It's very likely you're here because you've asked yourself at some point, "how do I work out my hourly rate?" "What should I even be charging?" "Is this amount too much/too little?" "I don't feel like I can charge this?"
The whole money side of content creation is, for the most part, an entirely new world for most creators, and trying to work out what to charge for a project can be daunting and confusing the first few times. And if I'm going to be totally honest, can continue to be something you struggle with further into your journey if you don't quite set yourself up right. So whether you're new to this whole invoicing situation or been doing it for a while, but you feel like you aren't quite charging what your worth...we're going to set you up for success right now.
The Most Important Thing
Before we get started, it's important to note that by the end of this the most important thing you will take away is the confidence and comfortability to charge the amount you feel your worth and becoming comfortable with continually reviewing and increasing your rates as you grow and develop. It's far more important understanding the why behind your costing and the value you are providing than me just saying "charge this amount".
We're going to be looking at plenty of real world examples and ways to work out your costs, but the mindset to be able to stand by your rates, item prices etc. and confidently relay them to the brand or client your working with is by far the most important thing.
It's also important to understand that at whatever stage of your creator journey you are on, if you are looking at charging people for your creations, you are essentially now setting up a business. Doesn't matter if it's even just you and one client, your mindset needs to be "I am a business / I run a business". This puts you in not only the right headspace to charge for your work, but also set you up with the right frame of mind to develop your costs over time, whether that's due to growth, skill value or demand. You might want to read You're Not A Creator. You're A Business to get the most out of what we are about to jump into here.
Getting Started: Your Hourly Rate
Working out an hourly rate is where all us creators start. It's the most basic and easiest element to use to immediately work out how much your video/photo/design piece/audio work or whatever it is you create will cost to make for a brand. I've found from my own experience and working with plenty of creatives, that generally a creator will fall into one of these three hourly rate ranges*:
Beginner (just starting out or need some extra cash): $30 - $40/hr
Part-Timer (creation is now a side hustle/your after work work): $50 - $60/hr
Professional (You are a full-time creator): $80 - $100/hr
*note: these and all mentioned amounts are in Australian Dollars (AUD).
So which one of these categories do you feel you currently fit into? You might be still thinking, "But Jake, how do I even know?" It might not be the easy answer you want for immediate results, but right now you need to go with your gut. Say out loud right now, "I'm a beginner, who charges about $30-$40/hr". If that doesn't quite feel right, do the same for the next category, and then the next. What a lot of us forget when working this side of things out is that we can change it. Yes, that's right. It's not set in stone the moment you pick one. If you get two paragraphs down and realise, "oh wait, actually I need to change my hourly rate!" - you can do so! It's that easy.
There is no right or wrong answer to placing yourself into one of these categories right now, as it's just a starting point and we're going to continue to tweak this as we go. So trust your gut and pick.
Your Hourly Rate and Hours Worked
Next, let's use the hourly rate range we just picked with some actual hours we might spend on a project - this will help zero in on a more defined hourly rate for yourself. You're either going to know how long it takes you to create something because you've kept an eye on the time whilst creating, or not, and have no idea. If it's the latter, then work out the comfortable amount of time it would take you to create/complete a stage of creation without feeling rushed, that you're 100% happy with and isn't dragging on from the client side. I'm going to use a video project example, as that's my bread and butter of work. Let's say we're creating a one minute video for a client, and it's going to take us 7 hours to complete that video to 100% satisfaction - 2 hours allocated to filming and 5 hours allocated to editing and revisions. So now...we maths:
Hourly Rate (Low/High) x Hours Worked
or, for example,
7 hours x $50 = $350 or 7 hours x $60 = $420
Which end of the hourly rate range would you be happy with receiving as payment as well as feel fair to charge? Because whichever one it is, it's probably the right hourly rate to start with for you. And if you feel it's still not quite right, you can either tweak the rate within the range a little (maybe you're a $55/hr or $38/hr), choose a new range category entirely and calculate again or you might even be looking at the next stage of charging your worth...ooo segway!
