By Payrollplus, 16. May 2024
This is a question that sooner or later arises on the path to self-employment or for freelancers and should not be taken lightly. A precise calculation of the hourly rate is essential for freelancers and self-employed individuals. It helps cover living expenses and appropriately reflect the value of their services.
In the freelance world, the hourly rate is a central aspect. It determines how much money you receive for each working hour. This value is not only important to cover your own living expenses but also to adequately reflect the value of your work. A well-calculated hourly rate ensures that self-employed individuals and freelancers are fairly paid for their time and expertise while remaining competitive.
Market requirements show how in-demand a particular skill or service is. The higher the demand, the more you can typically charge. Competition also plays a major role, as in an environment with many providers of similar services, you often need to adjust your price to get contracts. Your own qualifications and experiences are also decisive. Higher qualifications or specialized knowledge can justify a higher hourly rate.
First, you should consider your professional experience and previous salary. Also take into account results from market research. Your experience and skills can increase your value in the market. Look at what others in your industry earn, especially those with similar experience and in similar roles. This gives you an indication of what potential clients are willing to pay.
After analyzing your experience and the market, set realistic income goals. Consider your personal needs such as living expenses and financial goals. However, remain realistic within what the market offers. Your goal should be ambitious but achievable.
Next, calculate your fixed and variable expenses. Fixed costs are regular expenses such as rent and insurance premiums. Variable costs can fluctuate, such as material costs or advertising expenses.
A good understanding of expenses helps you avoid financial bottlenecks. It enables informed decisions about prices and budgets.
The following expenses should be considered:
Not every working hour can be billed to a client. Billable hours are those where you work directly on projects for clients. Non-billable hours include administrative tasks and acquiring new clients.
It’s important to track both types of hours to understand how much time you can actually spend on paid work. A realistic assessment of your productive (billable) hours allows you to calculate an hourly rate that covers not only your direct work but also the necessary non-billable activities.
Another important aspect is downtime such as holidays, sick days, and time for personal development. These should not be underestimated in your planning. Holidays and anticipated sick days reduce the number of working days in the year. It’s also important to plan time for your personal and professional development, whether through courses, seminars, or self-study.
These times are not directly productive or billable but contribute to increasing your value and efficiency in the long term.
After determining your annual income goals, costs, and available working hours, you can now calculate your hourly rate.
Let’s assume you want to work as a freelance graphic designer in Switzerland and your goal is to earn 80,000 CHF annually.
Next, you need to estimate the number of billable hours per year:
Now calculate your necessary hourly rate by dividing your annual total income by the number of billable hours:
This hourly rate of 89 CHF allows you to achieve your desired income while covering all your costs and accounting for non-working times.
It’s important to regularly review and adjust this hourly rate to account for changes in your expenses, market conditions, or your personal and professional goals.
Orienting yourself to common hourly rates helps create competitive prices. The goal is to find a middle ground. You don’t want to be so expensive that you lose clients, nor so cheap that you undermine your value. Adjusting to your expert level means you can charge more, especially if you have specialized skills or extensive experience. This demonstrates the added value you offer your clients.
Hourly rates can vary greatly depending on the industry.
On average, hourly wages for craftsmen range between CHF 60 and CHF 120. In urban areas like Zurich, Geneva, or Basel, these rates can be higher.
In online marketing, hourly wages depend heavily on specific expertise, e.g., SEO, social media marketing, content marketing, or PPC (Pay-per-Click) management. Professionals in online marketing can charge hourly rates between CHF 80 and CHF 200, depending on their experience and project scope.
Web developers working in Switzerland also see a wide range of hourly rates, depending on the technical complexity of the project, the technology used (e.g., frontend, backend, full stack), and professional experience.
Entry-level and junior developers can expect hourly rates of about CHF 65 to CHF 100. Experienced senior developers or specialists in in-demand technologies can charge between CHF 100 and over CHF 150.
Underpayment often arises from uncertainty about demanding appropriate prices for one’s work. Many self-employed people fear losing clients through high prices. However, this leads to working below their value. This can lead to financial stress and dissatisfaction in the long term.
Overwork is often a direct consequence of underpayment. To overcome financial bottlenecks, self-employed individuals take on more work than they can handle. This can lead to overtime, stress, and in the worst case, burnout.
Another important point is rejecting financially unprofitable projects. You must learn to say “no.” Not every inquiry or project is worth accepting. Learn to decline orders that are poorly paid or would take up too much of your time.
Successful negotiations begin with building trust between you and your clients. Clear communication about your abilities, experiences, and successes strengthens this trust. Show how your work solves specific problems or contributes to the client’s value.
Prepare for negotiations by supporting your arguments with concrete examples and results as well as case studies.
Ensure that contracts are clear and detailed to avoid misunderstandings. Open communication about expectations and services helps prevent conflicts. Also, practice how to confidently represent your prices and learn when it’s appropriate to be flexible.
Adjusting your hourly rate upward is important to keep pace with the development of your field and economic changes. Here are some aspects that can justify an increase in your rate.
Continuous education keeps your services competitive and current. Regularly invest in your professional development through courses, workshops, or self-study. These educational investments improve your skills and allow you to be appropriately paid for your expanded knowledge.
Convincing marketing that emphasizes your unique skills and successes is crucial for higher hourly rates. A strong online presence, a professional portfolio, and targeted networking increase your visibility and convince potential clients of your value. These elements help your target audience recognize the quality and unique character of your work.
Inflation and rising living costs are also valid reasons for a rate increase. These factors directly affect your operating costs and require an adjustment of your prices to secure your financial stability.
Over time, the value of your services can increase through experience growth and market changes. Many freelancers and agencies regularly review their prices and adjust them to reflect their growing expertise and the increased demands of their projects.
A thoughtful and well-communicated increase in the hourly rate is not only a sign of professionalism but also an essential part of your business strategy. It ensures that you are fairly compensated for your work and that your business model remains sustainable.
Freelancers can invoice orders with the PayrollPlus payroll platform and are socially secured. The innovative billing platform offers unique employment and billing models. Orders can be easily processed through the online tool.
