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Freelance Rates and Budgeting Tool

JEmerson
polycounter lvl 6
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JEmerson polycounter lvl 6
I have seen a large number of threads recently on various websites inquiring about how to determine freelance rates for new artists. There is a lot of information available on the Wiki, and in general, regarding freelance work. I have been working on an excel workbook to help new freelancer's understand how to determine their hourly rates, estimate revenues and expenses, and create end of period reports. This has reached a point where I am comfortable sharing with the greater Polycount community. If you have any questions or concerns, you may reply here, message me, or contact me via email.

I have crafted this workbook as if for myself and/or a business for use in professional settings. For those interested, I am a full-time budget officer for a City, a consultant, and a freelancer. This is not the only tool I would use, but for those without funds and/or additional resources, this would be a great one to add to your list. This tool will be updated on an ongoing basis. It is simply a tool to help, it is not a full-fledged budgeting/accounting suite of software. It has been designed for a predominantly American user base, but is easily adaptable to other locales as necessary.

*EDIT* 
There is a common conversation within this thread that needs to be addressed; the difference between your cost of good sold (input costs; fixed costs + variable costs) and the negotiated price/rate that the client pays. This tool does not address the negotiated price/rate that a client will pay. It does not incorporate the factors that affects your clients (their overhead costs, their budgets, their input costs) as those are known only to your client (and possibly you as the freelancer once the job is secured). That is not the purpose of it as that is a separate issue altogether, and is driven by the client's willingness to accept risk and the value the client places on the good/service. This tool, first and foremost, calculates the freelancer's minimum input costs. This is useful because it gives the freelancer some criterion to base the freelancer's calculation of risk on any given job to him/herself. This tool does not prevent you from charging higher than your input costs, but it should inform your decision to charge at or lower than your input costs. Furthermore, it does not prevent you from charging a flat rate if you choose to do so. Recognize that if you do charge a flat rate, then you potentially increase the risk you, the freelancer, assumes if the job input costs are greater than your estimate costs of input (costs exceeds the break even point).

Google Sheets Ver. 1.0.

FEATURES
  • Create an annual budget for you or your business, determine input costs.
  • Estimate Gross Revenues, Net Income, Net Liabilities for goods sold at marketplace (retail).
  • Expense Tracking for you or your business.
  • Revenue Tracking by source for you or your business.
  • Comparison tracking of Revenue, Net Income, Taxes, and Incidental costs.
  • Expenses Statement(s) for Tax Document preparation.
  • Cash Flow Statement(s) (a/k/a Profit and Loss Statement) for Tax Document preparation.
  • Balance Sheet for Tax Document Preparation.
  • Chart of Accounts to easily set-up a General Ledger
  • Purchase Order Sheet - Quickly prepare a Purchase Order.
  • Invoice Sheet - Quickly prepare an invoice for clients.
  • Statement Sheet - Quickly prepare a balance statement sheet for clients.
  • Gross Margins Calculations available in the Sales Reporting sheet.
  • Timetracking worksheets.
VER. 00.0.2 (Out of Date)
DOWNLOAD LINK

FEATURES (Different then above)
  • Create an annual budget for you or your business, determine input costs.
  • Estimate Gross Revenues, Net Income, Net Liabilities for goods sold at marketplace (retail).
  • Expense Tracking for you or your business.
  • Revenue Tracking by source for your or your business.
  • Comparison tracking of Revenue, Net Income, Taxes, and Incidental costs.
  • Expenses Statement(s) for Tax Document preparation.
  • Cash Flow Statement(s) (a/k/a Profit and Loss Statement) for Tax Document preparation.
  • Balance Sheet for Tax Document Preparation.
  • Chart of Accounts to easily set-up a General Ledger
  • Data Validation lists to easily set-up General Ledger categories and other necessary lists throughout workbook.
  • Invoice Sheet - Quickly prepare an invoice for clients.
  • Gross Margins Calculations available in the Sales Reporting sheet.
PLANNED FEATURES
  • Other financial tools as deemed appropriate without increasing over-complexity of the tool unnecessarily.
EXAMPLE IMAGES





