Step 1: Setting your personal financial goals
Before you get started calculating your freelance rate, it is crucial to first think about your personal financial goals. How much do you want to earn net on an annual basis? This question forms the basis for all your subsequent calculations.
It is important to keep a realistic yet ambitious net income in mind. Think of an amount that not only covers all your expenses, but also allows you to live comfortably and carefree. Remember that as a freelancer, you are responsible for your own social security contributions and taxes. 💰
A good rule of thumb is to assume that about half of your gross income will go on social security contributions and personal income tax. This percentage can vary depending on your personal situation, such as your marital status, the amount of dependent children and any tax deductions.
Tip
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Step 2: Include all your expenses as a freelancer 🧮
As a freelancer, you are a true entrepreneur and therefore bear full responsibility for all your business expenses. It is crucial to make a thorough analysis of all expenses associated with your freelance activities. 💸
Consider costs for:
Memberships and subscriptions
Office space or workplace at home
Computer equipment and software
Mobile phone and internet subscription
Means of transport and fuel
Bookkeeping and administration
Insurance (professional liability, industrial accidents, etc.)
Marketing and advertising
Training and further training
Don’t forget the unexpected costs!
Unexpected costs such as repairs or replacements of equipment should not be forgotten.
It is wise to build a buffer for such unforeseen expenses.
Step 3: Determine your available working hours 🕰️
As a freelancer, you are your own boss, but that does not mean you can work unlimited hours. It is important to have a realistic idea of the amount of hours you will effectively be working.
Start by determining the amount of weeks per year you will be enabled as a freelancer. Take into account leave periods, holidays and any rest periods. Then estimate how many hours you will work per week on average. 💻
Remember that as a freelancer, you also need to set aside time for non-billable tasks such as administration, marketing, training and continuing education. A rule of thumb is to include about 20-30% of your total working time for such tasks. 📝
Step 4: Calculate your hourly rate as a freelancer
Now that you have determined your net income goal, costs and available working hours, you can move on to calculating your hourly rate. This is the formula:
(Desired net income + total expenses) / number of working hours per year = hourly rate
Let’s give some examples:
| Desired net income | €36.000 per year | €25.000 per year |
| Total cost | €18.000 per year | €10.000 per year |
| Amount of working hours per year | 1.600 hours(40 hours per week x 40 weeks) | 800 uren (20 uren per week x 40 weeks) |
| Hourly rate | (€36.000 + €18.000) / 1.600 hours= €33,75 | (€25.000 + €10.000) / 800 hours= €43,75 |
It is highly recommended to make these calculations together with a professional bookkeeper or accountant. They can help you estimate all costs correctly and include any tax benefits.
Factors that can affect your freelance rate
Wondering which factors affect your daily rate? View it here!
Conclusion
Determining a profitable freelance rate is an important aspect of your freelance activities. It is essential to consider your personal financial goals, costs and available working hours when calculating your rate.
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