a freelance designers guide to managing money
TRANSCRIPT
A Freelance Designers Guide to Managing Money
Can I have you bank account details?
Cost estimates Time estimates
Hourly Rate -vs- Flat Fee
Contracts
Invoicing
Tax
Should you ever work for Free?
Cost estimates…
“This is extremely hard to do early in your career. Primarily because you haven't had enough experience in most cases to gauge a rough sweet-spot of what your worth is.”
Cost estimates
🤑 Research. Try and find out what others are charging (by looking on job sites)
🤑 Hours + Difficulty
🤑 1 day equals X hours work (7-8?)
🤑 Work out what the client wants and gather their requirements
🤑 Break all the tasks required into small chunks
🤑 Order them in size
🤑 Work out how long the smallest task will take, and the biggest (compare this to previous experience, this can be a university assignment)
🤑 Put a price on your time and work the rest out with your estimates.
*Remember estimates doesn't mean final!
“It's taken me several years, but I've finally gotten to be confident enough in my skills to know almost exactly how long certain tasks will take me, and I can now craft more accurate estimates because of it.”
Cost estimates…
Time Estimates
🤑 “However long you think it will take, it will take 2-3 times that once your client gets involved.”
🤑 “Add between 20%-50% depending on how fussy the client is”
🤑 “Include the time spent emailing, coordinating with printers, researching etc.”
🤑 “Guess the hours, add a bit on top for unforeseen problems”
Time Tracking
🤑 Harvest http://getharvest.com/
🤑 App Store “Time Tracker” £0-£3.99 e.g. TicToc
“The number of hours is very heavily influenced by experience - it took a few projects which involved me being underpaid and overworked to figure out exactly how long it ACTUALLY took me to do things.”
Time Tracking
“Everyone vastly underestimates a project or two starting out. Learn from these mistakes.”
Time Tracking
Ways to charge: Hourly Rate
👍 Flexible, and transparent. Covers revisions
👍 Use time estimate as a Guide you always can add remove
😢 Hourly rate means you need to track your time
😢 8 hours days can easily turn into 10+ if you discount time spent emailing, research etc…
What would you charge per hour?
Ways to calculate: Hourly Rate
Junior Designer Billable hours in a week Billable hours in a year
Hourly Rate
= £18,000pa = 37.5 = 37.5 x 47 = 1762 = £18,000/1763 = £9.23
Freelance Rate = £9.23 x (2 or 3 or 4…) = …
“Do a lot of research. Try and find out what others are charging by looking on job sites.”
Ways to calculate: Hourly Rate
A Annual Business Costs
B Annual Personal Costs
C Billable Hours
“If I had known what the cost of living was, I would have known what I needed to make to survive on my own. This cost of living calculator is an amazing resource.”
Accounting fees Banking fees Studio rent Utility bills travel costs hardware/software insurance advertising +Others…
Total amount of disposable income you’d like… plus…
Rent/Mortgage Utility Bills Savings Pension
Billable hours in a year (assuming 5 weeks holiday) this will be 1762 again
Ways to calculate: Hourly Rate
A Annual Business Costs
B Annual Personal Costs
C Billable Hours
A + B
C= Hourly Rate
“If I had known what the cost of living was, I would have known what I needed to make to survive on my own. This cost of living calculator is an amazing resource.”
“I've worked my way up to that number over several years after realizing I was underpaying myself.”
Ways to calculate: Hourly Rate
Ways to charge: Flat Fees
👍 Easy solution for repeat business, i.e. you know exactly what you charged last time
👍 Clients prefer flat fees
👍 As long as its calculated on time with an added buffer it shouldn’t cause issues
😢 It can leave you out of pocket if you badly estimate the effort required
😢 It can meant to don’t get paid for expenses
😢 Negotiating a higher fee maybe harder with repeat clients, if you’ve charged them before
What full time wage would you like to earn
in you career?
“Entry salaries are rough to deal with, but the speed you can improve your earnings is phenomenal if you're doing a good job.”
“Come to terms with the balance of job satisfaction and salary… learning is more valuable than cash when you start out”
Contracts - Protect Yourself
🤑 Set a minimum fee based on time. ie. ½ day rate (3-4 hours)
🤑 Work stops when the payments stop. Take a deposit upfront.
🤑 I charge a down payment (usually 30%-50%) up front. That will weed out the good clients from the bad.
🤑 Be sure to have a late payment clause that changes interest.
🤑 If you set mini deadlines, set small fees against each
Contracts - Protect Your Client
🤑 Agree deadlines and stick to them
🤑 Incentives to pay on time (decrease for on time payment/increase for late payment)
🤑 Assure them that you can agree to change the terms later down the line, resend contract at this point
Contract Examples
Design Contract
This Contract is between Ben Kamara (the "Client") and Rob Gill (the "Designer").