Getting Comfortable with Being Compensated Properly
Remember our most important thing? The process of deciding on an hourly rate and using it to charge for your time spent working on a project, is purely a 'getting started' mindset. You should only use this formula of 'Hourly Rate x Hours Worked' for your first few projects as you get comfortable with the concept of charging (and people paying you to create cool shit!). But why only the first few projects? In reality, when working out how to charge for a project, there's a few elements that make up the final total, not just our hourly rate and the hours spent working. Let's now introduce another into the mix, which is our expenses. Creating a project WILL involve you having to pay for things to complete the job, and not just some obvious elements like props or actors. Project expenses are things like travel costs, music licensing, software subscriptions, preset purchases and even time spent on communications aka emailing and phone calls too.
It's important for us to keep these expenses in mind and add them to our invoices as without doing so, in a nutshell, YOU are paying for part of the clients project. You've essentially agreed to "hey can you make us this and pay for some of it too" which just isn't how business is done. So make sure you are adding expenses to your invoice in order to be compensated properly for your work.
Charging For Expenses
So once you've become comfortable charging your chosen hourly rate for your time spent and that all feels good, the next step would be to add some of the further financial costs to your invoices - again, to be compensated for both the time you work AND for your expenses. Let's say our 7 hour project included some travel to the filming location, 2 hours of emails and phone calls for planning and the purchase of background music:
$60/hr x 7 hours + $50 fuel + $80 comms + $100 music = $650
You may also have some ongoing business costs that you pay for every month, like subscriptions to editing software, as well as home office expenses like electricity and internet. For me, I include an 'operational fee' on every project I do that blanketly covers part of my monthly business costs - generally about $100. You could also work out the percentage at which you use those expenses for work vs personal use - ie. what would be the ratio you'd use your internet at home for personal and work use? If you're just starting out it might only be about 10-20%, but if you're creating full-time there's a good chance it'll be 50% - 75%+, depending on your field. Use that percentage to work out the partial costing you use for work and divide it by the average number of projects you'd work on a month:
50% x $99 Monthly Internet Bill = $49.50 then $49.50 / 4 monthly projects = $12.38
Either a blanket fee or percentage specific is absolutely fine to use, just go with whichever fits your workflow best. Work out your general project expenses that will most likely occur for every project and determine the total you need to apply to every invoice. For example, every video needs music, therefore you are going to apply an expense charge for music on every project invoice; every film shoot you go to, you need to drive, therefore you are going to apply an expense charge for fuel on every project invoice. I'd suggest writing them all down and each of their totals. Use this as a guide for yourself as to what expenses you are charging, but put it as a total cost on your invoice. For the purpose of this example I'm going to stick with my method of a $100 operational fee, which now makes our total example invoice amount $750. It's ok to also keep some expenses separate from this operational fee. My fee mainly encompasses my on-going business expenses (ie. subscriptions/office bills), but doesn't include music licensing and communications as these tend to fluctuate in cost depending on the project.
A Cheeky Little Plug
If you do use music for any of your creative projects and you want to save some money, you should check out the little project I have streamtapes.com.au. StreamTapes is premium quality music for creators for absolutely free. It's copyright-free, DMCA safe and available for both direct download and streaming from Spotify & Apple Music.
Charge For Your Value and Growth
So we're now at a stage where you should be pretty comfortable charging clients using your hourly rate, plus charging your expenses and understanding why. I would recommend that at a minimum, this is how you should be charging for your content - you're being compensated for the time you're spending on creating and being reimbursed for any costs that arise for the project, as well as the costs to run your business. Everything is accounted for.
However, up until this point we've only been invoicing what is essentially an 'at cost' price - the exact amount it costs you the creator, to make that piece of content - time spent & money spent all paid back to you. What's wrong with that right? Well remember, you are a business, and part of being a business is to set yourself up in a way that's the most efficient and sustainable way to stay in business (or as I like to put it, stay alive) essentially. If we bumped our example invoice to a full-time hourly rate of $80/hr - minus the expenses, we would be getting $560 in our pockets. If our aim was to make about $75k a year, we would need to make about $7000/month pre-tax/super etc. Which means we would need to be doing about 13 of these $560 projects a month. For a one person show, that's just not sustainable every month...hello burnout!
