How do you determine your freelance rate?

[4flyer]

A coworker that recently left to work for a startup. He reached out to me and asked if I was doing some freelance work for him. As of right now, he is asking for somebody to help review schematics and layout. I'd be happy to do it but I do now know what to charge.

I am about 2 years out of school and in the southern US. Currently at work, my hourly rate is $40. I "feel" that is too much to charge for freelance but perhaps I need a confidence boost, I don't know.

Thoughts?

[PlainName]

For the same work, freelance rate is typically higher than employee rate since the freelance has to pay tax, etc, that the employer would normally take care of. Also holiday pay, equipment, job security, etc.

[geggi1]

Freelancing is typicaly about 2 times the rate of employed.
The reason for this is the freelancer will have to tax.
If the freelancer have specialized high value skills the rate might be 3-4 times of an employee.

[nctnico]

And if you are in the US, also consider cost for healthcare insurance. I've read that this can be extremely costly for people working for themselves.

[Smokey]

For this specific situation, if you are friends with the guy and the work is interesting and something you want to be involved in, then just pick a number that everyone is happy about and don't sweat it too much. 

[Psi]

Currently at work, my hourly rate is $40.

Then you should be asking for at least $70 for freelancing. Maybe $65 at the absolute lowest 'mates rates'. You are shooting yourself in the foot asking for less than that.

Obviously it depends on the country and the job in question but in general $100/h is not unreasonably for freelancing.
Usually with freelancing your experience has much less of an effect on your hourly rate.
They pay what you state if they want you to do the job.

Of course it's possible this person is hoping you don't know what to charge and they will get you ridiculously cheap.
Don't fall for it. If you are freelancing you get paid well because you're doing odd jobs here and there. Having work to do is not guaranteed like it is when working for someone as an employee. You have to make more to make up for the fact you don't always have work.

[Sniper1]

Sorry for hijacking this thread but i also have a few questions that are very on topic:
Do those rates apply to non US freelancers?
Also how do you get started and where?
What would be a good point to start, as in experience you have ?

[Psi]

You would need to check the industry in your area.

Keep in mind while freelancing brings in more money it's a lot more stressful because you are ultimately responsible for getting the job done and anticipating problems before they happen and knowing how to solve or avoid them.

Unlike working for a company as an employee, where they tell you what to do and you do it until you encounter a problem.
Then you report that problem to your boss and he figures out what to do next.

Normally you are taking on much more responsibility as a freelancer and you're expected to solve problems yourself

[m98]

In Germany, common rates for this type of work are between 80 to 120 € per hour. Sure, if you want to work for for an early-stage startup, you might need to make compromises.

[SiliconWizard]

For this specific situation, if you are friends with the guy and the work is interesting and something you want to be involved in, then just pick a number that everyone is happy about and don't sweat it too much.

Yes, obviously if you already have a job to pay your bills and the person is a friend, you can charge whatever, you can even do it for free if the amount of work is reasonable and you are good friends (what do you know, if his startup works he may be hiring you full-time down the line.)

But for a full-time freelancer, see the other points above.
You must charge way more than what you get as an employee to get the same level of income in the end. Double is a reasonable target. You could start with +50% (so 1.5x) to get your feet wet. But don't go below that. It won't work.

[kermitfrog]

But don't go below that. It won't work.

Is that a voice of experience ?

[rhb]

I spent most of my career as a contract scientist/programmer in the oil industry.  Rule of thumb for the oil industry is 140% of regular employment salary is a breakeven rate.  Big oil had really good benefits, though not so good now.

Note, I was full time, onsite for years with a private office except on my last contract when I lived in a cubicle.  I didn't like that, but they were paying almost double my previous rate.