If you spend any time on social media, chatting with freelancers or just asking your friends and family, you’ll know already that opinions differ widely when it comes to how much money you can earn from freelancing.
There are freelancers out there shamelessly boasting about their six-figure business: how they earn thousands per month through passive income and only have top-paying clients. There are also freelancers saying how hard it is to scrape a living from freelancing.
As an online sales coach I have worked with many freelancers and also run a lot of training courses, so I’ve seen “under the bonnet” of many, many freelance businesses. I work with freelancers to help build a client base and ultimately earn more money from freelancing.
So, how much money can you earn from freelancing? Let’s dive in
Working out your day rate
Lots of freelancers work to a day rate (they charge an agreed amount for a day of their time) for their clients. If you work, or plan to work, in this way, figuring out how much money you can earn is a fairly simple sum.
Let’s say you charge your clients £300 per day for your services. You work 5 days a week. This means your weekly income is £1500 per day. Say you work 45 weeks of the year, then you can expect your annual income to be around £67,500. But that doesn’t allow any time for unbillable work. By that I mean time spent marketing your services, admin, invoicing, financial planning, intro calls and so on.
This kind of unpaid work is unavoidable for any freelance business and needs to be factored in. As a rough guideline, I would allow at least 10% of your time to be spent on unbillable work. This means your weekly earnings are more realistically going to be £1350, making your annual earnings around £60,750.
You can dramatically reduce your time spent on unbillable work to increase your profits (for example, by investing in software to speed up your processes), but it will never be zero.
If you are stuck on what your day rate should actually be, I’d advise you to look at what you’d be earning as an employee doing the same role and multiply it by 2.5. So if you’re a graphic designer and the average salary is 30k, multiply by 2.5 to get to £75k. Divide this by the number of days you intend to work in a year (e.g 45 weeks at 5 days a week is 225). 75k divided by 225 is £333 per day.
Most freelancers undercharge when they start out, often due to a lack of confidence
It’s important to remember that there will always be people charging less than you and there will always be people charging more. Your day rate should feel comfortable but exciting so you work hard for the clients you win.
Project fees
Many freelancers don’t charge a day rate, but instead work to a project fee instead. For example, a website builder might charge a flat fee to build a client’s website, rather than charge a day rate. This often suits a client more as they know the price for what they are getting, rather than getting hit with a larger bill they weren’t expecting.
Whether to charge a project fee or day rate depends on your services and how you like to work, but it’s worth considering both options.
If you are going to charge a project fee it’s important to remember that you may have clients calls, project management work, emails and so on that you’ll need to factor into your time working on the project. As you do more projects you’ll get better at estimating the true time involved.
Removing time for money
Project fees and day rates both connect time with money, i.e. you sell your time in exchange for a fee.
Many freelancers offer products that are not time-based and this can really help you earn more money as a freelancer.
For example, if you are a freelance SEO expert, you could offer courses in SEO that clients can buy. Technically the sky is the limit in terms of earnings in this case!
I would caution that there is a serious time investment into creating courses and other digital products, as well as possible platform hosting fees.
That said, freelancers who have successfully built this kind of business can earn serious amounts of money.
Scaling up
I have coached freelancers who want to scale up their business. Often this looks like taking on work and then outsourcing to a fellow freelancer. In principle this could earn you a lot of money as you can take a margin on every piece of work without actually doing it yourself.
But remember, this means finding trusted partners who will enhance, rather than damage your reputation. It also means you’ll be managing people, as well as client expectations, and you’ll need to have a strong strategy to your cashflow in order to pay your suppliers while possible being paid late by clients.
One client I had went from £20k a year to £95k by taking this approach.
To read more about how to scale a freelance business check out my post here.
How much money can you earn from freelancing?
I would advise you to flip this round and think about how much money you actually want to earn from freelancing. I’d then work backwards to how this can be achieved through your products and/or services.
Many people laugh when I ask this and say “well obviously I want to earn millions of pounds a year”! While I’m sure that is true, I would say to be realistic about your needs and other commitments!
Remember that putting in the time and effort to build that kind of business could come at a cost to other aspects of your life, and you could run the risk of burnout. If it’s the right moment in your life, though, a sky’s-the-limit approach could be right for you!
Really, you can earn as much as you’d like, but you need a strategy and a super solid business plan.
Summary: How much money can you earn from freelancing?
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