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Determining your hourly rate as a freelancer is always a tricky business, but setting your freelance hourly rate in Belgium with its often complicated tax laws is even more challenging.
After reading this article, you'll know:
If you charge €5 per hour, odds are that the undertakings that would earn you €50 per hour are really dissimilar from what you're doing now. In truth, it may not just require a skill set that is different but also a different mind-set as well as a different set of expectations.
You already know what your rate is if you are currently waged by the hour as a freelancer. However, that does not mean that amount is the worth of your time. Your time might well be worth more.
As a freelancer, in my early days of consulting, I had my first surprise when I realised I was at €100 per hour being billed out. I could recollect that I was not getting paid that, but the fact that someone believed my time had a value of €100 surprised me.
It was after that I realised others were making more money while working less. It was then I thought to myself: “I’m doing something wrong”.
There is a quick trick to figure out the amount your hourly charge is. If you are on a salary before or have people who supply the same services as you do that are on a salary, simply cut off the thousands and divide what you get by two.
€20,000 per annum = 20 (without the thousandfold) /2 = 10 = €10/hour
Annual wages of €20,000 cut off to take €20 . You and half it, meaning you should earn €10 an hour.
If you earn €100,000 per annum, then take €100 and half it, so that means you get paid €50 per hour. It’s not a precise science, but it provides you a practical approximate range.
Beware: this calculation leads you to your net hourly rate, not your gross (entire) rate. This is what you should end up with after taxes and expenses.
Now that you know the ballpark of what your net hourly rate should be, you can use it as a basis to calculate what your full rate should be.
Next, ask yourself these questions:
The point here is to research on the amount your fellow freelancers charge for the same services, know the average amount and then you can select an hourly rate that you consider satisfactory – one you believe is a fair reflection of the value you are adding.
You begin to see opportunities and patterns by simply asking the questions: What are €50 per hour undertakings? Which activities cost €100 per hour? What are the activities for which someone can charge €10, 000? Know the range in which your services fall.
Now that you know the estimate for your net hourly rate, you can start stacking it with other needs.
For instance, the costs you will need to incorporate into your calculations differ wildly depending on your sector.
Let's say you're a freelance IT'er. You'll need to take into account at least the following yearly and monthly fees, and investments:
All of these costs need to be equally divided over all of the billable hours that you'll be working per year to make sure they are covered by your income.
Two freelancers rendering the same services in different locations might be earning a significantly different amount of money for a number of reasons.
For instance, setting your freelance hourly rate in Belgium should take into account that Belgium is one of the most highly taxed countries in the world. A Belgian freelancer will therefore need to set a much higher rate than someone having to pay less taxes in order to end up with the same net wages.
The same goes for social security contributions in Belgium, which will be calculated based on your annual income.
If you begin to look around, you can find examples of people that earn more money an hour despite offering what you might consider more or less the same services as others who earn less.
For instance, some trainers such as Tony Robbins have asked €10, 000 per hour. This informs a question you could ask yourself: What type of services did he offer that was worth as much as that? Then you can compare the services you are offering.
Before setting your hourly rates, it is important that you build your brand accordingly. Whatever hourly rate you then set, you can rest assured you're getting enough clients and you might even surpass your weekly and monthly targets.
Since you intend to gradually grow your brand, set up an affordable hourly rate initially. When you consistently deliver excellent services as a freelancer, then you can gradually increase your hourly rate as your brand is growing by the day.
In the long run, folks do not pay for the intrinsic value but for the 'perceived value' of your services. That is why branding is the perfect way to change the game. When two freelancers provide the same services the better brand more often than not wins.
In order for you to maximize your earnings, you can figure out how to make the most of your existing experience and skills or even consider gaining new skills.
Different niches require different levels of expertise. A writer well-versed in writing pieces centered on entertainment or culture will most likely charge a different price from a writer working in the technology sector.
This is because the entertainment freelancer probably has easy access to the bulk of the sources they need through regular search engines, while the research process of a technical writer will often be more complex and therefore more time consuming.
Logically, the latter writer will require either a higher hourly rate or more hours within a project to produce the same amount of deliverables.
As a freelancer or consultant, you can up the ante by asking clients to pay a premium for your time or service. Split your offerings and rates by asking a lower price for one market, and a premium one for another.
The same goes for different types of tasks: strategis projects may require a higher hourly rate than operational ones.
By now, you should have a rough idea of how high you should be setting your hourly rate as a freelancer in Belgium to cover your costs and earn what you want per year. But that does not mean that you have to settle for the rate before you now.
In fact, you should put more value on your time and opt to charge higher rates, especially if you have something more or different to offer than similar freelancers.
Given the way the Web has made the internet a worldwide market, you must set up your hourly rate with the knowledge that there are people readily available that can offer the same services for more or less. That does not automatically mean that you are over- or undercharging. As you now know, different types of expertise, location and much more play a very large role in price setting.
It is a common saying in business that when you offer the cheapest services, you get the worst clients and this is very true. When you offer the minimum hourly rate out there, many clients don't value your services, take your services for granted and are tempted to offer you even less.
Finally, don't set a very low hourly rate in the quest for patronage either. It is better to start with few, but high-quality clients that to book everyone you can find.