Education

Design Hireling: Your Rate

How much do you charge per hour (and project) for freelance work?

Working for gold coins.

A few weeks ago, I wrote about different kinds of payment methods for freelance creatives. That article is titled, Design Hireling: Payment Models. Today's article is a sequel about calculating your rate—how much do you charge for your work? How much do you charge hourly? And how much do you charge for a flat-rate project like a zine, book cover, or illustration?

Reminder, this article is partly a reminder to myself. I'm the worst offender when it comes to charging what I'm worth. So, do as I say, not as I do. User results may vary—especially if you live somewhere other than the United States.

What's my expectation for rates?

Freelance creatives (writers, designers, and artists) do not work regular hours, weeks, and years. Sometimes you have good months with lots of quality, well-paying work, and sometimes you're fasting through a lean month or two.

My rate needs to get me through both seasons. When new work is coming in, it needs to be high enough to build a nest egg. If I'm working lots of hours and not clawing back time and peace of mind—my rate is too damn low. On the flip side, when no work is coming in, I need my rate needs to be competitive and flexible.

What about pricing products?

This is not the article for figuring out your product prices. That's a whole series better written by someone in publishing—someone with data. If you're a freelancer, selling your own products is a great way to smooth out your income, if you can make something people want. My only experience with this is a tool, The Classic Explorer Template, whose regular sales alleviate some of my monthly expenses on Adobe Creative Suite.

What are the different pricing models?

A few weeks ago, I shared the three most common pricing models for freelance rpg designers—hourly pricing, unit pricing, and flat-rate pricing. You can find an exploration of those below:

How to calculate an hourly rate.

No matter what pricing model we choose, our hourly rate is our baseline. We only have so many hours in a day, week, and year—so the hourly rate provides us with a starting floor and ceiling.

The following steps assume you want to be a full-time creative who lives off their work. If you're already working full-time and taking on creative work as a side hustle, you'll probably have fewer goals and requirements. Calculate accordingly.

Step 1: Start tracking how long it takes to do the work.

I'm the slowest professional writer I've ever worked with. My graphic design? Even slower. That's why I have to track my hours. If I can't estimate how long it takes to do things, I can't provide quotes or commit to projects.

If you're just starting out, you probably have no idea how fast or slow you are. This is normal. I sometimes underestimate how long it takes to do things and end up working a lot more hours than I planned. When that happens, I'm working at low efficiency. New and experienced designers alike are always swinging between high and low efficiency—your goal should be increasingly narrower deviations. That comes with time.

There are two kinds of working hours:

Billable Hours. These are the hours spent working for the client, whether it's pulling inspiration for mood boards, drawing a map, or designing a logo.
Non-Billable Hours. The miserable time spent doing everything else, like emails, bookkeeping, drafting invoices, etc.

Step 2: Calculate billable hours per year.

I like to pretend I'm French when calculating billable hours (but only briefly). The average French Clayton works no more than 30 billable hours a week and takes lots of vacation. There are 52 weeks in a year, but the happier, Frenchier version works just 46. That makes me a busy Frenchman but a surprisingly healthy and carefree American. (The joke's on America in this scenario.)

If you're a junior (and without a full-time job already) you should plan for at least 40 billable hours a week. Yes, that's a lot of hours with non-billable hours on top. Unfortunately, when you're freelance, you're not freeing yourself from capitalism—you're betting on yourself to beat it. When you're first starting out, your time is what you sacrifice for experience, happy clients, and ego. Be prepared to put in lots of hours, but be militant about time off. Burn-out is real.

Anyway, let's pretend I'm only working 30 billable hours a week for 46 weeks. This is the minimum I'm hoping to work every year.

Billable Hours Calculation:

Weekly Billable Hours × 46 Work Weeks Per Year = Billable Hours Per Year.

Example: 30 × 46 = 1,380 Billable hours per year

Step 3: Calculate your baseline hourly rate.

What do you want your yearly income to be? Your lifestyle, location, and goals will be the deciding factor. At first, my dream income was relatively low. I had next to no possessions, lived in the American midwest, and my hobby was already equipped from a pound-of-dice bucket.

I recommend looking up the average income in your area and researching other designers and artists. Pick something that's comfortable but aspirational. When I moved to Boston, the average junior copywriter in an advertising agency earned just $50,000/year. That might sound like a lot to some, until they start looking at rent. Don't base your goals on professionals and shops you don't admire. And don't go looking for the minimum salary—in America that minimum is well below decent. Again, be aspirational and realistic. The worst thing you can do is charge yourself so little, that you're only getting by when business is good.

Baseline Hourly Rate Calculation:

Let's say my goal is to make $75,000/year. The calculation here is very simple:
Goal Income ÷ Billable Hours Per Year = Rough Hourly Rate

Example: 75,000 ÷ 1,380 = $54.35/hr

Step 4: Plan for your operational costs.

I'm not going to pretend $54.35/hr isn't great. Unfortunately, it's deceptive. Out of your hourly rate, you still need to pay for expenses, incidentals, taxes, and healthcare. These percentages will eat into your effective rate.

Calculate Additional Expenses:

Business Expenses $2,000. Subscriptions, legal, supplies, internet, etc.
Taxes 25-30%. Calculate after expenses. Be pessimistic for your own sake.
Insurance $12,000. This is a very rough estimate. The point is that it's a lot.

These three expenses are for reference only. Your expenses, taxes, and insurance can rise and fall depending on where you live and who you live with. There's a reason why lots of creatives get insurance through their partners.

How to calculate a flat-rate quote.

