Impact Brixton is home to an incredible community of freelancers. And one thing we always check is that they’re not underselling themselves. Times are tough, and work is a little thinner on the ground than usual – but that doesn’t mean you should lower your rate.
Despite the challenges that freelancers continue to face, BusinessCloud reckon that 2024 could be the year of the freelancer thanks to the move towards a flexible workforce powered by the trend for hybrid working that began during the pandemic. So if you’re thinking about going freelance, now could be your moment!
But whether you’re first starting out or you’re gaining more and more experience, knowing how to set your rate as a freelancer as we head into 2024 can be hard. And handling a situation when your client is late to pay your invoice is even harder!
This blog post will tell you how to calculate a freelance day rate, as well as a freelance rate by the hour, to suit the financial landscape in 2024. So let’s talk about finance for freelancers!
What is a Freelancer?
A freelancer is a self-employed individual who offers their services to clients on a project-by-project basis, rather than being employed by a single company. They have the flexibility to work for multiple clients simultaneously or focus on one project at a time – so they might spend a solid six months working on one project for one client, or they might work for one company for two days per week, and another for the remaining three.
Freelancers are typically skilled professionals in fields such as writing, graphic design, programming, marketing, and more. And because they’re not attached to any one company, they’re essentially their own boss. Which means that they get to set their own rate of pay!
UK Freelance Rates
Okay, so how do you set your own rate of pay as a freelancer?
When it comes to freelance pay structure, there are a few things you need to take into consideration, including industry standards, your skills and your experience. And keep in mind, you can charge a freelance rate per job, you can charge a freelance rate per hour, or you can even earn freelance pay monthly if you’ve got a project you know is going to last a while! It’s all about what best suits the job that you’re working on.
So let’s get to it! Here is a step-by-step guide for setting your rate as a freelancer.
1. Research Industry Standards
Just because you work for yourself, you’re still part of an industry with standards and expectations. So the first thing you need to do is investigate the typical rates for freelancers in your industry and location.
The going freelance rate in London and other cities will definitely be different to the rate in a more rural location like Shropshire. This is because the cost of living is different across the UK. So make sure you’re looking at the specific rate for your area!
2. Calculate Your Costs
Speaking of cost of living, it’s really important that you cover your overheads with the freelance standard rate that you charge. Take a moment to work out your living expenses, including things like rent, bills and groceries. Then, add that to your business expenses, including software, equipment and workspace (or virtual office!). And don’t forget any applicable taxes! Once you’ve added all of those up and left room for savings and disposable income, you’ve arrived at the rate you need to charge for your work.
We see lots of freelancers get caught out by their tax bill. Because sole traders pay all their tax in one go at the end of the accounting year, rather than paying it as they go along like PAYE individuals, it can be difficult to keep track of how much you’ll owe. So make sure you’ve got a good amount of cash set aside ready!
3. Consider Your Hours
Next, you need to work out how much you want to work. But with great power comes great responsibility! Make sure you choose a realistic number of hours and factoring in downtime between projects.
Once you’ve worked out how many hours you’re willing to work, you can think about a freelance overtime rate. This is something that you can offer clients if it looks like they’re going to need some extra last-minute support beyond the hours you agreed at the start of your contract.
4. Evaluate Your Skills and Experience
Once you’ve worked out how much money you need to earn, it’s time to prove to your clients that you have the expertise and experience to bring value to their company and their project. And this is all about pitching your skills. Put together a really strong portfolio, and check out our blog post on how to pitch!
There are a lot of freelancers out there. So think about what can help you to stand out from the crowd. What unique skills can you bring to a project? What’s particularly strong about your portfolio? If you’re an expert in something, or you have unique skills then you may justify higher rates.
5. Assess the Complexity of the Project
The more complex or specialised the project, the higher your rate can be. Are you going to have to do extra research? Develop a new skill? Or master a particularly complicated project? Then you can absolutely factor this into what you charge. Consider the level of effort and expertise required, and make sure you’ve taken that into account when calculating your freelance fee.
6. Understand Client Budgets
So far, all of the steps you’ve taken have centred on your wants and needs. And that’s definitely where you should start! But when it comes to working out your rate, you also need to take into account what clients in your target market are willing to pay. While making sure you get fair compensation, your rates also need to align with what clients are willing to invest in your services.
7. Offer Different Packages
A great way to manage a client’s budget expectations is to offer different packages or options. What could you provide for 200 per day? What could you provide for £500 per day? This can really help your clients to see where their money is going, and it means they understand the time and expertise that goes into your work.
This strategy can also help to broaden your client base, as it helps you to cater to a broader range of customers and projects while still being compensated for your work.
8. Be Ready to Negotiate
Often setting your rate with a client becomes a conversation. So don’t be alarmed if a client asks to have a conversation about your budget – this is perfectly normal! Just make sure you have a clear understanding of your bottom line. What is the lowest fee you are willing to take for completing this work?
