Money money money...
Money is the life source of any business, in any industry if a business is not making a sufficient amount of money it can be perceived as failing. As a freelancer it is important that you develop respect towards money and learn how much of it your time is worth.
I grew up with a single mother of five children, money had always been tight so I understood its importance, but I had never been very good at looking after it. I realised if I was ever going to survive as a freelancer I needed to change my attitude towards money.
One of the first things I arranged when going freelance was a meeting with an accountant. If anyone could give me advice and help change my attitude towards money, I guessed that it would be someone who spoke the language of money every day. After a long conversation with Alexander, I walked away mostly confused. We discussed all the details of Sole Trader v.s Limited Company and which would be the best approach for my business needs. My head was so full of information that none of it really stuck, the only thing I was sure of was that I needed an accountant, and Alexander was a very open and trustworthy man.
The one lesson he did teach me, and I encourage anyone who is already freelance or anyone thinking about making the leap to do the same, is to open a new bank account solely for tax. This is the best way to ensure you save enough money for your end of year Tax Bill. Alexander encouraged me to transfer 30% of every invoice into the new account to cover Tax and National Insurance Deductions, so that when the Tax Bill arrives I will have saved enough money to cover the bill without any worry or stress.
This seems like a simple almost obvious thing to do, but I have spoken to several freelancers and now that we’re approaching April they are worrying as they have spent all their tax. Do yourself a favour and open a new account and apply this method to save yourself the stress and hassle.
Another advantage of this account is that it can act as an emergency fund. I would at all costs try to avoid using it for this reason, but should you have a client who doesn’t pay an invoice on time then you have some money to fall back on in desperate situations. This can help remove pressure and Instead of reaching out to friends, family or much worse using credit cards or taking out loans, you can use this money to save yourself from building up debt.
For me personally, I don’t want the hassle or to waste time dealing with Tax Returns so hiring Alexander at the end of a financial year is a no brainer. I’d rather pay someone to do it for me so I can focus on running my business and moving pixels.
*Note I have yet to pay Alexander for a full Tax Return but he estimated that the bill will be around £200.*
Understanding money is at the core of being freelance. To be successful you need to understand your worth. A lack of understanding of what your time and products are worth will lead to many problems.
By undervaluing your worth you will find yourself chasing work frantically and constantly worrying about when the next payment will come in. This worry can be suffocating and it will affect your work and personal life.
Another result of failing to know your worth, is that your clients will begin to take advantage. Amends and feedback will be excessive and you will often be expected to complete these without further payment. This type of relationship with a client will often compromise your integrity as a designer and you will become more monkey than man.
‘So,’ you may ask, ‘how do I find out my worth and know what to charge?’
This is a tough question and honestly I don’t think there is a correct answer, this is very unique and dependant on each individual. However, I will share some advice on how I learnt my value within the motion graphics industry.
I felt that in order to know my value I needed to know what my industry was charging. I began emailing freelancers and studios asking them if they were open to having a discussion about rates. This is a very hit and miss tactic, a lot of people don’t believe in sharing this kind of information, so I received a lot of rejection and often no response at all, but there were a few kind folk who did have a chat with me and offered way more advice than I could ever have asked for.
By doing this research I found out that the variety in value was outstanding; what one studio charged £1,500 for another charged £20,000, one freelancer £3,000 another £12,000 etc. This made me realise that there are many factors to consider when quoting, for example location, effort and time. I noticed a huge difference in product value between the guys charging £20,000 and the ones charging £1,500, and in terms of location, the people working in London charge more to cover the higher living and business expenses.
This research made me question my circumstances and how these could impact my value.
I began by setting up a spreadsheet to keep track of all my monthly and annually expenses. I separated this into two sections, Business and Living Expenses. By inputting all the data of my spending I was able to work out a total monthly expense, which for me came to £1,220. This number also factors in £100 a month for entertainment, things like cinema, squash etc and £200 for savings each month, as Gemma and I are saving for a mortgage.
This is crucial information as I now know that ideally I need to make at least £1,600 before tax each month, which, when you multiply this by the twelve months of the year, annually amounts to £19,200. Knowing my monthly ideal helps me to accurately quote for jobs.
Typically I am hired to make 60–90 explainer second films. This type of work is a long process in which I need to complete the following:
Voice Over Sourcing, Directing and Editing
Animation and Compositing
Sourcing and Editing Stock Backing Track
Ideally I want to hire sound designers for the following:
Unique Score — roughly £1100 per minute of film
Sound Design — roughly £850 per minute of film
One of the main reasons I left my job to pursue freelance was to create high quality products. For me this to achieve this goal, I needed to invest more time into each project to ensure a higher level of finish. An ideal range of 6–8 weeks per 60–90 second video.
Now for working out my value. Against my competition, without sounding egotistical, I feel that my films are to a higher standard than a lot of freelancers and even studios, but I am also aware that I still have a lot to learn and that there are freelancers and studios who produce work to a much greater standard. With this assessment I feel that I currently sit around mid level in my industry. I also live in Bristol which isn’t as expensive as London but as a city it still remains fairly pricey.
When factoring all of this information I reached a Ballpark Figure of £5000 per 60–90 second film. As a Ballpark Figure this number will vary depending on certain factors like Art Direction and whether the film requires Character Animation. I am also willing to lower this rate if the work is for charitable causes or if it is something I am very passionate about, but in both circumstances I push for creative control and that feedback is reduced to an absolute minimum. Over time when I increase my skill set I will re-evaluate this figure and charge accordingly.
When factoring your value take into account that you’re most probably an expert in your field, unless you’re a student then you may have some more learning to do. Otherwise, unlike your clients you will have probably spent 10 hours a day for several years learning your trade. Over this time you will have acquired knowledge and skills that makes you valuable, even ‘simple things’ like sourcing a high quality voice artist and being able to translate what your client needs to them is a skill that your client likely will not have, therefore making you the expert. So when you are quoting for a job ask yourself, “Would my client know how to do this?” If the answer is no then you are the expert, therefore you should charge appropriately.
As previously mentioned figuring out your value is unique and dependant on the individual, so when factoring your own circumstances your Ballpark Figure may turn out to be much more or even less.
I am in no way a master at quoting and don’t pretend to be, but I am happy with the way I currently quote and over time I will refine this process and learn new skills to increase my value. In the meantime, I hope this helps current freelancers or soon to be freelancers think about their value and whether they are charging appropriately, I know this information would have helped me when I first started my freelance journey.
Do you know your value in your industry and are you charging appropriately?
This article is part of a series of life as a freelancer. In this series I’ll be sharing lessons I that I have learnt and tips and tricks that you could use if you’re planning to make the leap to freelance. If you enjoyed reading this article, be sure to follow so you don’t miss out.