I just read an article about how women freelancers tend to undercharge, sometimes by almost 30%.

That's infuriating.

Don't undercharge! The formula for figuring out your day rate is simple, but requires some prep.

BIG MONEY THREAD!

This is the basic formula for figuring out your day rate:

[expenses] / (231) = day rate

But this isn't the whole story, because you also need revision, hourly, rush job, per asset, and asshole rates.

I'll explain this in detail:

First, figure how much you need to make per year to pay your various bills and expenses just for living. This includes rent, utilities+internet, health insurance, car payment, student loans, groceries, etc.

Tack on about 10-15% for unforseen bills, upcharges, etc.

Once you have the above, add about 25-50% to it. This is expenses for you. Games, movies, leisure, clothes, whatever.

(If you're in entertainment, especially as an artist, you can write off expenses for any entertainment as a business cost. More on that later.)

Now tack on another 25-30%.

THIS IS IMPORTANT

DO NOT SKIP THIS

This is roughly how much you are going to end up paying in taxes in many jurisdictions.

In this US, this should account for federal and state taxes. Some municipalities also charge tax at the city level.

Ok, time to get to the formula:

[expenses] / 261 = day rate

261 is the approximate number of work days per year.

But that's way too simplistic. The above doesn't account for holidays, vacation, sick days, etc. You NEED those days.

Subtract 5-10 days for holidays

Subtract 10-20 days for vacation

Subtract another 5-10 days for sick time

Being fairly liberal with these numbers, call it roughly 30 days total that you're subtracting from the 261 work days.

Time to update the formula.

[expenses] / (231) = day rate

We can continue with hard numbers and make this a little easier to understand.

Say the number you came up with is $60,000/year.

That makes things look like this:

$60,000 / 231 = day rate

or

$60,000 / 231 = $259.74

Now that you have a hard number for your day rate, you need to come up with additional rates for:

- Revisions
- Rush jobs
- Per asset rate
- Hourly rate

and finally, my favorite

- Asshole rate

Each of the above should be different, and be exact. Don't round these to the nearest 10 or anything. Give exact numbers to show you've actually calculated how much these things cost you and the client.

Some pointers for these:

Revisions should be more than your base rate, and by a minimum of roughly 25%.

Make sure they know it costs both you and them time and effort.

Many contracts will specify how many revisions are included in the contract. If it doesn't include revisions? Probably a bad contract.

Rush jobs shouldn't be taken lightly.

Don't be afraid to charge an additional 50-100% for a rush job, and make sure the client knows the percentage is going to go up the faster they want something.

Per asset rate is based on how long you know certain tasks take.

If a specific task will take only 2 hours, divide your day rate by 4, and then tack on a percentage to make it worth your time. For large orders of small assets, lower the %.

Hourly rate is generally only for things like consultation, appointments, etc. It's also good for getting an annoying client off your ass.

Divide your day rate by 8 and then crank up an additional percentage based on how much you hate the client.

Asshole rate is what you charge for jobs you simply do not want to do.

Make it at least twice your usual rate, and itemize any costs for additional time, materials, research, etc. required to get the job done.

Use your hourly rate for any itemized additions.

Based on the previous $60,000 figure, here are some VERY ROUGH numbers for the above:

Revisions = $324.68 / day
Rush jobs = $519.48 / day
Per asset = $40.58 / hour
Hourly = $40.58 / hour (and gradually increasing)
Asshole rate = $519.48 AND UP per day + hourly

Now, consider your taxes!

Every month, you should put away some money to pay taxes since freelance clients won't withhold taxes for you.

If you're in the US, you're probably going to be paying 25-30% taxes on all freelance income, and additional for any residuals or royalties.

One great thing about figuring out your taxes is figuring out the costs you can deduct from them.

In the US, this is probably going to be a maximum of around $12,000.

That means you can spend $12,000 on job-related expenses and then have that amount eliminated from tax you pay.

If you're a freelance artist, that $12,000 could be for anything from art supplies to toys. You can write off entertainment, books, games, movies, etc. as reference and research material.

If you go to a con, write off your travel and tabling expenses.

Write off any mileage you put on your car. This often ends up being more effective than writing off the gas and repair costs, and insurance is usually a separate write off.

Write off other equipment, including your computer, and do that yearly if you continue using it.

If you work from home and have a work space, you can deduct a percentage of your rent and utilities from your taxes.

If you use your phone for work, that also counts as a deduction.

Basically, anything work related can end up saving money on your taxes. Milk the hell out of that.

I'd highly recommend spending the money to see a tax professional. They're expensive, but can account for things you're unaware of. And hey, that's tax deductible too!

Anyway.

PLEASE don't undercharge.

If you aren't sure what to charge, or what a fair rate is, look at some cost of living calculators for your area. There are lots of them online.

Now go forth with the blessings of Satan and charge that asshole rate as often as possible.

Several people have rightly pointed out that this thread seems to be implying that women undercharge because they don't know the math, rather than that they're forced into it by institutionalized sexism.

This wasn't my intent, and I clearly used sloppy wording.

I'm sorry.

I've compiled and expanded this thread into an article on Medium if you want it all in one place. https://medium.com/@xavierck/a-short-guide-to-freelance-rates-79de309658ac