Once you know that, you can negotiate. The key is to explain the value you bring to the project. Show them that if they pay your fee now, they will reap the benefits later!
Negotiating your salary is an art. Glassdoor have a really useful list of phrases you can use to make sure you sound polite and professional while staying firm.
Freelance Day Rate Calculator
If you’re asking yourself – what should my freelance rate be? We’ve got a handy formula you can use. Check it out below!
Freelance rates compared to salary for PAYE jobs are different. So if you’re making the move from full-time employment to freelance, don’t just convert your current salary to hourly rate and be done with it!
We really like the method that the recruiters at Ellwood Atfield use as a salary to hourly rate calculator. They advise you to use the following formula when setting your freelance day rate:
(£Your annual basic salary +30%) / 220 days
Why the extra 30%?
Now you might be wondering why we’re adding an extra 30% to the going rate for PAYE. The fact is that freelancing comes with a lot of benefits, including choosing your own hours and having the freedom and flexibility to work for lots of different clients. However, there are also a few drawbacks that you need to compensate for when calculating your freelance day rate.
As a day rate contractor, it’s important to note that your payment is based on the days you work. This means you won’t have the usual perks like holiday or sick pay. Additionally, some of the cool extras that permanent employees get, like pension contributions, car allowance, and other cash or in-kind benefits, may not be part of the package when you take on a project with a client. So you need to make sure you have the extra cash to cover these costs.
Why 220 days?
220 days is an estimate of how many days you might work in a year as a day rate contractor, which is why we’ve plugged it into our hourly wages calculator for the UK above. It’s a useful number to use as a ballpark for a freelance rate estimator!
Of course, though, the number of days you work in a year can vary based on things like gaps between contracts or times when you choose not to work. So if you’re planning to work more or less, feel free to adjust the formula accordingly!
Don’t Forget to Review Your Rate
And don’t forget to regularly review and adjust your rate. As you gain experience and your skills evolve, the more value you will bring to any project. So make sure that’s reflected in your fee! Your freelance rate should increase accordingly. You also need to stay competitive and make sure that your compensation aligns with the market. You don’t want to discover that you’ve been undercharging for your work!
Examples of Freelance Rates From Different Industries
It’s all well and good looking at a formula, but sometimes you just need an example. We’ve put together a list of common freelance day rates from different industries below. They’re by no means exhaustive, and they definitely vary based on your skills and industry. So make sure you only use these numbers as a jumping off point for your own research!
- Freelance rates for copywriting UK in 2024: The experts at TJCreatives predict that a typical day rate for an experienced copywriter in 2024 will be around £350 – £500. This makes sense, considering that ProCopywriters did a 2023 survey of 520 copywriters, and found an average day rate of £433. But bear in mind that’s the average! They found that junior copywriters often start at around £250 per day, with broad variations between regions and sectors. So make sure you take into consideration the industry standard and your location when calculating your rate.
- Freelance graphic design rates UK in 2024: The experts at YunoJuno do a fantastic report on freelancers’ rates every year. The average rate for designers hired on YunoJuno was £359, with the lowest rate sitting at £260 per day.
- Freelance marketing rates UK in 2024: “Marketing” is a bit of a catch-all term, so we’d encourage you to be specific when you’re pitching your skills. Are you a social media manager? Digital marketing expert? SEO consultant? Analytics consultant? Salaries will vary depending on your specific skills set and the role you go for. So we’d encourage you to take a look at the YunoJuno report to see where you fit!
- Freelance bookkeeper rate UK in 2024: Most part-time bookkeepers charge an average rate of around £20 per hour for performing general bookkeeping duties. Accountant Costs has a useful breakdown of what tasks this might entail!
- Freelance web developer rate UK in 2024: Expert Market tells us that high quality freelance web designers charge around £40 to £70 per hour, although costs for individual projects will vary. Again, it’s all about your skills and experience and how you can meet the demands of the project!
- Freelance videographer rates UK in 2024: This will vary depending on industry. Commercial clients will pay more than, say, a charity; as their budget will be a lot bigger. So definitely take that into account when you’re pitching your fee! A videographer usually charges an hourly rate starting at around £40. So take that as your baseline!
Frequently Asked Questions (FAQs)
How do freelancer rates compare to salary?
Freelancer day rates tend to be higher than salary day rates. This is to compensate for the lack of benefits like holiday pay. To convert your salary to a freelance rate, or to consider in more detail a freelance rate vs salary, use our freelancer day rate calculator above!
Conclusion
Trying to set your hourly or daily rate as a freelancer can seem stressful. But with the tips in this blog post including an hourly rate calculator for freelancing in the UK, it doesn’t have to be! Always know your worth, and be willing to ask politely for what you deserve. You’re a superstar, and anyone would be lucky to have you on their team!