How long does it take you to complete a regular job? The kind you do repeatedly? If you're an artist, this might be a collection of full-page pieces and some spot art. Cartographers—maybe one, two, or three maps per book. A graphic designer might make brand packages (logos, type, and colors) or lay out a 30-page zine.

Your Billable Hours Per Year ÷ Average Time Per Project = Your Project Maximum

Now take that maximum number of projects you can do and divide that from your goal income or budget. That's your baseline flat-rate to charge per project.

Your Goal Income ÷ Your Project Maximum = Your Project Fee Baseline

Alright. Let's put this all together now. It takes me 40 billable hours to design a standard brand kit with logos, type suite, colors, and brand guidelines. That includes the meetings. The happiest version of me (the French one) works just 1,380 billable hours per year. So my maximum number of projects per year is 34.5 or 35 projects. That's a lot! That's almost one and a half projects every week. (A very tall order for a product as monumental as a rebrand, but more on that later.)

Now let's figure out the cost of those projects. If I'm doing 35 projects a year and I want to make $75,000/year, that means I should be charging a minimum of $2,142.86 per project. Every dollar a client pays over that baseline reduces the number of projects I need to complete.

If I managed to charge $5,000 for every standard branding kit, I'd only have to do 15 projects. A little over one client project a month. That's pretty doable if I'm doing it full time. Especially since I'm still calculating for only 30 hour a week. In reality, most freelancers work at least 40—sometimes as much as 60 during busy seasons. Suddenly, the puzzle is a lot easier when you realize you only have to charge more than your baseline. Every dollar over is a better life.

The secret math of flat-rate quotes.

Sometimes you'll see designers advertise a menu for their services—don't do this. Either leave your rate off the list or provide a range. Your baseline should be the lowest number in that range—if it's the range at all! (It shouldn't be.) The point of flat-rate pricing is that you can change it depending on the project and client.

Here's how you calculate a flat-rate quote:

How many hours will it take to complete? Multiple it by your hourly rate.
Is the above calculation less than your project fee baseline? Raise it to that line.
How big is the client? Raise your price for Hasbro and other big companies.
What's the demand for your work? If they can't do it without you, raise it.
What's the timeline? If the client wants it rushed, you charge extra.
How much do you want to do this job? Raise it if you don't. Lower it if you do.
Will the project be a great portfolio piece or expand your business? Lower it.
Do you think the client is going to stress you out? Raise it.

Do you tell the client these calculations? No! Remember your doing this math for your own sake, not theirs. If working on a tech brand or drawing little goblins makes you miserable, you have a right (nay, a responsibility to your mental health) to charge extra. Anticipating your costs, including the cost to your morale, isn't selfish—it's good business. The worst a client can do is say no or try to haggle.

Thinking ahead with flat-rate pricing.

Flat-rate pricing is surprisingly flexible. That's why I advocate strongly for it. You'll likely come upon a number of these scenarios.

What to do when the client's budget is too small. Never lower your rate below the baseline. Instead, ask them if they want to reduce the scope. Your rate stays the same, but your hours shrink to fit the budget. If you're an illustrator, this might mean doing fewer pieces, removing color, or simplifying the design. Graphic designers use this technique all the time, offering fewer deliverables for a smaller quote. One fewer logo, spread, or application.

Treat your hourly rate like a failsafe. When working under a flat-rate, keeping your clients in-scope and on-time is everything. A good agreement provides clients with next steps if the project goes past schedule or beyond the scope. Sometimes you can negotiate an additional fee for extra deliverables, but my favorite clause is an inflated hourly-rate that kicks in once the originally agreed upon scope is fulfilled. This rate ensures you're compensated for clients who refuse to make a decision or try to squeeze more work out of you without paying for it. Most clients don't like paying hourly, so having an hourly rate acts like a disincentive.

Your price can control new work coming in. I like to be semi-transparent with prospective clients, especially ones I admire and respect. If I'm too busy for my own comfort, I might quote them a price that makes up for the added stress. And I always explain why, "My calendar is busier than usual. This is what I need to carve out the appropriate time. If this project can wait, I can get you a new, lower quote later." Conversely, if I really don't want to take a job, but I can't afford to say no, I might give them an inflated price—a soft "no." I don't like doing rebrands for tech companies, even the benign ones, but I don't mind doing it for the right price. That price is a payday in comparison to the others.

Paying my Joesky Taxes

Talking business is a violation of the Joesky Tax. Here are hirelings whose fees are something other than money.

Melfy Arda. A renowned and formidable mage of Oakdale. For this jaunt into the wilderness, Melfy wants the location of another ally—she's going to kill them. The cost: Players give up the life and favor of a beloved NPC or faction.

Dennis the Great. A legendary but harmless Crowknight of Noxley. An incompetent boob with a flail. When this is over, drunk nobles will sing his name. The cost: Players forfeit any glory, reputation, or renown for this adventure.

Seven Severence. The renowned and dangerous merchant of Aldnari. He'll supply the expedition in exchange for the heart of Silver Reach upon its retrieval. The cost: Players immediately agree to reduce the reward for the adventure.

B-Boo B-Bop. An uncommon but harmless IBM 1401. This awakened intelligence is happy to spit out manilla punch cards forever in your cargo bay. The cost: Players give up valuable cargo space and system's power.

Arnold Parnassus IV. A renowned wizard of Fireford College. The preeminent scholar on doors and hinges. If there's a door, he can open it, but only for someone serious about "door magic." The cost: One player spends a level in "Door Mage."

Crog Mamma. A common but formidable brute of the West Fells. You point. They punch. You weak. They strong. You sleep on floor. Get strong too. Crog sleep in bed. Crog deserve it. The cost: Crog sleeps in your bed. It's good for you.