One of the trickiest parts of freelancing is getting the project pricing right and earning an income that is expected for what you do. This is quite often a mystery, though. Many freelancers simply feel that if they make ends meet at the end of the month then why worry?

If this sounds familiar, you may actually be suprised by how much you could be leaving on the table. With a few steps, though, you just may see where your income stands and finally put a dollar figure to your work.

Step 1: Know your hourly rate

It’s easy to take a look at a project and say to yourself it’s worth X dollars. Then another project is worth Y dollars. In other words, freelancers have a tendecy to guess. More often than not, too, it ends up being worth more than we thought and we short-change ourselves in the process.

Since freelancers are essentially their own businesses, it’s important to target your income. Once you determine your target income, then you can break it down further into the hours you will have to work and, finally, your hourly rate. Your hourly rate will be the key for estimating a price for any project and reaching your target income.

Resources to help calculate your hourly rate (Freelance Switch):

Hourly rate calculator

Factors to consider when determining your price

Step 2: Always track your time on projects

Tracking time your time serves two primary purposes. First it is done to see if you are spending too much time on a project. The second is using that data for determining estimates in the future. The day will eventually come where you get requests for project estimates that are similar to previous projects you have completed.

Time tracking is simply using software, an excel spreadsheet or even pen and paper and recording EVERY DAY:

1. The project(s) worked on and the exact time spent on each project

2. Other non-income task(s) and exact time spent on those (includes invoicing, searching for clients, etc)

2.5 (It also helps to total the hours upon project completion)

Using time records from old projects can greatly simplify and save the guesswork from determining a fair price for your work since you now have accurate measures to go by. You can simply multiply the time by your hourly rate calculated above to get a project price.

Here are some free online time tracking services as well:

Paymo Timetracker

Slim Timer

Step 3: Always use project agreements

This is the most important part of any project. A project agreement outlines exactly what you will do in a project and exactly what you will be paid. The key to it’s effectiveness, though, is to note EVERYTHING that you will do to complete the project with specific details and no vague statements. This is done so there are no surprises or sudden additions to the work and time required for completion.

Clients have a tendency to add on more work as ideas come to them. Without a project agreement, however, they often think they are to be included as a part of the project, adding to your time. That’s why its important to draft the agreement and sign it along with your client. To handle those changes or additions, another document called a change order is used to outline those changes plus any incremental costs to the client.

Here is a sample  project agreement template and change order template from Elance.

Category: Insider Advice

Tags: freelance advice, freelance work, freelancing, time tracking

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