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Thursday, January 10, 2013

How to Compute Flat Rates and Down Payments

We've talked about the importance of charging a flat rate and asking for a down payment for each project assigned to you. And yet, given the nature of this career, no freelance worker would ask his client for exactly the same amount, since freelance jobs vary in range and scope.

In this article, I'll let you in on a few insider's secrets to help you determine how much your "advanced fees" should be.

When it comes to flat rates, you have the following options:
  • Charge the same amount regardless of the nature of the project.
  • Come up with a rough estimate of the total amount that the project will incur, and then compute 10-15 percent of that amount. That will serve as your flat rate.
If you're just starting out, you may want to consider the first option, since you have yet to determine how frequently clients will come knocking at your door to outsource tasks to you.

If you've already had several years or more tucked under your belt, and you can offer your rare, exemplary skills, you can definitely charge more than the majority of workers in your field, provided that you can meet your deadlines. If you can do this, you may consider the second option.

When it comes to asking for a down payment, here's the deal. In countries like the United States, where freelancing is seen as a legitimate career and even a lucrative way to earn money, it's no longer unreasonable for a professional worker to ask for a fee that goes as high as 50 percent of the estimated total amount that the project will incur.

If you're just starting out, or you feel like you still have to prove you're capable given the credentials that you have, you can start by charging 30 to 40 percent.

In my next few article installments, I'll cite several examples on how these guidelines can be applied.

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