Freelancing is a great avenue for those looking to exploit their creative and professional talents. Currently, 55 million Americans are freelancing in some capacity—accounting for 35 percent of the total U.S. workforce. Independents contribute a staggering $1 trillion in earnings to the GDP. They are a large and growing part of the economy, yet many self-employed creatives—artists, writers, and marketers, among others—struggle to price their hourly rates. Now, a study from FreshBooks, who makes accounting software designed for freelancers and self-employed professionals, suggests they’re undercharging their clients.
The company pooled its customer data into an analysis on the median rate that self-employed creatives charge—as a sort of “GlassDoor for Creative Freelancers.” The findings revealed that their creatives charge a median rate of $60 an hour. Freelance marketers and interior designers bring in the most per hour—at a median $75 hourly rate—and writers bring in the least, at a median rate of $48 an hour. Compared to their salaried peers, self-employed creatives are thriving and bringing in more money annually—generating more than double the hourly rate they had previously earned.
“My income went up when I became self-employed, and I credit that fact with my value going up, as well, says Lisa Kaneff, a freelance marketer from the Washington, D.C. area.
Many creatives shortchange themselves. The reasons freelancers undercharge vary, according to Freelancers Union. Many independents believe their fees should match what they made at their 9 to 5 job, and they lack the confidence to price what they’re worth. Others underestimate how long a project will take and therefore wind up making less. For most, money is just an awkward topic to bring up.
“Asking for a competitive rate is something I see creatives struggling with. Here’s my mantra: know your worth, and you’ll get paid what you’re worth,” says Kaneff.
Mike McDerment, CEO of FreshBooks, claims that insight is also important to creatives. “Our customers tell us they undercharge for their expertise because they don’t have access to real market data,” he says.
Charging rates that match your level of experience and knowledge is vital to the success of your freelance business. Aim too high, and you could lose a client. Price too low and you might not be able to cover next month’s rent. So how can you avoid charging too much or too little for your work? First, understand and accept the adage “time is money.” You can never get your time back. If you feel strongly that your time is worth a certain dollar amount, don’t be afraid to charge it.
The company’s analysis also revealed some information about where creatives are located. Despite the high cost of living, high concentrations of self-employed creatives choose to live in major U.S. hubs where they believe there are more opportunities. The amount of money they make varies widely, from $37,200 in Chicago to $75,600 per year in New York. Other hot spots include Seattle, Los Angeles, San Francisco, and Austin. Creative professionals are living well in these major U.S. hubs, bringing in enough annually to surpass the cost of living.
“We took an aggregate look at FreshBooks’ customer data and were pleasantly surprised. Self-employed creative professionals are not only earning more than their salaried peers—they’re thriving in some of the most expensive cities in the United States,” says McDerment.
With insecurity growing in the jobs market, this is a great time to be a freelancer. But don’t forget: to survive and thrive, money is a critical element in the freelancer-client relationship. FreshBooks created the infographic below exclusively for Paste, and their data helps to further shine a light on this problem that is very real.