5 Tips to Help You Calculate Your Rate and Speed Up Invoicing
Time is money when you’re a freelance designer, but if you’re not clear on how much time you spend running your business, it’s very likely that you’re cutting into your own earning potential. When you know how to accurately forecast how much time and energy a project will take until it’s approved for billing, you ensure that every minute you spend is as profitable as possible. Here are five tips to calculating an accurate rate for your work, and expediting invoicing.
Tips #1: Know your competition
To gauge whether you’re charging too much, or too little, conduct your own ad hoc online search of freelance designers who may include pricing for various projects on their websites. Research job posts on design-specific freelance websites, as well as posts for full-time roles to get a sense for the rates different companies pay based on their size and industry. Though you’ll very likely find some designers who are willing to produce logos for very little money, perhaps in exchange for visibility or portfolio-building value, the average price of a logo tends to start at a few hundred dollars, but can go well into the thousands, particularly if you’ve got professional design experience to tout. Consider the other assets that can boost your billing rate, too, including educational background, niche areas of expertise, and portfolio history, particularly with larger brands, or those relevant to a specific industry or medium.
Tips #2: Consider the “all in” costs
Unlike an arrangement when you’re employed full time and have the support of a creative team and account manager, you may be the point person facilitating conversations about client needs, and design and concept changes, approvals, edits and requests for additional treatments. Additionally, you’ll likely spend time researching competitor logos, potentially investing in specific software programs that facilitate your design ability, and preparing files for multiple uses like print, Web and social media. All of these tasks take time that should be reflected in your rate. Though potential clients may want to know your defined hourly rate to consider working with you, make it standard practice to provide a comprehensive scope of work the client will sign, before work begins. Aside from detailing exactly what the project will entail, establish policies around deadlines, ability to participate in conference calls and meetings, how many edits your rate includes, and invoicing policies. This may include a portion of the work being paid for upfront, and/or establishing major project milestones that signify that an invoice will be issued.
Tips #3: Monitor your working hours
With the availability of so many free time-tracking apps, your time spent on a project should never be a mystery. Anytime you “touch” a project, including a client call or responding to emails related to the project, the hours are billable time. When you have such real-time documentation of time available, you can substantiate your rates, and alert the client if the project is in danger of going over budget, so your scope of work can be revised (and signed by the client) to include additional costs and hours.
Tips #4: Establish regular processes for invoicing
Invoicing can be simplified with a little organization and some automation. At the start of the project, confirm that the client has the information needed to issue payment, including signed 1099 agreements, completed direct deposit forms and any other non-disclosure releases they may require. Ask for the name, email and phone number of the contact person in accounting to ensure invoices are addressed appropriately, and to have direct contact if invoices aren’t paid. Ask about any policies that the accounting department has for invoice file format, delivery required for processing, and requirements for including purchase order numbers and similar client account numbers. Don’t forget to spell out your payment terms on every invoice in plain language, and thank the client for their business. Taking the time to sort through seemingly minute details can mean getting paid in a matter of days versus months.
Tips #5: Automate what you can
There are many inexpensive electronic invoicing options tailored to freelancers that can greatly reduce the amount of time you spend on administrative functions, and many allow you to accept credit card payments from clients to expedite payment. Such systems also help you track when invoices are sent, opened and paid, to reduce the amount of time you’ll spend following up with clients on missed payments, and to give you a sense for your own cash flow based on the projects underway at any given time.
Though being a freelance designer involves losing the “guaranteed paycheck” that full-time employment offers, it gives you the ability to set your own rates, and work with the clients whose projects and design goals are of interest. With a little upfront time investment to ensure that your invoice processes are in place, you can command the rates you deserve, and ensure that you get paid in a timely manner — without investing too much of your own time on administrative tasks.
About the Author!
Kristen Gramigna is Chief Marketing Officer for BluePay.com, a credit card processing firm that makes billing more efficient with automated invoicing. She has more than 15 years experience in the bankcard industry in direct sales, sales management & marketing and also serves on its Board of Directors.