Calculate your Base Hourly Rate and Make the Switch to Freelance With Confidence

Too cool! The team over at built a calculator for you to determine your hourly rate. It asks you questions about your budget for office and personal expenses and even asks you how much profit you want to make. What a great application - I'm suprised I haven't seen someone come up with something similar sooner. I'm really impressed with their site overall (very Web 2.0) and they've definitely made a subscriber out of me.

I'm happy at my new job and I'm toning down the side work a bit, but this is a great confidence booster for anyone trying to make the switch from a salaried position to a freelancer. I do want to throw out a caution that I think my friends in sales can back me up on - you should use this calculator only to get your breakeven rate.

I always think of it this way - when you go the local market down the street to buy something at the deli, do you ask the owner how much it costs him or her to keep the lights on or how much his mortgage is? Of course not - you buy based on market value and what you're willing to pay to get good quality meats and produce.

I'm a huge fan of billing based on value - not by hour and certainly not based on your overhead. It's not about how much time you put in or how valuable that time is, it's about the value you provide for your customer. If your customer is maintaining a website that costs $500/month in labor to maintain, can you show the value in a $6000 investment to automate some of that maintenance? If your client has an e-commerce site that isn't marketed well, can you project how much market share you can create for them to justify an investment in your services?

If you lack the confidence to sell based on value, I don't think you're ready to make the switch. Have pride in promoting yourself and what you can provide for your prospects. Then, ask your first few customers to help you identify where you bring value and what it's worth.