So if you're goal is to be a full-time or even part-time creator working for yourself, then you will want to develop up to charging for your value and growth. And we can do so by utilising something like profit margins.
Profits Are What Help You Grow
Profit margins are what aid in growth. There's an obvious consumer mindset that profits are bad - of course, as a buyer we've all said "I can't believe the mark up on this product!" at some point right? But it is the aspect of charging that provides you with the money to grow and do things like buy/upgrade equipment, hire someone to assist, gear repairs and free up more time. So how do we not have to work on 13 projects a month, we add a profit margin.
A good starting point to get use to this is a profit margin of 30% (but for service based businesses like content creation, the average is 50-70%). I've even felt it daunting to charge that higher profit margin, so start with 30% and get comfortable with it. It's about building the right mindset first. So at this point, our example invoice might look something like this:
Example Video Invoice Breakdown from $80/hr Rate: Planning - 1 hours of communications - $80 - 2 hours of shot list creation/scripting - $160 Capture - 2 hours of capture - $160 - 1 hours of travel - $80 - $100 Operational cost (ie. fuel, equipment coverage etc.) Editing - 3 hours to edit x1 video - $240 - 2 hours of revisions (2 stages/ 1hr each) - $160 - $100 Operational cost (ie. electricity, internet, subscriptions etc). - $100 Music Licensing Total = $1180 Plus 30% profit margin = $354 Final Invoiced Total = $1534
With the above breakdown and the inclusion of a profit margin, we've now taken the need to do 13 projects a month to 5, which is a whole lot more sustainable don't you think? Growth is part of being a creator, and we should grow both in our creativity as well as via means like finances, as it gives us access to more opportunities to learn and exercise our skills. Profit margins help us financially grow and have more time to become better at what we do, which in turn, helps our clients get better and better content.
Key Takeaways
Everything we've talked about and worked through here is about becoming more and more comfortable with charging your clients and other businesses. It's about becoming confident with charging what you, your skills and way of working is worth. If you're just starting out, it is important to gradually build to the final stage of charging. As I've mentioned throughout this, it's about the mindset, more than it is about the numbers. So start from the initial steps, get comfortable, get confident and understand why. If you just jump straight to the last step because "ooo more money!", there is no amount of bullshitting you can do that won't make your clients (and potential clients) see that you don't really know what you're talking about when it comes to numbers and why OR you'll lack the confidence to back your pricing and be forever inclined to discount your work, which in the end only ever benefits the client and robs you of proper compensation.
Here are some final key points to keep in mind for charging your worth:
Mindset comes first. Embrace your current stage, whilst understanding how to move to the next one and why.
You always want to make sure you are setting YOURSELF up for success first. Make sure you are being compensated for your work properly first. If the invoice is out of budget for the client, then we shift the scope of work, not work the same for less money (ie. discounts). This will just result in burnout and hating what you do.
Set expectations early - with things like the number of deliverables (pieces of content) the client will be receiving/duration of content pieces/different versions or variants etc. and especially budget - you can word it like "What investment are you looking to make to create this?" or not even ask for a specific number "what budget range were you looking at working in?"
Keep track on how long it takes you to create a piece of content, how many pieces of content you can make from one capture, how long it takes to film/record etc. This will help you in the long run with negotiating better. If a project is out of budget for a client, you know how you can be flexible in the scope of work - "How about instead of doing 3 videos, we capture 1x 2min video and also create 5x 15sec videos from that too." Clients are looking for value - their basic instinct is to ask for "lots" before anything else, there is nothing wrong with showing them how they can still get great value that fits into their budget and looks after you too.
As you grow and become better, it will take less time for you to create each project as you are more efficient, more practiced, have a better workflow etc. So even if it starts taking you 2hrs to edit a 1 minute video to 100%, if 5hrs was your comfortable editing time, keep charging for 5hrs to edit a 1 minute video. This will help naturally increase your profit margin as well as work you up to a more 'value based pricing' stage (more on that later). At the end of the day, you shouldn't punish yourself financially for being better/quicker/smarter as you grow as a creator - you should be rewarded and compensated for that.
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