Hello & welcome to another edition of "The Dough Report", where I talk about how much I made and spent in the past month. Additionally, I like to branch out a little and also include thoughts on money, savings and all things financial in general. Why? Because I feel that apart from sharing how much we make, talking about everything else related to our finances is also slightly taboo. Let's change that! I'm curious to find out more about how everyone else is managing their money and I'm guessing you're too.
If you're new around here, it might be best to have quick read through the income reports I published previously to find out what exactly I'm doing here and why. Basically, each month I'd like to share the following: How much I earned, how much I spent/invested into my business and on what and what I learned during that month. So let's get to it.
April 2016 Earnings:
- Social Media Projects: 1.595,00€
- Copywriting: 965,00€
- Consulting: 1.500,00€
Total Revenue (excl. VAT): 4.060,00€
April 2016 Expenses*:
- Adobe Creative Suite: 8,50€
- Google Apps: 4,00€
- Mailchimp: 8,50€
- Google & FB Ads: 85,00€
- AppSumo: 23,50€
- Website Hosting: 46,10€
- Phone & Internet: 45,00€
- Chamber Contribution: 214,60€
Total Expenses: 435,20€ (*Not included: social insurance, taxes, rent, utilities)
Net Profit: 3.642,80€
FYI: Please bear in mind that the sum you see above is definitely not the amount of money I get to spend this month, as at least 50-66% of it goes directly into a savings account set up specifically for future tax and social insurance payments.
Now, even though my earnings are a little lower than last year, the great thing is that I basically cut my hours in half. I did this by downsizing a little (I'm currently working on 4-5 projects at the same time as opposed to 8-9 projects last year) AND raising my rates. This combination has allowed me to focus on side projects as well as build up the consulting side of my business. Raising your rates or pricing in general is such a difficult topic for many freelancers and solopreneurs: Where do you start? What can you charge? How much do you need to survive? What do others charge?
When I started out, I basically googled for hours without finding ANYTHING at all. I started asking around, basically talking to the 3-4 people who were self-employed (although not in my line of business) and they were pretty tight-lipped, not wanting to share how much they charge. Based on what I found out, I came up with a number that was actually way too low, because I had no idea how to factor in future social insurance or tax payments. In Austria, there's a bunch of websites with lots of information on them - but none of them clearly states something like "Just so you know, at least 50% of what you earn will actually go to the state or your social insurance company at some point, so make sure you can pay all your other bills with the other 50%". THAT would have been most helpful. 4 years later today, it seems a little easier to determine what you should charge. Here are a few tips:
- Talk and compare. Start by talking to the people you know who already are self-employed. All of us have friends on Facebook, Twitter or, you know, in actual real life - get in touch with those who have been doing this for a couple of years, invite them for coffee and pick their brains in return. Even if they don't work in your industry, they will most definitely have useful insights. I have 2-3 people I like to contact whenever I'm not sure about a quote I'm sending out or a briefing I received from a prospective client; it's good to have someone you trust to be able to honestly discuss these things with.
- Facebook groups. Whether you're a photographer, developer or journalist, there's gotta be a Facebook group for you out there! Look them up, join and then work that search function like your life depends on it - chances are, someone has had a similar question before. I learned SO MUCH from Facebook groups it's almost a little sad - but it will restore your faith in the Internet. Sure, they can't always help because different countries have different rates and pricing guidelines, but they love to help. My favorites are Freelancers' Hub (mostly UK & tech-oriented), Amici delle SVA (Austrians complaining about their social insurance system) and Freelance to Freedom Project Community (mostly US, mostly female).
- The most basic principle. If you're just starting out and have literally no idea what to charge, I found this to be very helpful: Make a list of your monthly expenses. Include EVERYTHING, from rent to utilities to groceries to going out to clothes to Starbucks Lattes. Double that amount. That's how much you should aim for in total revenue each month. Now decide how many hours or projects you want to take on each month and divide the previous sum. So, for example, my monthly expenses are 2.500€ which means I should aim to make 5.000€ each month. I'm happy to do 30 billable hours per week (bookkeeping, further training or education, admin etc. are non-billable hours), so 5.000/120 = 41. This means I should AT LEAST charge 41€ per hour (excl. VAT).
Last but not least: Here's a great online resource with tons of information on freelance rates, pricing and fees.
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