never actually calculated an hourly rate by reverse engineering everything I should be taking into account when comparing my job to being employed.

To be fair on ourselves we should include all the benefits of employment in our hourly rate:

• Holiday pay
• pension contributions
• sick leave / compassionate leave / bereavement leave (?)
• Tools/equipment/uniform
• plus more

For me, when quoting I've charged a general hourly rate for adhoc work, something that clients seem happy to pay and I've been quite happy with... until now. I've mostly worked to fixed prices for larger project work. And I've considered my time as well as the value of the service or product that I'm producing and what I think it's worth.

Overall I've earned some good money and think I'm giving good value. I've been able to live quite comfortably and there are plenty of returning customers. So overall it has been working.

However, I've been a keen 20 something, eager to please and earn without too much planning for the future. The main goal was to get a property so I have security and I've achieved this.

I'm now 30 and suddenly I'm thinking about pensions, stability, whether this is something I should continue or get a stable job in employment, etc.

And, probably too late in the minds of many, I'm thinking I need a more structured hourly rate. I need to decode how much I want to aim to earn a year, take into account all of the above that you would get in employment and charge that.

The worry is it's too high. But I suppose, even if I land less work, I would rather work 50% of a 40 hour week to achieve 50% less pay than my aim. Than work 100% of a 40 hour week at 50% the hourly rate to achieve 50% less of my aim.

 

[AllUpHere]

Another thing to consider is increasing your ratio of billable hours / non fee earning hours.

In my experience web designers are pretty poor at marketing, with some telling me they spend as much as half of their time finding work, and doing other non billable activities. Get your marketing up to scratch and you'll be billing for most of the hours you are working.

 

[Vending Siting Services]

It’s all about what the market is ‘prepared to pay’ - you could price yourself out of the market if you increase prices too much.

Your thinking is right in the comments in your last paragraph. You know what you are worth, don’t sell yourself cheap, but do keep your prices sensible.

Kind regards

Barbara

 

[Alan]

It depends what your skills are and location, but if you are a full stack web developer, with multiple skills in demand and prepared to work in London you could easily earn £80,000 p.a. fully loaded with benefits, pension, holiday, health insurance etc worth over £100k pa.

Reverse engineer that back, as a freelancer with say 66% utilisation = approx £80 per hour

If you are a WordPress theme tweaker with limited technical skills in a regional city you could expect £40k p.a. package worth £50k = approx £40 per hour

But as All Up Here mentions utilisation rate is key in the calculation and 66% is actually quite high.

 

[Change18]

Thanks, lots of useful info.

If you are a WordPress theme tweaker with limited technical skills in a regional city you could expect £40k p.a. package worth £50k = approx £40 per hour

I'm full stack but working with WordPress as there's a lot of demand for this at the moment. Less a theme tweaker but more of a theme and plugin developer from scratch, working a lot with bespoke WordPress builds that require more custom features and need the full stack skills. I'd be surprised if a theme tweaker in a regional city could earn £40k. If so, please point me to the jobs as they should snap me up with my skills.

 

[BustersDogs]

I wrote a book on this. https://www.amazon.co.uk/How-Much-That-Walker-Window-ebook/dp/B01H8VQ7T6/ref=asap_bc?ie=UTF8

 

[JEREMY HAWKE]

If you get the best results you should be charging the best rates .
Successful sites mean successful sales figures and everybody is prepared to pay the top money for that