I see this question pop up quite frequently on job forums and the NY tech forums that I read.  I thought I would talk about how I approached this when I started my own business and what I do now.

So when I started out on my own, I was lucky enough to have a baseline salary to compare what I needed to make per hour.  I took my raw salary, divided it by 1000, then divided it by 2.  I’m not sure why that math works, but it works out to the hourly salary per year (40 hrs x 52 wks per year).  Assuming I make 40,000 / year that breaks down to $20/hr.

After i’ve gotten the baseline amount, I added any additional costs that I would incur because I was freelance.  This would be monthly health insurance, 401k I had to cover, etc.  Then I would take the annual amount, divide it by 12 months, then 160 hrs to get what I needed to add per hour.  Some people just double their hourly if they dont have steady work.

Now that you have an hourly, throw it out the window .  Just kidding, this is pretty much your baseline amount that you should make.  However, in the end, it really is just what a client is willing to pay you.  To figure that out, what I’ve done is to first get an idea of what the market rate was.  I would write my credentials down, as if I was hiring myself.  Then I would create a craigslist ad requesting freelancers send me their hourly rate.  Normally this gave me a variet of responses and rates.  I would average them all together to see what that was.  If it was higher than the rate I calculated, I would use that one instead.  I use this method to check what the market rate generally is.

Finally, if you have some specialty knowledge that isn’t typical, I would definitely add some $$ on top of your hourly for that.  Also I’ve found that because I can communicate clearly with clients, i’ve been able to charge more for that as well.

Ok, hit me back with questions, comments, arguments!