Calculate hourly rate for freelance web and graphic designers

Anyone working in the creative field as a Web designer or Graphic designer is familiar with the challenge of calculating an appropriate hourly rate. It is not enough to simply set a price; you must understand which costs need to be covered by your income to avoid financial difficulties. This detailed guide will walk you through the steps necessary to realistically calculate your individual hourly rate.

Main insights

• The hourly rate should cover all personnel costs and office expenses.
• The estimated working time per year must be clearly defined.
• The calculated value is the breaking point; adjustments are necessary for a profitable activity.

Step-by-step guide to calculating your hourly rate

Keep in mind that the following steps should be tailored to your personal context. Take notes while gathering the necessary numbers and values.

1. Calculate your personnel costs

To determine your hourly rate, you should first ascertain your personnel costs. These are all expenses associated with your professional activity, such as salaries or fees, plus the corresponding social security contributions. For example, if you have a desired salary of €30,000 per year, make sure to carefully note this amount.

2. Determine your office costs

In the next step, consider the office costs. This includes rent, operating expenses, software licenses, hardware, and everything you need to perform your work. Again, take note of your figure. An example might be €36,000 for the year.

3. Sum everything up

Now it is time to sum all these costs. Add your personnel costs and office costs to ascertain the total debt for your business. If your personnel costs are €30,000 and your office costs are €36,000, the total comes to €66,000.

4. Calculate your working hours

You must also calculate your actual working hours. A common calculation assumes that you work about 21.5 days monthly and eight hours daily, resulting in 172 working hours in a month. Multiply this by 12 months and then account for non-working time to arrive at the effective hours.

5. Subtract non-working time

With a fairly realistic estimate, you might find that you can bill clients for about 1074 hours in a year after subtracting vacation and sick leave. This figure is crucial for the final hourly rate calculation.

6. Calculate your hourly rate

Now that you have your total costs and the number of hours, you can calculate your hourly rate. Divide the total annual costs by the number of hours you can bill. For example: €66,000 divided by 1074 hours results in an hourly rate of approximately €61.53.

7. Consider the breaking point

If you want to not only cover your costs but also generate a profit, keep in mind: the calculated hourly rate represents your breaking point. When you enter the market with this figure, you should think about how much leeway you have to lower prices if necessary.

8. Optimize your costs

If the calculated hourly rate seems too high for you, consider where you can make adjustments. This may involve decreasing office costs or reconsidering your desired salary. These adjustments can help you compete better in the market.

9. Avoid financial bottlenecks

Remember that your hourly rate should not be so low that you find yourself in financial difficulties. Do not forget that you have to cover your living expenses, rent, and important things like insurance.

Summary – Calculate hourly rate for web and graphic designers

A well-thought-out calculation of your hourly rate is essential for long-term success as a self-employed designer. Consider all relevant costs and ensure that you are not working below your value. Otherwise, you risk being unable to meet your financial obligations.