When thinking about charging for my work I need to decide what my commission should be? And how I should charge, be it by the hour? for the full job? Or even at all?
Looking into the minimum hourly wage in the UK I set my bench mark on what I should charge, the UK minimum wage for an adult over the age of 25, which includes myself is £7.20 an hour in 2016, this amount is the set amount for all employees in the UK in 2016, it does not include any amounts paid in by the person themselves, be it investments; such as educational, equipment and travel expenses so I need to take these things into consideration when introducing my prices.
With photography equipment being a significant investment into my job I first need to work out my overheads, These are the indirect costs or fixed expenses of operating my business, this ranges from rent to marketing costs and equipment, it refers to all non-labour expenses required to operate my business.
Looking into an online guide on calculating your hourly rate as a freelancer I decided to work out what I should be charging;
I started with deciding what I wanted to make per year, I took into consideration the average yearly salary in the UK in 2016, which was £26,000. Starting at this amount seemed reasonable, for a first years wage.
I then needed to consider the overheads of being a freelance photographer by working my yearly outgoings which included;
- Advertising/web hosting
- mobiles/laptops/tablets/camera equipment
- self employment tax
Totalling together an average of £10,366 expenses paid out every year.
I then needed to arrive at my new adjusted annual salary;
Target Salary £26,000
New overheads & Expenses £10,366
= Adjusted Annual Salary £36,336
From here I need to work out my total number of billable hours per year, considering my own time and family holiday time.
Until 1984, an hourly rate of basic pay was computed by dividing the employee’s annual rate of basic pay by 2,080 hours which is the number of hours in 52 workweeks of 40 hours and rounding to the nearest pound. For a regular full-time employee, the hourly rate was then multiplied by 80 to determine the biweekly gross pay, meaning that the total number of my working hours would be 2,080 divided by my time off;
3 weeks of holiday = 120 hours
12 bank holidays = 96 hours
total number of days 216
2080 hours – 216 hours = 1864 hours
Assuming that I won’t be billing a client for all hours of work I do each week I will need to allow for 25% of my time to be spent on non billable activities;
1,864 hours x .75 = 1398 billable hours per year.
I then need to divide my adjusted annual salary by my billable hours per year;
£36,336 / 1,398 = £25.99
so £26 an hour
Taking this amount into consideration I then would need to calculate the amount of time I spend on each client, including the shooting time and editing process, this will then give me a clear view of the amount to charge per job, by using this as a base number I can work out how to charge people fairly for the amount of hours I spend on them.
Once I have established a set rate based on average hours I can then use this amount to advertise per job, this makes advertising to new clients easier, meaning I can produce an amount for them before starting the work.