In addition to your overhead expenses, you have monthly bills to take care of. When you've gone for a year or two working without a boss, you may have noticed that your budget is reduced because you're no longer commuting to and from work five to six days a week, shopping for corporate attire, or eating meals at the office cafeteria.
And yet, even without transportation fare and money for food and clothing to worry about, the long-term success of your freelance business will depend upon your willingness and determination to work for a minimum amount to sustain your freelance business.
I'd like to illustrate how you can make this feasible. In the Philippines, the minimum wage among salaried professionals in the private sector falls just slightly above Php11,000.00. Now sit back and think, given your education, training, work background, and specialties as a freelance professional, how much money do you think should you be earning as your monthly minimum wage?
If your clientele is mostly based locally, you can't justify a minimum wage that's horrendously high. But if you'd like to attract clients outside the Philippines where they usually offer payment in U.S. dollars and require you to have a PayPal account, you can charge at higher rates.
To illustrate, as a 10-year veteran freelance writer and proofreader, I have seen it fit to raise my "minimum wage" to Php18,000 since, along the way, I have decided on my specialties, which are article writing, proofreading, ghostwriting, and writing corporate resumes. And then I made a list of my overhead expenses:
Mobile phone pre-paid cards
Stationery (coupon bond printed with my letterhead, legal-size envelopes, envelopes for my manuscripts, and stamps)
Marketing materials (press kit, ink cartridges, and card stock for my business cards)
After making this list, I computed the equivalent of 70 percent of Php18,000, which, in addition to my target monthly minimum wage, I felt would be enough to cover my overhead expenses and other necessities like healthcare, household expenses, meals, money for recreational activities, and savings.
Take a look at the following equation:
Php18,000 x .70 = Php12,600
Php18,000 + 12,600 = Php30,600
I have to aim for a minimum of Php30,600 monthly, so I have to manage my time, either to be more effective on a series of projects with quick turn-over rates, or justifying a larger-than-usual fee for a project that stretched for several weeks.
Stay tuned for my next several posts on setting your freelancer's quota.