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How to Charge an Hourly Rate Without Getting Cheated

Time Tracking with Due

Whether or not to charge per hour for freelance services is a hotly debated topic in the freelance community. I lean towards charging a flat fee instead of hourly per assignment because of how I work creatively.

I don’t sit down to do a task all at once. Instead, I brainstorm, write, research, edit, and tweak a piece of work continuously throughout the week. It’s hard for me to track working hours during a process where there are many stops and starts.

With that said, charging hourly works for some freelancers specifically virtual assistants and other freelancers who do administrative tasks. If you do decide to charge hourly, it’s critical that you’re charging appropriately for your efforts.

Here’s how to use the hourly model without getting taking advantage of:

Set a Rate Taking Into Account Operating Expenses and Taxes

One of the biggest mistakes freelancers can make is charging too little per hour. It’s fairly common to do this when transitioning from full-time work to self-employment. You’re used to seeing certain hourly rates offered to employees by companies. Hourly rates set by employers are calculated taking into consideration the additional benefits you receive for being on staff.

You don’t get the same employee benefits when working for yourself. You need to bump up your hourly rate to cover your out-of-pocket expenses like operating expenses, taxes, health insurance, and more. Freelancers feel the pinch when setting prices that are too low. Don’t set yourself up for financial struggle.

Get a Proper Time Tracking Software

Tracking time precisely can be another challenge of charging hourly. Think about it — do you know how long, down to the minute, it takes you to do a task for your business? Probably not.

It was rather cumbersome for me to keep track of working hours when I did attempt the hourly model. Tacking systems, if you use them religiously, are a way to make sure you’re keeping track of your working hours.

There are quite a few free time tracking apps on the market you can use to track time. Some bookkeeping systems also have a time tracking tool that even makes it simple to add a timed task to an invoice. has this time tracking tool where you can track time for yourself and employees.

Don’t Be Deterred By Rate Shock

Besides the frustration of tracking time, another reason I moved away from charging hourly is the shock I would get from prospects when I named my price. I’ve found that clients have a certain hourly rate in mind and anything beyond that is a surprise. Clients would try to haggle which was an uncomfortable conversation. 

Lowering your hourly rate can lead you down a slippery slope. When charging hourly, you’re trading time for money. If you’re not making enough per hour, you’re going to be overworked, underpaid, and stuck. Don’t be deterred by rate shock from clients and stick to your guns. An hourly rate should be offering you a livable income. If you’re just scraping by, consider bumping up you rates.

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Personal Finance Writer
Taylor K. Gordon is a personal finance writer and founder of Tay Talks Money, a personal finance and productivity blog on hacking your way to a happier savings account. Taylor has contributed to MagnifyMoney, The Huffington Post, GoGirl Finance, Madame Noire, and The Write Life.

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