Replies

  • Ruz
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    Ruz polycounter
    lol, seems a bit complex, my rates are much simpler ie here is the price hope its ok
  • JEmerson
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    JEmerson polycounter lvl 6
    Ruz said:
    lol, seems a bit complex, my rates are much simpler ie here is the price hope its ok

    But how did you determine your rate in the first place? My concern would be whether your rate accurately reflects your total costs. E.G., I can charge $25 per hour, but if my total costs in a year are reflective of $30 per hour, then I am losing money due to my need to fulfill the overhead costs aspect. This tool is about informing the freelancer what their real rate is versus that rate they negotiate with the client. For instance, it may be totally acceptable as a business practice to work for 100 hours at $25 per hour, even though my real rate inclusive overhead is $30, and suffer the $500 loss if I know I will get a second contract at 400 hours for a rate of $35 per hour (net revenue of $2,000; making up for the $500 loss incurred on the first project and profit of $1,500 total).

    Another way to look at it is if I spend 1 hour doing X activity that is not revenue generating, then I lose Y amount of dollars (hourly rate) + cost of X activity.
  • sziada
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    sziada polycounter lvl 8
    you have a point,

    I just generally calculate the cost to a flat rate and estimate how many days its going to take me to make an asset 
  • JEmerson
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    JEmerson polycounter lvl 6
    You can play with your calculator all you want, but if you arent getting a call back from the studio with work, it still amounts to $0 in the bank account.

    Thanks for the info on flat rates. That is really good, and informative, information to have.

    I would not quote a flat rate without knowing how much my hourly rate is in combination with my expected time to spend on an asset. In doing so, I can guarantee I will not exceed budget on my end and suffer an economic loss, or incur additional expense on my client's side. As for "playing" with the calculator, it's not playing if it helps you understand your own business better. You're right that money in the bank is better than no money at all, assuming your opportunity cost is equivalent to the pay. If it's not, then you are losing money (even if you're collecting from studios). But you're correct on the greater point that the rate must be competitive in the world marketplace.
  • marioreitbauer
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    marioreitbauer triangle
    Still raging here about that post....
    100$ a day....
    2200$ max a month if you want weekends.

    Go pay tax, pension, insurance, hardware, software.

    Please... do everyone a favour and go unemployed, you will earn more and we dont have to bother with freelancer like you.
  • Ouran
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    Ouran greentooth
    Agree with Mario here. I live in Europe as well and 300-400€ is in the ballpark of what I charge. This allows for a decent life, not drugs and sports cars.

    No clue how you can survive doing freelance at 100-150$ a day Michael :open_mouth:
  • JEmerson
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    JEmerson polycounter lvl 6
    DonSmith said:
    Studios and publishers don't usually considered hourly rates anymore.  We generally look at "man month rate" (mmr).  This tends to include overhead for management and opportunity cost as well.  So we look at studios who have anywhere from 6K - 12K mmr for props/vfx/animation  and sometimes more if we are in a bind.   that's 300 - 600 usd a day.  Anything less and you're throwing money out the window *usually*.   Start thinking of your freelance as a real business that deals in hundreds of thousands of dollars and not 10s of dollars, and sign bigger contracts.

    If you don't get a call back for more work after your initial engagement it's most likely due to value add vs cost.  A lot of times it's about how much effort it is on the clients part to get the work done at quality.  Very little to do with cost alone.  

    Hourly rates aren't really that useful in calculating your business earnings either.  There's a great video of a gentleman talking about hourly rates for clients.  You should listen to him.



    Hope this is helpful to you.

