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Thinking About Starting a Work from Home Business - Or doing some Freelance Work?   Here are some things to think about when setting your rates

The first step is to find some local salary information.  You want to be competitive.

Check classifieds to see if salary is listed in any of the ads or search the internet.  See our Salary Information by Job and Location

For example, I would expect a clerical person to make $25,000 to $35,000, minimally, if they were employed full time and receiving benefits.  That works out to approximately $12.00 to $16.83 per hour.  Again, your own local market may be higher or lower based on cost of living and the labor market, so do some checking.

However, this hourly rate is not the only cost that an employer pays for an employee.  So, donít sell yourself short.  You should be able to command more than the going hourly rate for your services. You need to keep the following in mind: 

If an organization hires a contract or freelance person they will save money on taxes.  You will be paying all taxes on your own.  For instance, as an employee you pay approximately 7.65% in FICA tax and the employer picks up the other half.  When you are self-employed you need to pay both sides or approximately 15.3% of earnings.  You also have to pay quarterly estimated taxes and/or monthly payroll taxes. 

In addition, the organization will not have to pay for any benefits for you.  Paying full benefits (medical, dental, short term disability, vacation, holidays, retirement, etc.) for an employee can often add an additional 30-50% to the total annual cost of compensation.

So, a $15.00 per hour employee can easily end up costing an organization closer to $21.00 per hour when you add in benefits and taxes.  (not to mention providing office space and equipment)

So, if you want to work as a contractor or sell services on a freelance basis you need to factor in these things when coming up with a rate.  Not having them provided to you represents a loss in compensation to you and a cost savings to the employer.

If you are working with organizations that are willing to pay by the hour it is probably just administratively easier for both you and the organization keep track of work that way. 

It will probably be necessary, however, to come up with separate rates for all of the different kinds of things you'd be doing.  In a work from home typing business, for instance, you would need to develop rates for typing envelopes, straight documents, documents with footnoting, etc. 

To do this, you need to estimate how much time it takes you to complete each of the tasks. Multiply the time it will take by the hourly rate you came up with (15 minutes = .25 hours x hourly rate = piece rate) Then factor in the cost of any materials you will need (will you be providing envelopes and paper, printer cartridges, etc?).  And with experience you'll become more efficient and will make more money per hour.
Incidentally, if you are working as a contract person, you should get flexible hours. If an organization gives you specific hours to work, it may be treating you as an employee under the IRS regulations.  This is one of the IRS tests to determine whether someone is a contractor or employee.  And the IRS has been cracking down on contract vs. employee situations. 

Interested in seeing a list of Freelance Jobs to bid on??

Kirsten Ross is mother of two sons and is a Certified Human Resource Professional (SPHR) dedicated to helping women achieve more life balance and to transforming the design of work.

Visit at to search our revolutionary flexible work job board featuring more than 35,000 fresh work from home, part time, job share, flex time and telecommuting opportunities, search for a job share partner or read valuable career, life balance and family articles.  You may also email her at




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