As a freelancer, knowing what to charge is tricky and many find it hard to place a value their skills, experience and time. But once you’ve found this magic number, it can be equally challenging sticking to it and you may still find yourself undercharging. Read more…
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The first instalment of Essential Lessons for New Freelancers looked at setting your prices and finding your hourly rate. This time I’d like to share some of the things I have learned about the process of quoting for work.
Quoting for freelance work is very much a learning curve, and in the beginning you can easily under quote or underestimate the time it will take to complete the work. But with each project that you quote for, and each piece of work you complete, the process will get easier.
Before You Start
Before delivering a quote, you should gather as much information about the project as you can. Ask lots of questions even if you think they sound silly; the one question you feel too embarrassed to ask, could give the one answer that gives you real insight into what the client is looking for.
Ask the client about their business, and about what they need from the project. Also find out if they have a budget or schedule in mind for the work. This will all make it easier to answer the brief, and show how you can best meet their requirements.
3 Elements of Quotes
An effective quotation will cover 3 aspects of the project:
- the scope of work,
- the timescale, and
- the cost.
Spending time in preparing a detailed quote which covers these three aspects will benefit both the freelancer and the client, as both parties will know what to expect from one another. A detailed quote can also help to avoid subsequent quibbling over the invoice as there should be no unexpected charges.
Scope of Work
The scope of work should describe the work that the freelancer will be doing, and what will be delivered upon completion. It is good practice to be specific: if you are designing a logo, state how many initial concepts will be presented and how many rounds of revisions are included, or if you are building a website, list the features the site will have. This shows the client how you will meet their requirements.
However, sometimes these requirements may change once the project has started. A client may want extra changes to refine their logo, or add extra features to their website. These changes can seem small to the client but this scope-creep can quickly escalate and leave the freelancer out of pocket by stretching the budget. You should make it clear to the client that any change to the scope of work may delay the project and incur extra charges.
Timescale
The timescale of a project is dependent on several things. The first is how long the freelancer will take to complete the work. Based on previous projects, you should be able to gauge how much time you will need for the work, and this will get easier over time as you complete more projects and gain more experience. It is a good idea to add extra time to this figure as projects rarely run according to plan and can easily take longer than you anticipated. You can end up losing money if you haven’t allowed for such complications. I would suggest 10% as a reasonable amount of extra time, so if you estimate a design will take 10 hours to complete, your quote should be based on the project taking 11 hours.
The second thing to affect the timescale is your schedule. You may have other projects in progress which mean that you may not be working on this project full-time, or you may not be able to start on this project straight away if you have another to finish first.
Finally, the client may have a deadline in mind for the project to be finished, for example, they may be planning to launch their website on a particular date. You will need to discuss this with your client and make sure your schedule will allow for it. If meeting this deadline would require you to delay another project or work overtime, it is reasonable to ask for a higher rate of pay, but bear in mind that the client might not be willing to pay extra. If you really want the job, be willing to negotiate and hopefully find a situation that suits you both.
Use these three factors to find a suitable delivery date for the finished work, and state it on the quote so that both you and your client are aware of, and agreed upon, the deadline. A large project may be split into multiple stages and therefore have several delivery dates; you should list these stages as well as the final deadline.
Cost
Previously I discussed calculating your hourly rate of pay. Now that you have that figure, it is time to use it.
The simplest way of deciding how much a project will cost is to multiply your hourly rate by the number of hours you anticipate spending on the project. This, of course, is just the cost for your services and you may be required to outsource other items and add the cost of that to this figure. You may have to arrange printing or buy stock imagery on behalf of your client and these additional costs should be listed so that the client is fully aware of what they will be charged for.
Presenting the Quote
Once you have gathered the information for all three parts of the quote, it is time to present it to the client. It is important to look professional, so lay out your quotation neatly, branded with your logo and contact details; a client is not likely to take you seriously if your quote is a price scribbled on a napkin. If you have any terms and conditions associated with your quote, such as the requirement of a deposit before work starts, state them clearly.
Describe the scope of work, state the proposed project schedule and deadline, and list all charges, in a clear and unambiguous way. And, finally, be prepared to answer any questions your client might have.
Further reading
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Going freelance is exciting and the thought of being your own boss and avoiding the 9 to 5 regime can be very appealing.
However, inexperience often leads new freelancers to make mistakes. While some of these will be minor, others can end up costing you both time and money. As a freelancer, it’s important to learn from your mistakes, as well as the mistakes of others.
Recently a relative of mine decided to become a freelancer, and it seemed useful to share some of the lessons that I learned when I was starting out. The first of these is setting your prices, something that can be quite confusing.
When you start freelancing it is hard to know what to charge. Set your rates too high or too low and you risk alienating potential clients.
Value yourself
Most new freelancers set their prices too low; they lack the experience and confidence to value their skills accurately. And if you undervalue your work, others are likely to do the same. So how do you decide on a fair price?
Firstly, know that you aren’t just selling your time; if you were then national minimum wage would be fine. You are selling your time and your expertise. All the time spent on training, education, learning software and sharpening your skills and creativity, is important. It is the reason people should hire you to design their logo or build their website, rather than get the kid-next-door-who’s-good-at-art to do it.
You have a business to run
Secondly, take into account the costs of running your freelance business. Many freelancers work from home, so will incur fewer costs than a dedicated design studio or office space. You will, however, have rent or mortgage costs, as well as heating, lighting, power, and phone/broadband costs to cover, and a percentage of these can be classed as business expenses. Check your local tax laws to find out how much you can allocate as a business expense.
You may need to invest in computer upgrades or specialist software. And office consumables such as printer ink, paper and recordable CDs may also be required. Costs such as these seem small but can quickly mount up.
Profit is king
Finally, remember that like all businesses, freelancers need to make a profit; it’s not enough to just break even. You will need to set this money aside for business development, marketing, training, and because it’s just plain good to have money in the bank. You will need to decide how much of a profit you want to aim for. Whatever the figure, you will need to keep this in mind when you set your budget.
Finding your hourly rate
How much do you want to earn per month from freelancing? Be sure to choose a realistic figure, as freelancing is not the way to get rich quick. This figure needs to cover all the expenses you have identified and allow for profit and a salary for yourself as you will have living expenses as well as business ones.
Decide how many hours per month you can spend on chargeable hours. If you plan on working 40 hour weeks, not all of those hours will be spent on client work. There will be time spent on finding new work, dealing with emails and phone calls and various other tasks, such as looking after your accounts. Also take into account that you will not be working 52 weeks a year; you will require time off for holidays and illness.
Now divide your target earnings by your target chargeable hours, and you have your hourly rate.
An example
If you decide you want to earn £2000 per month and work for no more than 35 hours per week, or 7 hours per day, 5 days a week.
Of those 7 hours perhaps only 5 will be chargeable, giving 25 chargeable hours per week, or 100 hours per month.
£2000 divided by 100 gives you an hourly rate of £20.
And finally
This is, of course, a fairly simple overview of the process of setting your prices, and your circumstances may well require different considerations from those mentioned here. In the next instalment of these essential lessons for freelancers, I will look at using your hourly rate in preparing quotations for jobs.
Further reading
You may also be interested in these articles:
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