I often hear people say that you can’t possibly earn a decent living as a freelancer. It’s a belief that seems to be held by society as a whole and that, unfortunately, sometimes trickles down to freelancers or to those who would like to become freelancers.

When it comes to perspectives surrounding earning potential among freelancers and small business owners themselves, I’ve heard it all, from ‘it’s really tough to make a decent living as a freelancer’ to ‘I earn a 6-figure salary from my small business’. Those who do make 6 figures are few and far between; however, they go to show that earning a decent living is more than possible.

At the end of the day, how much you make from your business should all come down to your needs and what success looks like to you. How many hours you want to work, the type of clients you want to work with, and your personal goals should all have an impact on your business finances. This is because you should be creating a business that works towards your aims in life and reflects why you do what you do. And if those aims involve earning a decent living from your business, then that’s a perfectly achievable goal.

I know a lot of people are feeling concerned right now about global inflation and the increased cost of living. Many freelancers are worrying about making enough money through their businesses to cover all their outgoings. So, in this blog post, I wanted to share what I’d say to you if you’re unsure you can earn a decent living from freelancing alone.

Initial pricing considerations

The first thing to say is that you and only you are responsible for how much you charge. Your prices aren’t dictated by your customers or average industry rates; they’re down to you and you alone. If you aren't quoting high enough prices to earn a decent living and cover all your expenses in the time you have available, that's on you.

This might sound like tough love, but it’s also true. You are the only person who decides the rates you charge. If you need to be earning above average industry rates to cover your expenses and make a decent living, you have to find those clients who are willing to pay you more. I’ve written a blog post on how to go about doing this here.

Your minimum hourly rate

Believe it or not, failing to make enough through your business to cover all your expenses and earn a decent living is surprisingly common. In fact, the only way to be sure you’re quoting high enough is to understand what your minimum hourly rate needs to be.

Setting your rates based on what someone else in your industry is charging or simply accepting the rates your clients offer you without having a benchmark isn't a solid pricing strategy. You need to know the minimum rate you can accept to make a project viable for both you and your business.

The first step to identifying your minimum hourly rate is to understand your capacity for paid client work. It can be tempting to think that if you work a 40-hour week, that equates to 40 hours of paid work. But unfortunately, that’s not how it pans out. Think about all the other things you have to do that you don’t get paid for: admin, marketing, emails, sales, continuous professional development, etc.

To understand your capacity for paid client work, the best way is to track your time and figure out what you can manage on a consistent basis. How many hours on average do you spend working each day, and how many of these hours are spent on paid client work?

Once you know how many hours you can realistically dedicate to paid client work on a daily basis, you can calculate how much you need to be earning from those hours to cover all your expenses and make a decent living.

If you find that at your current rates, you’re having to work extremely long hours just to make ends meet, you don’t have a sustainable business model. Working long hours on a consistent basis is likely to lead to burnout, which will potentially enforce an extended break from work. And if you’re unable to work, this certainly won’t be good for you financially, and you definitely won’t be able to earn a decent living from freelancing!

How to price your services

In Charge with Confidence, I show my mentees not only how to calculate their minimum hourly rate but also how to identify an aspirational hourly rate. The rate calculator spreadsheet I provide them with allows them to input all their figures to reveal minimum, mid-range and aspirational rates.

Knowing what your minimum rate needs to be while also having an aspirational rate to aim for helps you quote higher than your minimum to leave room for negotiation. Quoting higher than your minimum gives you space to manoeuvre if the client comes back to you looking to pay a lower amount.

It’s important not to quote your minimum rate and then let the client push you down from there. If you’ve calculated your prices to take into account your business and personal expenses as well as the number of hours you want to work each week, accepting anything less than your minimum will mean that you’ll either have to work longer hours or charge other clients more to make up the difference.

How much should I charge?

The amount you should be charging is unique to you. The rates you set have to allow you to cover all your expenses and make a decent living in the number of hours you have available for paid client work.

As a rule of thumb, if you find that after sending quotes to your clients, you never hear a ‘no’, you probably aren't charging enough. And if you're fully booked with client work but aren't earning enough to make ends meet, you definitely aren't charging enough!

On the other hand, if you’re regularly hearing ‘no’ from your clients but know you need to be charging higher rates, you need to explore a different potential client base. Some types of clients tend to have lower budgets than others, so it’s a good idea to see if you can start working more with those with bigger budgets! For example, private individuals and agencies often pay lower rates than direct clients and large multinational companies. Similarly, clients in some countries will expect to pay less than clients in other countries.

Your ideal client is someone who can pay the rates you need to charge. And I can assure you that there are clients out there at every budget level. If you’re not earning a decent living through your small business, the question you need to be asking yourself is: Are you doing everything you can to find those clients who can pay what you need to be charging?

If you find that the answer to this question is yes, you’ve set your rates based on your costs and your capacity, you’re doing everything you can to find clients who can pay those rates, and you still don't feel able to earn a decent living, it might be a sign that you need to try something different. You could consider taking a part-time job alongside your freelance work to support you financially, but I’d hope that wouldn't be a step you’d need to take.

Always remember that your rates are your decision and no matter how much you decide to charge, there are clients out there who will be willing to pay what you need to earn.

If you were doubting your ability to make a decent living as a freelancer, I really hope this blog post has given you some food for thought. Earning enough all starts with getting your pricing calculations right, followed by identifying and targeting the right kind of clients for you.

If you’re unsure how much you need to be charging to make sure you’re earning a decent living, I’ll help you assess your prices in Charge with Confidence. During the programme, we’ll look at all the expenses you need to be considering before calculating your hourly rates and taking a more in-depth look at your current client base. Click on the link below to find out more!

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