How in the world do I calculate my price?!

I'll say it right now: I don't have an accounting degree, I don't know what I'm doing all the time when it comes to navigating the freelance/contract world. That being said, I've learned from plenty of my own and others mistakes, have seven years of freelance trial and error under my belt, a degree in graphic design, for years was CEO of a student-run firm where all of our clients were contract while I managed a staff of 30, and have had some really smart people give me advice along the way.

I recently was talking with a friend who is newly navigating freelance; we were chatting about how I determine my worth and price when negotiating with clients, this is how I broke it down for her:

FACTOR IN THESE THINGS

1. When calculating the price of fine art and design we're talking about your original ideas and works. That should have some sort of base monetary value to you. This should be a factor in your hourly rate — you might say to yourself, “no matter what, I won’t work for under $___/hour” and should factor in experience, portfolio, education, proficiency ext. Note that as you get better and quicker at your craft, the amount you charge should increase to compensate. I've been increasing my rate at about $5/hour per year for the last several years.

2. No matter how you create, there are supplies that should be calculated into your hourly price. Supplies vary. You might work with paint or clay, maybe you need an Adobe Suite subscription or an external hard drive. Whatever the supplies, they need to be accounted for in order to maintain business in the future and are actually acutely critical to whatever the current project is.

3. Then you’ve got to take care of you. Because you’re on contract, you get all the mulla straight to your bank account. Sweet! However, there are taxes that will be taken out, health insurance that you may have to pay for because you’re not under an institution, groceries to buy, bills to pay, and on. These are things that may not be crucial to your "job", but they are crucial for survival -- they should be factored in!

Take the monthly expenses you have and the hours you can realistically (or want) to work and you’ll get a good estimate of a price for this factor in your hourly rate.

BONUS: Be sure to look up how much will be taken out when you file your taxes and take that out yourself with every paycheck. Save that money in a business savings account so you're sure not to touch it throughout the year.

A REMINDER

For a confidence boost when calculating your hourly rate or overall price on a project, know that you own the intellectual property to your work. The U.S. copyright law protects “original works of authorship", this includes drawings and other designs, photographs, sculpture, painting, other works of fine art, and SO MUCH more. This means you can put a price on your intellectual property and, legally, if someone wants your work, they have to pay the price you set.

If someone is going to make money off of your work indefinitely, don't you think you should be compensated more than the mere amount of hours it took you to create?!

CONCLUSION

My advice when figuring out your price would be to base your hourly rate on your physical needs (supplies/bills/taxes) and then cushion it with what you feel you’re worth based off of experience, portfolio, education ext. and know that you have the right to bill for someone using the things you create from your brain. Sometimes to reassure myself I'm billing accurately, or if I'm stumped on where to start with a quote I'll use this price calculator. Remember, they are buying your work and getting a significant profit and return on their investment from you for the rest of time. So don’t sell yourself short.