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6 Easy Steps to Calculate an Hourly Freelance Rate in South Africa

Author: Melissa Wentzel
Date: 2016-09-29
Six easy steps to calculate an hourly freelance rate in South Africa based on your annual salary and non-billable hours.
Most 9-5's place a considerable constraint on your ability to control your salary. It's no wonder so many people are looking into freelancing part-time as a way to supplement, or boost their income. But how much can you earn from a side gig? And how do you figure out how much to charge? We've outlined six easy steps to working out your hourly freelance rate.

Is Freelancing Feasible in South Africa?

According to global freelance network Elance-Odesk (UpWork), freelancers made $941 million from more than two million jobs advertised online in 2014. Of the 9.7-million freelancers registered on the site at that time, 36 000 were from South Africa. Marius Vosloo, CEO and Founder of Freelance Cape Town – "Cape Town's number one platform for creatives" – just celebrated his second year of operation on 26 September. Freelance Cape Town is a new player in the grand scheme of things. So far, however, 1 400 freelancers have registered on his website, since the launch in 2014, to connect local businesses to local freelancers.
"We currently have 336 paying freelancers," says Vosloo. "Our registration database at this stage is about 2000 of which 1 400 would be freelancers and 600 'Freelance Finders' (clients)."
Vosloo says there's been 1 648 direct messages to freelancers from potential (paying) clients on the platform. He explains that this is not including the clients who choose to call the freelancers directly. And it's not just freelancers who like the flexibility of freelancing. More and more companies are also finding these alternative working arrangements particularly attractive. In a recent article on why South African companies are outsourcing, Tiny Modise, Westech sales manager, said the main reason South African companies turn to outsourcing is, "to cut down the work load and to save money." So we'd reckon, yes, freelancing is legit.
CLICK BELOW to read about three budgeting apps every freelancer needs.

Six Easy Steps to Working Out Your Hourly Freelance Rate

Even if you start out freelancing part-time, you'll most likely want to make it a permanent mode of operation eventually. Just try working from your bed one time, there's no going back. What you need to do is think of yourself as your own business. If you want to make a complete transition into freelance waters, you need to calculate a freelance rate to thrive, not just survive (or undercut your competitors). Most people calculate their freelance rate based on how many working days there are in the year. In the words of LL Cool J in Deep Blue Sea: "This is a mistake". You need to consider your lifestyle outside of work. Like a vacation. Unless you're a travel writer, taking a road trip across the country is not considered billable time. You're running the show here, kid (just an expression). how-to-work-out-your-hourly-freelance-rate-2
  1. Determine your target annual salary based on the industry average for your level of experience in that area. For example, are you junior? Senior? C-level? Let's say you're a copywriter starting at the bottom: R120 000.
  2. Make a list of the expenses an employer would subsidise. These include medical aid, internet, and tax obligations. Add up what that would cost you annually. These are your overheads. Let's say R40 000.
  3. Add that to your target annual salary and you have R160 000. This is your actual annual salary.
  4. Determine the number of billable hours per year. For example, the actual number of working hours in the year (2080). Now subtract three weeks annual leave (15 days), 10 days paid sick leave, and 12 days of public holiday (thank you Mr President). 2080 - 120 - 80 - 96 = 1 784 billable hours per annum.
  5. Determine how much time, per week, you'll be actively pursuing new business (pitches, cold calls, etc.). If it's 10 percent of your work week, multiply your billable hours by 0.90 (1 784 x 0.90 = 1 605,6).
  6. Divide your actual annual salary by your billable hours and you have your hourly rate. In this case, Mr Junior copywriter earns (R160 000/1605.6 = ... ) R99.651220727 per hour. Let's just call it an even R100.
And voila. You're ready to quote your first client.
Are  you freelancing? Why don't you try and drop your car insurance and save some money on monthly essentials!