How Much Should I Charge per Hour? Calculate your hourly rate based on facts not fiction

It always amazes me that at this time of year students coming to the end of  their design courses have little or no idea how much to charge

Coins and plant, isolated on white backgroundSure, there are fee scales out there, but even these are not explained in sufficient detail.

The whole question of how much to charge per hour is actually quite simple to calculate, and even if you have been in business for years, it is still an interesting exercise to calculate an hourly rated based on an end figure for gross profit, for example:

Aspirational salary =£/$30,000.00

Estimated Overheads:
Secretarial £1,000.00
Training £750.00
Insurances £730.00
Repairs/maintenance £450.00
Printing, postage, stationary £2,290.00
Advertising £631.00
Telephone £1,080.00
Motor running expenses £2,400.00
Travelling expenses £57.00
Entertaining £354.00
Legal fees £400.00
Accountant fees £1,200.00
Bank charges £750.00
Subscriptions £335.00

Required Turnover     £/$42,427.00

Working 8 hours per day, 5 days a week, 45 weeks a year, there are 1800 hours a year. Chargeable % of hours is likely to be between 30 and 60%, say 40%.

£42,000 ÷ (1800 x 40%) = £58.33/hr

This assumes a constant workload. It is very difficult to achieve a constant work ethic and a chargeable % at 40%. Inevitably weekends, late nights supplement the equation.

The hourly rate charged depends entirely on personal choice. It may be necessary to “buy work” initially, however when you become internationally sought after you can charge accordingly.

You may well find that you have to charge at least £/$60.00/hr to be profitable.

But what ever happens don’t undersell yourself.