To find out your hourly rate, at first you have to figure out how much you need to earn a year along with the annual business expenses, then divide it by the time you can commit to work a year.
Now take your income goal and amount you expect to be able to work and fill in the following equation.
Annual Income Needed=Annual Income Goal + Annual Business Expenses
Calculate the hourly rate needed to achieve your goal with the following equation.Hourly Rate Needed=Annual Income Needed/Annual Billable Hours
Where, annual billable hours is the workable hours a week multiplied by the number of work weeks in a year with subtracting time away for vacation, illness, public holidays and day to day business.
Here is a sample example for calculating your hourly rate needed using methods given above.
Let’s say that, if you have to determine that you want to make minimum of $10,000 per year and your business expenses is roughly $5,000 for the year. If you are going to work six days per week and three hours a day then the total billable hours will be (18 hours/week X 52 weeks) 936 hours. For your understanding, calculations are given below.
$10,000 is your annual income goal
+ $5,000 is your annual business expenses
=$15,000 is the total revenue needed
If the total revenue needed is divided by total billable hours, your hourly rate will be calculated as given below.
$15,000 is your annual revenue needed
÷ 936 is your annual billable hours
=$16.02 is your hourly rate
From the above calculations, if you set hour hourly rate $20, you will achieve your annual income goal easily.
Once you figure out your hourly rate, there is no problem for the projects with hourly rates. But if you are going to do projects on the fixed price rate, you have to calculate your price for the project based on the hours needed to complete the fixed price project. But you have to remember that if you are going to work 18 hours a week that doesn’t mean that you will work each and every week.
Other than setting your hourly rate or the rates for fixed price projects, you have to check out other people’s bids, as well as their reputations. If freelancers without feedback are bidding $250, you can bid higher, however if someone of the other bidders have hundreds of stars ratings and bid low, you might not get a chance. If you are not comfortable with bidding at the lower price, you can submit a higher amount, but you will have to mention it in your private message.