Years ago, the idea of freelancing or adding a side gig to one’s regular job was almost unheard of. But because of increasing economic insecurity and the ongoing pandemic, a growing number of people have turned to freelance gigs to help support their lifestyle. From blog writing to graphic design, there are a number of sectors that are known to accept freelance workers. These gigs are great for allowing you to pursue new endeavors outside your regular work while adding some extra cash to your pocket. Some people even turn their freelancing side hustles into their full-time jobs! But how do you decide between charging an hourly rate when freelancing or accepting a flat fee?
If you are just starting out as a freelancer, you have probably already noticed that some companies offer part-time jobs or contract roles at hourly pay, while others are interested in paying a flat rate. Wondering which pay rate is better? You aren’t alone. That’s why we’re discussing hourly rates vs. flat rates for freelancers in our latest article. Keep reading to learn how to decide which choice is best for you!
If you’re reading this blog post, you’re probably either:
If you are in group B, you can probably skip this part. But if you’re still learning about the freelancing world, it may help you learn more about different freelancing jobs you can try, where you can find them, and how to determine your rate.
There are several different jobs you can try out as a freelancer. Like copywriting and graphic design, some gigs typically require some education or past experience in the field. Many prospective clients will also want to see a portfolio showing off your best work. Virtual assistant jobs and transcribing work are pretty easy to pick up if you don’t have much experience in a specific area.
Once you decide what practice you want to offer your skills in, you need to find a job platform to apply for jobs and send project proposals. Food delivery and ride-sharing gigs can typically be procured through the apps themselves. Like email marketing and web development, other jobs can be found on popular job platforms like UpWork or community Facebook groups. You can even download the JobGet app (our fav!) and explore the Extra Income section to make money right from your phone.
UpWork is an online freelancing platform that connects companies and individuals together to conduct business. Freelancers can either bid on projects or receive job proposals from interested companies who viewed their profiles and want to set up an interview or test run.
Fiverr is another popular platform among both freelancers and companies looking to outsource work. After signing up, a freelancer can start “selling” their work to prospective buyers. Individuals can sell everything from logos to pitch decks. The most successful freelancers on this platform typically work at a fast pace.
Both platforms have faced scrutiny and criticism over the years. These platforms charge commission fees on freelancers. Many freelancers on Fiverr also feel forced to put low price tags on their services to remain competitive. While Fiverr now allows freelancers to charge more than $5 for their services, the original price structure still created an overly competitive marketplace that harmed many freelancers in the United States.
Some freelancers also offer unethical services, like fake reviews or Instagram followers. Before signing up for either of these websites, you should perform thorough research on their practices as well as reviews by freelancers who have used the platform themselves. Be sure that your skills and talents are being used in an ethical way!
You can also find job postings on Facebook Groups and Craigslist ads! Try searching for groups relevant to your trade, such as pet sitting groups or freelance writing communities on Facebook. These groups are also great resources for learning more about finding jobs, negotiating pay, and improving your skills.
Craigslist also features new job postings every day. However, jobs on Craigslist are not always vetted by a website or other reliable source. Do your research and use your best judgment before committing to a job.
Know someone who needs a nanny for their children? Have a friend who needs help managing the social media account for their restaurant? Personal referrals are a great way to dip your feet into freelancing. This also provides a layer of safety and protection, since a connection has recommended this client to you.
Let’s talk about charging an hourly rate when freelancing! Some freelancers will settle on an hourly rate for part-time jobs or long-term projects. Both parties should have a solid idea of how many hours it will take to complete the project while remaining adaptable in the case of any complications or roadblocks.
When setting an hourly rate, you will need to consider:
One common formula people use is dividing the salary you wish to have plus overhead costs by the number of hours you plan to work. So, if your goal is to earn $1,000 a month and it costs $75 a month for overhead, you would add those two numbers together to get $1,075. Most individuals and businesses aim for a 10% profit margin. To add this into the formula, you should multiply 10% of $1,075 to get 107.5. Then, add 1,075 to 107.5 to obtain 1,182.
Next, you would divide it by the number of hours you want to work. Let’s say you want to work 40 hours in total. After dividing 1,182 by 40, you would get $29.55. This number may have to change depending on market conditions.
Let’s review all of the pros of accepting hourly pay:
While there are some great perks to setting an hourly pay, there are a few cons that you should consider:
Now, let’s move onto flat rates. If a freelancer is working on a similar project to one they have performed in the past or working on something small, they might prefer charging a flat fee instead of getting paid by the hour. When setting a rate, freelancers will typically factor in:
Flat rates offer several benefits for freelancers:
Going with a flat rate pay doesn’t come with 100% perks:
So, is it better to accept an hourly pay or a flat rate? The answer to this question depends on the scope of the project and your individual experience as a freelancer.
You don’t have to accept only hourly rates or only flat rates either. If a client prefers paying you by the hour and the project will be continuing for an extended period of time, you might decide to accept an hourly rate. However, if the proposed project isn’t too time-consuming and can complete it pretty quickly, it would make more sense to accept a flat rate. Blog articles and social media posts are typically paid for by the project.
Since we’re already talking about pay, it probably doesn’t hurt to take a deeper dive into managing one’s finances as a freelancer. Some extra knowledge never hurt, right? As you grow and expand your freelance business, you should keep these general finance tips in mind:
As you can see, both hourly pay and flat-rate pay offer their own pros and cons. If you work fast and don’t want to get penalized for doing so, it may be better to accept a flat rate. But if your work is largely dependent upon the time it takes to complete, hourly pay might be better. As you continue to take new freelancing jobs, you’ll develop a better feel for which pay rate works best for you.
Are you thinking about starting a new freelancing gig? Will you choose to charge an hourly rate when freelancing or a flat price? Let us know in the comment section below! We would love to hear from you.
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