Tips for Setting Your Rates
Setting and managing your hourly rate is one of the most difficult aspects of the freelance business. Here’s some advice on how to approach the problem.
One of the subjects that freelancers return to over and over again is one of your hourly rate and how to set it. This stems from the strange secrecy we all engage in, wherein divulging our rates is akin to spilling the secrets of the universe or something. In point of fact, if we all simply had an honest conversation about what we charge, newcomers could learn quickly from the experienced old salts and the whole translation services industry would be on a much more fair footing.
Still, people shy away from that conversation with strangers, so we have to figure out other ways of coming up with our data. Without more information from others we can never be certain we’re charging what the industry would truly bear for our services, but over time you do at least figure out the basics. For those who are just starting out, I thought I’d toss together some advice for setting your initial rate – and then for how to revisit the subject as time goes on.
Setting Your Initial Translation Rate
When launching your own business, it’s difficult sometimes to set the initial rate. On the one hand you don’t want to scare off business by setting it too high, on the other hand, you don’t want to set it too low and wind up barely surviving. You’re in business to earn money, after all.
My advice is simple: Decide what your time is worth.
Time is what you’re selling. It’s what we’re all selling. Your time’s value is augmented by your skills – in other words, it’s worth more than someone who has no skills to offer. So, figure out what the lowest amount of money you can charge that adequately pays for your time. It’s often helpful to work backwards: Assume you’ll be engaged 100% of the time, or 40 hours a week, 50 weeks a year with 2 weeks leave. How much do you need to charge for those 2,000 hours to earn what you need?
This requires you to first calculate your costs – what you have to pay out to keep your business running. Then figure it out – if you’re charging, say, $20 an hour, you’re earning $40,000 a year, minus taxes and expenses. Maybe that’s enough – maybe not. But starting here will ensure that you don’t do work for less than the living rate you need.
When to Raise Rates
Once you have some clients paying this initial rate, I’d suggest reviewing everything six months in and then raising your rate. Initial rates are almost always lowball figures – we lack confidence and clients. Now that you have a little of both, raise your rate slightly. Give everyone a little warning, but do it – you don’t want to be earning initial rates ten years from now.
Then, once a year review it again. You don’t necessarily have to raise the rate – but you shouldn’t hesitate if your expenses have gone up.