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Cracking the Code: Calculating Your Hourly Rate as a Freelancer (Without Losing Your Mind or Shirt)

Mikko Keränen

• 2 min read

Ever stared at your screen, wondering how to set your hourly rate as a freelancer without resorting to consulting a crystal ball? You’re not alone. It's like trying to hit a moving target while riding a unicycle. Fear not, for today, we embark on an epic quest to demystify the art (and science) of calculating your hourly rate – a journey fraught with peril, math, and a bit of common sense.

Step 1: Dream Big (But Not Too Big)

First things first, let’s talk numbers. Not the boring kind, but the kind that lets you dream. How much do you want to make in a year? Think of a salary that doesn't just cover the bills but allows for those little luxuries in life – like premium coffee beans or that extra streaming service subscription because, let’s face it, you can’t miss the latest season of "Game of Drones."

Step 2: Reality Check – It’s Not Just About the Salary

Now, wake up from that dream because there's more to consider. As a freelancer, the luxury of paid vacation, sick days, and your company handling taxes and retirement is as distant as the possibility of enjoying a hot cup of coffee undisturbed on a Monday morning.

Here’s the deal: you need to factor in vacation days (yes, you’re allowed to have those), sick days (because health is wealth), taxes (the inevitable), and retirement (you do plan to retire someday, right?). Let’s not forget about those days when clients are as scarce as a sunny day in November.

Step 3: The Math Magic

Let’s break it down:

  • Desired salary: Start with that dream figure.
  • Working days: There are about 260 weekdays in a year. Subtract weekends (you’re not a robot), plus at least 15 vacation days (because you’re worth it), and around 10 sick days (to binge-watch your favorite show... or recover from actual sickness). You’re left with about 235 days.
  • Working hours: Let’s not kid ourselves; no one is 100% productive for 8 hours straight. After coffee breaks, existential crises, and the occasional cat video, let’s aim for 6 productive hours a day.
  • The Extras: Calculate a rough estimate of your taxes, retirement, and any other overhead costs. This can be tricky, so maybe consult with a professional (or a wise sage).

Divide your dream salary (plus extras) by the number of workable hours in a year. And voilà, you have your hourly rate. But remember, this rate isn’t set in stone. It’s more like a guideline, or a pirate code.

Step 4: The Reality Check (Again)

Take a moment to compare your calculated rate with the market. If your rate is higher than what clients are willing to pay, you might need to adjust your expectations (or find richer clients). If it’s too low, congratulations, you’re selling yourself short. Adjust accordingly.

Final Words of Wisdom

Calculating your hourly rate as a freelancer is part art, part science, and a whole lot of gut feeling. It’s about finding that sweet spot where you can live comfortably, save for the future, and still enjoy the occasional splurge. Remember, the goal is not just to survive but to thrive – to work to live, not live to work.

So there you have it, a semi-scientific, mostly sensible guide to calculating your hourly rate without losing your sanity or sense of humor. Now, go forth and conquer the freelance world, one hour at a time.

Until next time, keep those numbers crunching and dreams flourishing.

Mikko

ps. If you want to learn how to manage your cashflow efficiently, check out this FREE book from Facebook community I'm building: https://rebrand.ly/fb-group-freedomandfinance