I charge an hourly rate. I quote how many hours a project should take and collect half of it upfront. I only allow 2 revisions. Any more revisions and I charge them more.
This is the formula I use to determine my rates. Numbers aren’t mine and from a book called Creative, Inc.
- Calculate my monthly business expenses. This includes things like transportation, meals, licenses, permits, internet, postage and delivery, printing and reproduction, studio rent, telephone, office supplies, etc. (For example: $1074)
- Calculate my monthly personal expenses. Rent, clothing, recreational activities.. Anything I spend on that is not related to my business. ($2215)
- Calculate my ideal monthly profit. I add up my personal expenses ($2215) and how much I want to reinvest into my business per month ($1200). Then add 30% taxes to this total number ($1024). The total comes out to $4439.
- Calculate my gross business income needed. Add my business expenses ($1074) to my ideal monthly profit number ($4439). My gross income needed per month is $5513.
- Determine how many days a month you want to work and how many hours per day. Let’s say I only want to work 18 days a month and 5 hours a day (5×18 = 90 billable hours per month). Take your gross business income needed and divide it by your total billable hours ($5513 / 90 = $61.25).
If these are your numbers, your hourly rate should ideally by $61 per hour. Anything less than this and you are not making a profit.
Of course there are good, legitimate reasons why you would want to work for cheaper, things like: If you are just starting off or don’t have much experience, if your quality isn’t that high, if you just want to get your foot in the door of a client, you want to work more days and hours, etc..
Anyways, that’s how I calculate my rates and hopefully it’s useful to some others. I personally don’t accept any projects that take less than 5 hours.