     Thank you for this info. I will incorporate it into this tool. I think it is prudent to point out that regardless of the unit of measurement (hours, days, months) the result is similar as what I am helping users to calculate is a rate that can be converted as necessary. Furthermore, the rate can be reflective of overhead costs (as seen in the workbook) or not (also present in the workbook) and is easily convertible to other units of measurement. Having said that, I can understand why a studio would view it on a monthly basis and incorporate the studios opportunity costs into their freelance hiring budget. This tool does not address the studio side (but it could), but rather the freelancers side. A studio has accountants and possibly economists for that reason, to calculate those costs and run a benefits cost analysis and labor cost analysis. Again, thank you. I look forward to reviewing that video and editing the workbook as appropriate.
  • Gaurav Mathur
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    Gaurav Mathur polycounter lvl 9
    @Sigmafie, thank you for sharing your model.  Some of the feedback to your contribution seems a bit hard-edged.  I appreciate your efforts and look forward to seeing an updated spreadsheet.  It might be more easily shared as a Google Sheet.
  • pachermann
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    pachermann Polycount Sponsor
    Thank you for sharing!
  • JEmerson
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    JEmerson polycounter lvl 6
    gauravcm said:
    @Sigmafie, thank you for sharing your model.  Some of the feedback to your contribution seems a bit hard-edged.  I appreciate your efforts and look forward to seeing an updated spreadsheet.  It might be more easily shared as a Google Sheet.

     Thank you. I like that the criticism is harsh though as it helps to refine this towards a better product. As for Google Sheet, I have tried that and it breaks the workbook pretty bad; it will have to remain an Excel workbook for now. I will work on getting it prepped in Google Sheets though, but that will be a secondary goal at the moment.

    @DonSmith: I updated the original post to include road map improvements and address points made in the video you supplied (it was very good).

  • perna
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    perna quad damage
    @Sigmafie, thanks for the effort, very interesting. I opened the document in google sheets and there were no immediately obvious errors. Sheets is an excellent solution, free, with superb collaboration tools and extremely powerful integration with other google services. They're kings of data, so well worth looking into if you haven't already.

    For those who believe this is overly complex and you more or less pick figures out of a hat, I suggest it wouldn't hurt if you gave the spreadsheet a good look.
  • Ouran
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    Ouran greentooth
    @Sigmafie Indeed, thanks for your work putting this together and sharing it with us. It's quite a complex tool to get started but I'm sure it'll prove useful :)
  • jbh3d
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    jbh3d polycounter lvl 9
    Very useful! Thank you for this.
  • am0000
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    am0000 polycounter lvl 6
    Thank you for sharing !
  • JEmerson
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    JEmerson polycounter lvl 6
    I'm going to ask that everyone please cease criticism of Michael's rates, and return to conversation regarding usefulness, how to use, and how to improve this finance tool. Thank you.
  • renealex
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    renealex polycounter lvl 4
    Right now In my country (Venezuela) there crazy talented people working for less than 50$ a week, and they are grateful for getting a job. I'm of Talking of 3D Artist, Film Editors, 3D generalist. (for big companies like HBO group for name one)
  • cg18
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    cg18 polycounter lvl 6
    renealex said:
    Right now In my country (Venezuela) there crazy talented people working for less than 50$ a week, and they are grateful for getting a job. I'm of Talking of 3D Artist, Film Editors, 3D generalist. (for big companies like HBO group for name one)
    More or less the same here in Mexico, really bad local rates.
  • LuisCherubini
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    LuisCherubini interpolator
    renealex said:
    Right now In my country (Venezuela) there crazy talented people working for less than 50$ a week, and they are grateful for getting a job. I'm of Talking of 3D Artist, Film Editors, 3D generalist. (for big companies like HBO group for name one)

    Actually, is due to those really poor local rates that some of us go for freelancing in the first place. If you charge more than you simply dont get the job opportunity, it sucks. Everyone here have different realities and charge based on their own expense. The problem is that nowadays the freelancing market is global, and that generates a higly competitive market regarding those who gets the big contracts.

    Sigmafie said:
    I'm going to ask that everyone please cease criticism of Michael's rates, and return to conversation regarding usefulness, how to use, and how to improve this finance tool. Thank you.

    I really liked the efforts you have put into the overall development of this sheet, thanks a lot for sharing with us.
    As an artist, I'd suggest also improving the readability of the cells, since this is a important documentation that a few of us will be using in a constant basis.



    Scaling up the font size for headers and categorizing the distribution of information in a more tangible way could help. Also use as much space as possible on each tab, I've noticed that a few are located mainly on the top left corner of the sheet. (May be the different aspect ratios of our monitors tho)

    Again, looking forward to the update on your sheets. Thanks a lot for caring and sharing a bit of your management knowledge. Cheers!




