Freelance Rates and Budgeting Tool
polycounter lvl 7
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
DOWNLOAD LINK
FEATURES (Different then above)
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.
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.
- Other financial tools as deemed appropriate without increasing over-complexity of the tool unnecessarily.
Replies
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.
I just generally calculate the cost to a flat rate and estimate how many days its going to take me to make an asset
Basically it comes down to this:
Are you experienced enough to do the work quickly and with minimal fixes? If so then hourly may work but it really depends on your rates. Asking $20-30 per hour is an avg rate, but again it depends on the client's size, budget and what the asset is. Most artists I inquire for their rates quote me $100-$150 per day rate.
If an artist can turn in a prop out, for example, in 1 day at a rate of $150, as opposed to a novice who needs 3 days at $80 a day, I'd rather pay the more experienced artist. Less hassle and lower cost in the long run.
Personally I prefer flat rates. It prevents surprises on both sides. Again depending on the client expect the following:
$50-100 for a prop
$300-500 for a simple environment (no props, just interior architecture)
$350-700 for a character
These rates include sculpting, retop, uvs and textured.
Those are general rates. Some startups will need lower rates and of course AAA games can afford about double, but will be brutal with you on the quality you deliver.
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 $0 in the bank account.
Thanks for the info on flat rates. That is really good, and informative, information to have.
I would not quote a flat rate without knowing how much my hourly rate is in combination with my expected time to spend on an asset. In doing so, I can guarantee I will not exceed budget on my end and suffer an economic loss, or incur additional expense on my client's side. As for "playing" with the calculator, it's not playing if it helps you understand your own business better. You're right that money in the bank is better than no money at all, assuming your opportunity cost is equivalent to the pay. If it's not, then you are losing money (even if you're collecting from studios). But you're correct on the greater point that the rate must be competitive in the world marketplace.
He is the best example of one of those people ruining the industry for all freelancers.
If no client wants to hire you, it might be because your work lacks quality not because your rate is too high.
Please guys, completely ignore the rates he posted there since they are so far off of what you need to make a decent living that it makes me sad.
With twice of what he posted there I would still consider those as mid lvl artist rates.
100$ 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.
But I am kinda shocked how someone with 15 years experience can post something like this.
I would have understood if a junior posts those rates, at least then you can explain why he is really wrong with those and open his eyes.
No idea how Michael made a living so far, I guess with pirated software, no vacation and the apartment is payed by his girlfriend/wife or he just works on 3 jobs at the same time charging whole days for all of them.
And to not only add "flame" here. My rates (since I think it is fair to share instead of only blaming).
The rate I ask for is 450€ / day.
The rate I actually get payed is between 350-450€ (depends on the length of the project, how often the company already hired me this year (I do work with discounts of 0.25% / day, so a project of 50 days would have a discount of 12,5%)
This is on a senior level in Germany.
With 400€
After tax, social insurance you got like 250€ left.
From those 250 you need to subtract Software and Hardware, which is around 3000-4000€ / Year and leaves you with 230.
Since you probably only got work for 70% of the time and since you also want to do vacation you need to calculate with 70% of that which leaves you with something like 150€
Pension is not included yet.
This leaves you with ~3000€ / month.
If you can not ask for at least 250/day you should not freelance.
As a freelancer you carry the risk, so you should be compensated for that and getting less as if you would be in an employment makes no sense at all.
No clue how you can survive doing freelance at 100-150$ a day Michael
Unsolicited opinion: I see hourly rates as a way to help me understand the value I put on my work. When I was first starting, for instance, I know I wasn't any good at my job, so I knew 7.00 an hour was probably ok. And growing up with that as the way parents and friends spoke about earnings it made sense. But when you think of your yearly income as a salary that is paid to you by your company, you can begin thinking of your business as a separate entity. There's hardware updates and software licenses, office space and all kinds of things that are tax deductible and then it becomes even more important to run your finances through an actual company. Paying yourself, of course first, but being sure to get your company paid too. This makes it easier to scale when you have a larger contract and for those times when times aren't so good.
Not getting a call back after doing work for hire usually has very little to do with cost, and not something I think is trying to be solved/addressed here. Reasons range from personality conflicts to unforeseen turnover at the client's end. Very rarely to do with cost alone.
Hourly rate is falling out of favor with some, as it doesn't speak to the true value of the work. There's a great video of a gentleman talking about hourly rates for clients. I recommend everyone listen to this lecture.
Hope this is helpful to you.
**** Edited for content ****
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.
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).
I charge $350/day and have been told i'm under-charging (also evidenced by people literally going: "perfect, start tomorrow" when i give them a quote, lol).
$100-150/day is crazy low for ANYONE. If you're charging that much you're harming not just yourself, but the freelance industry as a whole.
it's $2000 - $3000 per month. There are people i know who pay the lower end of that in rent alone in the states, let alone consumables, other bills, health insurance etc. Holy shit this is making me angry...
$350-700 for a character? ARE YOU INSANE?!
I feel like the wailing on Michael is derailing the thread a little but I'll just pitch in a bit here.
I'm from a third world country and we have next to no gaming/CG industry here at all. People who get into anything on the creative side undercharge like crazy just to get by or so they tell themselves.
Here's the thing; like gir said when you undercharge you not only harm yourself but also the industry. Also (and this is from experience) when you undercharge you get clients who don't respect you, your time or your work and will most likely use you like a sweatshop worker. It's mentally and physically exhausting and you crash and burn real quick.
So in short
1. Git gud
2. Charge for being gud
3. ???
4. Profit
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.
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!
CHANGE LOG
@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.
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.
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.
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.