Good morning and happy Wednesday! ☀️

This week, we’re talking freelance rates. If you struggle with setting rates, you’re not alone. It’s one of the most common challenges freelancers face.

There’s a lot to factor in, and business expenses are one piece that’s easy to miss. It’s important to get it right because your rates do more than affect your income. They determine whether your business is sustainable.

What to consider when setting your rates

Setting your freelance rates can be harder than it looks. There’s more to factor in than you might initially realize. Here are a few things to keep in mind:

Your skills and experience: You deserve to be paid for your expertise. The more experience and specialized knowledge you bring to the table, the more you can (and should) charge.

Project scope: Consider how much time and effort it will take to complete the work. Some projects are simple: a short article with minimal research. Others are more involved, requiring more thorough research and multiple rounds of revisions. Your rate should reflect the full scope of what’s being asked of you.

As a writer, I’ve had clients who just need a brief article written. Others ask for a longer guide, complete with data points and quotes from expert sources. The second is a much more involved project that warrants a higher rate. Make sure you’re accounting for that difference.

Demand for your skills: If you work in a specialized niche, your skills are in high demand, or your calendar is consistently full, your rates should reflect that.

Market rates: Consider what other freelancers in your niche and at your experience level are charging. This can serve as a benchmark.

I’m a big advocate for freelancers talking openly about rates.

The more transparent we are with each other, the easier it is for everyone to charge what they’re worth.

For my fellow writers, Who Pays Writers is a great place to start. I regularly talk rates with trusted colleagues.

Don’t forget business costs

All the factors highlighted above matter. Your experience, the project scope, market rates, and demand for your skills.

But here’s one that’s easy to overlook: the cost of running your business. Even a simple online business costs money.

If your experience is anything like mine, your business expenses have probably crept up in recent years. Subscription costs are just one example.

Here are a few business expenses you may be paying for:

Business software
Educational expenses
Advertising fees
Domain and web hosting
Internet service
Accounting costs

Beyond these, there are costs specific to self-employment that can catch freelancers off guard. Most notably, healthcare and taxes.

Healthcare. If you’re not covered through a partner’s or spouse’s plan, health insurance premiums can be significant. And that’s before factoring in out-of-pocket costs like deductibles and copays.

Self-employment taxes. Most U.S. workers pay into FICA, the federal payroll tax that funds Social Security and Medicare. When you’re an employee, your employer covers half, so each party pays 7.65%. As a freelancer, you’re responsible for the full 15.3%.

Your business costs may be higher than you realize. It’s important to make sure your rates are high enough to cover them.

Why your rates matter

Your rates aren’t a one-time decision. As your skills grow, your costs increase, or your schedule fills up, your rates should reflect that. Here’s my recommendation: Revisit your rates at least once a year.

When you do, ask yourself a few questions:

Are your current rates covering your business expenses?
Have your costs gone up since you last set them?
Is your calendar consistently full?

If the answer to any of those is yes, it may be time for a rate increase. Getting your rates right is one of the best things you can do for your financial future.

Have a topic you’d like me to cover? Let me know.

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