  • JEmerson
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    JEmerson polycounter lvl 6
    Hello everyone. I have updated this tool to Ver. 00.0.2.

    CHANGE LOG
    • Added "Wages Calculation" worksheet
    • Added "Invoice Example" worksheet
    • Added new "Sales Reporting" worksheet
    • Deleted old "Sales Reporting" worksheet

    @Kerub: I will work on updating scaling and color coding throughout the document. However, my first priority is to complete the functionality. Thank you for pointing that out as that is a great suggestion.
  • JEmerson
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    JEmerson polycounter lvl 6
    Good morning everyone. I have worked on recreating this workbook in Google Sheets for your convenience and have added one or two things. You may find the file here.
  • zachagreg
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    zachagreg ngon master
    Sigmafie said:
    Good afternoon everyone. I have updated the google workbook to include a new Job Price Estimator and incorporated a "Day Rate" throughout the workbook for your convenience. As always, You may find the file here
    You're a champ just so you know.
  • NikhilR
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    NikhilR interpolator
    Sigmafie said:
    Good afternoon everyone. I have updated the google workbook to include a new Job Price Estimator and incorporated a "Day Rate" throughout the workbook for your convenience. As always, You may find the file here
    Thanks so much for this!
  • sculptn
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    sculptn polycounter lvl 7
    Useful workbook thank you.
  • EarthQuake
    Hey this is awesome to see. Both an excellent tool and great that you're giving it away for free.

    It's rather disappointing reading some of the comments in this thread. But just an aside, whether you're quoting a day rate, a monthly rate, or a per-asset rate, you need to know your hourly rate.

    Hourly * 8 = day rate
    Hourly * estimated hours for asset (including revisions!) = asset rate
    Hourly * 8 * 22 (average work days per month) = monthly rate
    Hourly * 8 * 261 (average work days per year) = yearly rate

    Of course, it's important to understand the difference between what you need to charge for your minimum cost of living, and what you can charge due to skill, experience, demand for services, etc. But this tool is a great way to estimate that minimum and keep track of many common expenses.
  • Neox
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    Neox ngon master
    i'd say 18-20 days is more relastic as a monthly average. counting in sickness and vacation times.
    of course those are not paid for the freelancer but instead of promising your client 22 days of work EVERY month, plan this into your daily rate.
  • EarthQuake
    Neox said:
    i'd say 18-20 days is more relastic as a monthly average. counting in sickness and vacation times.
    of course those are not paid for the freelancer but instead of promising your client 22 days of work EVERY month, plan this into your daily rate.
    22 is a common figure to use in the US, but in the EU more vacation/sick days are generally accounted for, so this is somewhat regional.

    Average per year probably varies a bit as well. For instance in Spain it looks like there are 251 work days in 2019, but 264 in the US. So it's worth doing the research for your local area.

    But yes, accounting for sick time (and down time in general) is a good practice as a freelancer, as you generally don't get paid time off.
  • JEmerson
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    JEmerson polycounter lvl 6
    Neox said:
    i'd say 18-20 days is more relastic as a monthly average. counting in sickness and vacation times.
    of course those are not paid for the freelancer but instead of promising your client 22 days of work EVERY month, plan this into your daily rate.
    Neox said:
    i'd say 18-20 days is more relastic as a monthly average. counting in sickness and vacation times.
    of course those are not paid for the freelancer but instead of promising your client 22 days of work EVERY month, plan this into your daily rate.
    22 is a common figure to use in the US, but in the EU more vacation/sick days are generally accounted for, so this is somewhat regional.

    Average per year probably varies a bit as well. For instance in Spain it looks like there are 251 work days in 2019, but 264 in the US. So it's worth doing the research for your local area.

    But yes, accounting for sick time (and down time in general) is a good practice as a freelancer, as you generally don't get paid time off.

    Thank you both for your interest in this workbook and its uses. As for the discussion regarding unique situations and jurisdictional differences, that is part of the reason I have structured this the way I have and encouraged users to research their own needs/situations/jurisdictions and modify the workbook to that within the workbook and the comments throughout.
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