The Contract is dated November 23, 2015.
1. PROJECT AND PAYMENT
1.1 Project. The Client is hiring the Designer to do the following: The designer will assist in
helping to design visuals and prototypes for a mobile application called Scorescast. Some
branding, logo development and basic design work across other platforms may also be required.
1.2 Schedule. The Designer will begin work on November 23, 2015 and will continue until the
work is completed. This Contract can be ended by either Client or Designer at any time, pursuant
to the terms of Section 6, Term and Termination.
1.3 Payment. The Client will pay the Designer a rate of £500.00 (GBP) per hour. Of this, the
Client will pay the Designer £1,000,000.00 (GBP) before work begins. The Designer agrees that
it is not entitled to any further fees from the Client in relation to this project unless otherwise
agreed in writing by the Client.
1.4 Expenses. The Client will not reimburse the Designer's expenses.
1.5 Invoices. The Designer will invoice the Client for work done monthly. The Client agrees to
pay the amount owed within 28 days of receiving the invoice. The Designer shall be entitled to
charge, and the Client shall pay, interest on any unpaid amount from the due date until payment
is received at a rate of 5.0% per month on the outstanding amount.
2. OWNERSHIP AND LICENSES.
2.1 Client Owns All Work Product. As part of this job, the Designer is creating “work product”
for the Client. To avoid confusion, work product is the finished product, as well as drafts, notes,
materials, mockups, hardware, designs, inventions, patents, code, and anything else that the
Designer works on—that is, conceives, creates, designs, develops, invents, works on, or reduces to
practice—as part of this project, whether before the date of this Contract or after. The Designer
hereby assigns to the Client this work product once the Client pays for it in full. This means the
Designer is giving the Client all of its present and future right, title, and interest in and to the
work product (including intellectual property rights), and the Client will be the sole owner of it.
The Client can use the work product however it wants or it can decide not to use the work product
at all. The Client, for example, can modify, destroy, or sell it, as it sees fit. Accordingly, the
Designer should not register or attempt to register any intellectual property rights in the work
product unless requested to do so by the Client.
2.2 Designer’s Use Of Work Product. Once the Designer assigns the work product to the Client,
the Designer does not have any rights to it, except those that the Client explicitly gives the
Designer here. The Client gives the Designer permission to use the work product as part of the
Designer’s portfolio and websites, in galleries, and in other media, so long as it is to showcase the
https://www.hellobonsai.com/ http://docpool.welcomebrand.co.uk/
Website project contract Client name here
Offroadcode Limited
September 2012
Commercial in Confidence
Offroadcode Limited Office 5 Dale Street Mills, Royd Street, Huddersfield, HD3 4QY, United Kingdom T: +44 (0)1484 643078 W: http://offroadcode.com E: [email protected]
LOADS of resources here
Invoicing
🤑 “Use Software to help keep track of invoices: Freshbooks, Wave, Freeagent, Kashflow, Harvest, Excel…”
🤑 Give the many ways to pay. Bank Transfer, Cheque, PayPal (which is great for international work!)
🤑 Be prepared for late payments.
🤑 provide “30 days notice”, in the contract add a small % for each day payment goes over.
Invoicing
“I only release a very low res version until final invoice payment. Then give them them all the high res versions when payment clears.”
Invoicing
Relationships
🤑“Send nice emails. Build a good relationship with the client. Understand where they're coming from.”
🤑“Only work with people you are confident of having a good working relationship with. Trust needs to be built otherwise as with all relationships, it will break down.”
🤑If your unsure of someone to begin with, as for payments upfront and contracts to be in place. As the relationship builds you might be able to relax this
🤑Meet them, spend time talking to them, it will help you become better at judging peoples nature
🤑Be prepared to have a client base and have the patience to deal with every single one
Tax
🤑 PUT ASIDE MONEY FOR TAX!
🤑 “Doing your self assessment as a sole trader is pretty easy - as long as you have everything in order before you sit down to do it.”
🤑 “keep receipts for expenses… petrol, trains, new pc hardware etc that are related to your work. Even a % of your household bills, if work from home”
🤑 Working full time and freelancing part time, you can pay tax on your freelance earnings through your PAYE (if below £3k) just write a letter to declare your freelance income & expenses.
🤑 “keep track of any interest you make in various savings accounts… it’s all income”
“Saving shouldn't be as daunting as it sounds, back then I associated everything I earned with 'I need this to live' - save something, even if it's as little as £25 a month, if you get a raise, increase your savings.”
Saving
“Save up at least 3 to 6 months worth of living expenses. This will make the slow times so much less stressful and prevent you from taking on bad projects or clients due to panic over finances.”
Saving