What should my rate be as a self-employed freelancer, hourly or fixed?

Freelancer’s Question: I am in my mid-twenties with a Master's degree in Surface Pattern design., Throughout my time at university, I ended up doing a lot of Digital Design, Photoshop and Illustrator. I currently have a full-time job as a Graphic Designer. But I definitely do have some spare time to take on some extra work on a freelance basis., In particular, I have been approached by a local artist who is asking me to digitalise her paintings and make them into patterns. The artist is also asking me to create ‘look-books,’ and similar materials for her.

I plan on meeting the artist to talk more about the potential works, but I don't know where to start when charging for my work. Due to the variety of the work she wants, would charging an hourly rate be appropriate, or should I look at charging a fixed fee per design? Any advice would be greatly appreciated.

Expert’s Answer: Taking the leap into freelancing and setting your first freelance rate can be as daunting as it is exciting.

Based on your circumstances, we have put together a few guidelines for you to consider when picking what the right rate for you is going to be.

Choosing between hourly and project rates

One choice you’ve already considered is whether to charge on an hourly, or project basis. In general, a project-based fee (or a ‘fixed fee’ as you describe it in your question) tends to be more appropriate when dealing with clear deliverables. A project fee, or fixed fee, also tends to have the edge for the self-employed when they know how quickly they can get the work completed.

Alternatively, an hourly rate can help mitigate against the risk of underselling oneself when working on more subjective projects, especially when first starting out -- as you are doing.

The finer details? TBC

But it sounds to me like there are still some details to nail down when you meet with the artist. And while I don’t know how familiar you are with the type of work the potential client has requested, my view is that – at this stage – an hourly fee will likely serve you better.

That’s not to say this can’t change in future – if the client continues to request these services on a regular basis, you may be able to use your experience of their previous commissions to set a ‘per design’ fee, or possibly a fee ‘bundle’, which could be more lucrative for you.

Measuring your value and costs

Having decided how to charge, let’s consider what to charge.

Looking at what other freelancers in your market charge can be a good place to start, but don’t let this be your only guide. Place a value on your talents and training, and research what other freelancers in your space offer. Perhaps you can offer something more unique, or of higher quality, to keep any would-be rivals firmly at bay?

You should also be meticulous when assessing the costs you’ll incur – this could include the pro-rata cost of software licences you need, and even the power your computer uses while working. If you continue to freelance regularly and generate enough self-employed income, there’s also income tax and national insurance to cover.

Final thoughts (includes invisible costs)

Ultimately, a freelance rate is not equivalent to an employee’s salary. When working as a freelancer, you are ‘in business on your own account’ – and like any business, your fees must account for costs that will be invisible to your client, but these are costs which are nonetheless essential to make freelancing a sustainable pursuit.

For more details on the potentially challenging topic of how to price your freelance services, check out the advice section on our website, where we offer specific guidance on setting the right rate.

Best of luck with your new client, and hopefully many more to follow!

The expert was Fred Hicks, senior policy adviser at IPSE -- the Association of Independent Professionals and the Self-Employed.