1. Calculate Your Basic Expenses (Annual)
* Living Expenses: Rent/Mortgage, Utilities (electricity, gas, internet, water), Groceries, Transportation (car payment/insurance/gas, public transport), Health Insurance, Personal Care (haircuts, etc.), Entertainment, Clothing, Debt Payments, Savings, Retirement contributions
* Business Expenses:
* Software Subscriptions: Adobe Creative Cloud, other video editing software, project management tools, etc.
* Hardware Depreciation: Camera, computer, hard drives, lighting, microphones, etc. Figure out the lifespan of each item and divide the cost by that lifespan to get the annual depreciation.
* Website/Hosting/Domain: If applicable.
* Marketing/Advertising: Website design, business cards, online advertising, networking events.
* Insurance: Business liability insurance, equipment insurance.
* Education/Training: Courses, workshops, conferences.
* Office Supplies: General office stuff
* Professional Fees: Accountant, lawyer.
* Software Subscriptions
* Travel Expenses
Example:
* Living Expenses: $50,000
* Business Expenses: $10,000
* Total Annual Expenses: $60,000
2. Calculate Your Target Income (Annual)
* This is how much you want to *earn* above your basic expenses. Think about what you want your lifestyle to be. Do you want to take vacations? Save aggressively?
* Example: Let's say you want to earn $40,000 above your expenses.
3. Calculate Your Total Annual Revenue Goal
* Add your total expenses and your target income.
* Example: $60,000 (Expenses) + $40,000 (Target Income) = $100,000
4. Calculate Billable Hours Per Year
* This is crucial and often overestimated. You are *not* billing for every hour you work. Consider:
* Total Work Days: 5 days/week x 52 weeks = 260 days
* Vacation/Sick Days: Let's say 20 days
* Holidays: Let's say 10 days
* Unpaid Admin/Marketing/Sales/Networking: This is a BIG one. Factor in time spent on:
* Finding new clients
* Writing proposals
* Invoicing/accounting
* Answering emails
* Networking
* Social media marketing
* Updating your website/portfolio
* Learning new skills
* General admin tasks
* Calculate Non-Billable Days Let's estimate that you spend roughly 2 days/week on non-billable activities. That equates to 2 days/week * 52 weeks/year = 104 non-billable days.
* Total Billable Days: 260 (Total Work Days) - 20 (Vacation/Sick) - 10 (Holidays) - 104 (Non-Billable) = 126 days
* Billable Hours per Year: 126 days x 8 hours/day = 1008 hours
5. Calculate Your Hourly Rate
* Hourly Rate = Total Annual Revenue Goal / Billable Hours per Year
* Example: $100,000 / 1008 hours = $99.21/hour (Let's round this to $100/hour)
6. Research Market Rates
* This is where your calculated rate meets reality.
* How to Research:
* Ask other freelancers: Network with other video professionals and ask them (tactfully) about their rates. Focus on people with similar experience and in your geographic area.
* Online Forums/Groups: Check forums and Facebook groups for freelancers. Search for discussions about rates.
* Job Boards: Look at freelance job postings for video work and see what rates are being offered (though be aware that these are often lower than what you should charge).
* Talk to Potential Clients: During initial consultations, get a sense of their budget expectations.
* Factors Affecting Market Rate:
* Experience Level: Entry-level vs. experienced.
* Specialization: Are you a generalist or a specialist (e.g., drone videography, motion graphics)?
* Location: Rates vary significantly by geographic area. Major cities generally have higher rates.
* Client Type: Corporate clients usually pay more than non-profits or small businesses.
* Project Complexity: More complex projects command higher rates.
7. Adjust Your Rate Based on Market Research
* Compare your calculated rate to the market rate you've researched.
* If your calculated rate is significantly higher:
* Re-evaluate your expenses. Are there any areas you can cut back?
* Re-evaluate your billable hours. Are you being realistic?
* Consider starting at a slightly lower rate and gradually increasing it as you gain experience and build your portfolio.
* Focus on marketing yourself effectively to attract higher-paying clients.
* Be prepared to justify your rate based on your skills, experience, and the value you provide.
* If your calculated rate is significantly lower:
* You might be undervaluing yourself. Consider raising your rate.
* Make sure you're accounting for all your expenses and time.
Important Considerations:
* Value-Based Pricing: As you gain experience, consider moving away from hourly rates and towards value-based pricing. This means charging based on the perceived value of the final product to the client (e.g., how much will the video help them increase sales or improve their brand image?).
* Project-Based Pricing: Another alternative is project-based pricing, where you give a fixed price for the entire project. This requires accurate estimating of the time and resources involved.
* Negotiation: Be prepared to negotiate your rate. Have a clear understanding of your minimum acceptable rate and be confident in the value you offer.
* Contracts: Always use a written contract that clearly outlines the scope of work, deliverables, payment terms, and other important details.
* Review Regularly: Review your rates annually (or more frequently) to account for changes in your expenses, experience, and the market.
Hourly Rate Calculator (Simplified):
You can create a simple spreadsheet or use an online calculator to help with these calculations. Here's a basic example:
| Item | Amount |
| --------------------------- | ---------- |
| Annual Living Expenses | $50,000 |
| Annual Business Expenses | $10,000 |
| Target Annual Income | $40,000 |
| Total Annual Revenue Goal | $100,000 |
| Billable Days per Year | 126 |
| Billable Hours per Year | 1008 |
| Hourly Rate | $100 |
In summary, determining your freelance video hourly rate is a process of careful calculation, market research, and self-assessment. Be realistic, be confident, and be prepared to adjust as needed.