When you want to sell a product or service on the internet, the question of: “At what price should I offer my services? “ And, for most freelancers, it’s not an easy task! The question of price is often a brain teaser. You can never be sure to place the “cursor” at the right level: neither too high nor too low …
Useful background reminder
When you’re a full-time freelancer, and therefore you don’t have a salaried job nearby, we do not benefit from either Social Security or Pôle-emploi benefits.
But rather “Shit flying in squadrons” R.S.I (sorry, but this is the picture that comes to me about the RSI). Suddenly, it is essential to take this into account in its tariff.
What happens, for example, when the freelancer gets sick or has to be hospitalized, forcing him to pause his business? In most cases, a freelancer who does not work is a freelancer who loses money, he is not simply paid! When you are an employee, you are taken care of by the Social Security in the event of sick leave or by your employer in the event of a work accident. But there you are independent.
Hence the interest in setting up a automatic business that brings you passive income, that is, income that is independent of the work you provide. This is how we build our financial freedom, because there is no financial freedom if you are forced to work to earn income.
With this in mind, a good business model is the private subscription site : As long as your subscribers remain subscribed, they earn you money every month. So money comes in automatically, whether you’re behind your computer or not!
But that’s not the topic of the day, so let’s go back to setting your rate.
Elements to determine the tariff
Take the most common case: freelance who does not have an automatic business. He will have to define his tariff on healthy bases, which take into account his constraints and his situation. There will have to be 2 reserve funds:
- One to cover the risk of unemployment and illness;
- The other will be a reserve and investment fund in order to have cash to invest in your business.
Let’s first look at the unemployment and sickness background. A freelancer is not entitled to unemployment benefits simply because, unlike employees, he is not affiliated with Pôle-emploi and therefore does not pay any contribution to the unemployment insurance scheme.
But if his business does not work and he finds himself penniless, he should be able to receive unemployment benefits. For that, he will have to do ” as if “, plan a sum that he will put aside to build up a safety mattress.
Thus, it should provide a sum to hold several months (between 6 months and a year) to rebound in the event of a hard blow.
For example, if you have to generate € 3,000 in sales tax to be able to pay you 2,000 € net (which takes into account the costs of an EA and a few hundred euros of monthly expenses), several scenarios are possible:
- Either you plan to keep 500 € on the account of your box every month for your safety and therefore, every 6 months, you will have the equivalent of one month without any cash inflow and thus 2 months over a period of one year;
- Either you plan to put 1000 € aside every month, which allows you every 3 months to anticipate a month with little or no cash inflow. Over 1 year, you will therefore have 4 months cash in advance in the event of a hardship.
To do this, it is of course necessary to cash a certain volume of C.A and therefore have rigorous management. Because really, we are much more serene when we have several months of cash in advance …
The Investment Fund
Now let’s move on to the investment fund and the number of days that you will be able to bill in the month, so where you will work on client projects. Some blogs recommend billing 15 days a month, except that they ignore certain parameters.
To be able to find new customers and constantly offer the best possible service while increasing your rates, you have to be able to invest in the development of your business. This is what many freelancers overlook.
In fact, each month, you are going to need time and money to:
- Train you on your job and gain skills;
- Devote yourself to commercial prospecting;
- Invest in certain tools and software;
- Train you in management and entrepreneurship;
- Ensure the maintenance of your blog;
- Cooperate with partners (accountant, lawyer, administration, etc.).
And to make time for these different activities, you need to plan at least 2 days during the week. You will therefore only have 3 days to work on customer projects that you will invoice.
In addition, the vagaries of your activity, rather go on a base of 10 days billed in the month as 15 (a longer project than expected, outside meetings, trade fairs, etc.).
Everything will depend on how you organize your schedule, because you can organize yourself differently: work one week non-stop on customer projects, and the following week do 2 billed days and 3 days on ancillary activities for example .
For these various activities mentioned above, it will of course be necessary to provide the necessary budget.
Calculation of the tariff
Take a concrete case: you want to pour yourself € 2,000 per month. We’re going to start on a real billing basis, so with a higher level of charges than that of a self-business (what happens when you exceed the EI ceiling). With the actual regime, the charges represent 50% of your C.A.
- Your monthly expenses are € 500;
- You also want to put 500 € aside every month in your investment fund;
- You want to take 5 weeks vacation per year (yes, a freelancer must be able to take advantage of it too!) so add 10% of the amount of your remuneration, or 200 € (the equivalent of paid vacation).
Here is the formula for calculating the minimum monthly AC amount to be achieved:
(salary + monthly expenses + security fund) X charges X vacation provisions
Which gives in our example:
(2000 + 500 + 500) X 1.50 X 1.10 = € 4,950 in turnover to pay you € 2,000.
Hence your daily rate: 4,950 / 10 days billed = € 495 / day
Does this price seem high to you? In any case, it corresponds to the requirements defined in the example. Of course, only professional customers will agree to pay such a rate, so are more focused on BtoB.
Of course, you don’t have to pay yourself 2,000 €, if you just 1200 € for example, you’ll only have to cash € 3,630 of sales tax and you will have a more competitive rate at 363 € / day. The hourly rate on the basis of 8 hours of work / day will be: 363/8 = 45,37 €.
To justify this high price to your customers, your work will have to give them a real return on investment. For every euro they give you to work, they can earn 2 behind thanks to your work, that is to say that you have to show your added value … why not with customer testimonials.
For example, if you are a freelance Community Manager or a web marketing consultant, if you manage to double or triple the number of leads (contacts, prospects) to your client’s newsletter, or even double the conversion rate on their page sale, your client will understand your value and therefore agree to pay you dearly for this service.
And you, does your price allow you to make a good living from your activities? Have you set up a passive source of income?
Article proposed by Cédric from the blog “Blogging for a living”
Infopreneur and blogger on http: //www.bloguerpourenvivre.