Since COVID-19, the world has been tasked with finding alternative ways to earn a living. As a result, remote work options have seen a significant uptick in popularity. The freelance space, for example, expanded by 13% in 2020, the fastest rate since 2013, and experts predict that a large portion of the American workforce will be full-time freelancers by 2027.
Despite all this development, there is still a misconception that freelancers earn less than those with a typical 9-to-5 job. This is not the case; according to data, around 31% of freelancers make $75,000 or more per year, with freelancers on platforms such as Fiverr and Upwork earning between $10 and $250 per hour, depending on their level of expertise.
Having said that, we'll admit that a fraction of people in this industry are clueless about how to track their working hours and secure reasonable compensation for their services. To this end, it is important that they adopt an approach that enables them to count hours accurately worked while simultaneously managing their business. This Workee expert article explains the importance of calculating working hours, how to determine your rates, and useful tools that can get paid on time and simplify your work life even further.
Why do you need to calculate work hours?
Freelancers and online professionals need to calculate working time to:
Get clear insight into the time a project requires: counting work hours provides a freelancer with information about the time required for a different project, which can prove useful in reflecting reliability and efficiency to potential clients.
Track and manage expenses: with knowledge about the hours required by projects, professionals in need of hiring a freelancer have adequate knowledge, which allows them to make reasonable offers for their projects. Utilizing a tool such as Workee provides clients with an effective way to manage projects offered to freelancers.
Save time on non-billable hours: "Time is money" is a popular saying emphasizing the need to maximize available time. Calculating hours worked per day allows a freelancer to assign time to more important projects; therefore, tools capable of handling non-billable hours such as simple invoice creation are needed.
Be more disciplined: calculating work hours instills discipline in freelancers, providing relevant information on time management and providing a working environment devoid of procrastination and multitasking ( causes a fall in productivity by about 40%, researches show).
How to calculate work hours
As a freelancer, many factors (time factor, value factor) go into calculating working hours. Since you are your own employer, you need to prepare for everything: public holidays, breaks, sick leave, unproductive days, and other administrative tasks that include sourcing for new projects, marketing your services, managing finances, and so forth. All these tasks are essential parts of your job, so you need to find a way to include them when calculating your hourly rate. You can calculate total hours worked in two ways manually or automatically. To calculate your hours worked manually, you need a grasp of the following;
Your expenses from conducting business weekly.
Your billable hours excluding holidays, etc.
Your adjusted hourly rates.
Add up all business costs such as web hosting, internet, project management tools, supplies, insurance, taxes, etc.
Cost of conducting business
Multiply your profit margin by your freelance expense and add the result to your freelance expense.
Calculate billable Hours
Determine your number of billable hours and remember to allow a percentage for non-billable activities.
Calculate your adjusted hourly rate
Divide your cost of conducting business by your actual billable hours. Here's a quick formula: Adjusted annual salary/ Billable hours per year
You can always make adjustments according to your hourly, weekly, and yearly rates.
To calculate your hours worked automatically, you can use a freelance hourly rate calculator that calculates billable hours by utilizing annual income, billable hours per week, and non-billable hours to calculate your rates.
Other important things to consider to add value to your business
Asides from determining your hourly and weekly rates, you're still tasked with sending invoices to customers, following up on late payments, and promoting your services to keep a consistent stream of money. While all of these activities fall under the category of non-billable hours, they are all vital aspects of any freelancing business. It would be best if you utilized a tool capable of managing all of this. Workee is an all-in-one platform that includes invoicing and payment features and can easily do all these things. You can send your invoice and receive payments with just a few clicks. Additionally, Workee offers tools to aid you in building a brand and creating a unique personality. From the convenience of a single platform, you can establish and manage your website, book and schedule meetings, handle taxes, and much more. Together, these features guarantee that you stand out in your field and that your entire workflow is structured.