Hidden Costs of Freelancing You Need To Be Aware Of

Freelancing is more expensive than you think.

It’s super easy to underestimate how much our freelance businesses cost to run and maintain – but doing so is a really bad idea.

It leads you to undercharge clients and starts to create an unsustainable business.

I believe learning about the true costs of freelancing gives you a huge advantage – you start charging more for what you do, guilt-free!

Thinking about these costs can help you get over the mental blocks of giving an expensive quote to a client. Once you start thinking about all the actual real costs involved in running your business, you will realise you have to charge a certain amount to survive, never mind flourish.

So next time you receive an email from a potential client asking you to quote a project, don’t jump in to respond with a figure just yet. There are a few other things you should consider before deciding on your rate.

.

Table of contents:

The hidden costs of freelancing

As a freelancer, your fees should allow you to earn a comfortable living – and there’s absolutely no shame in that. Additionally, they should cover some of the following expenses as a minimum:

hidden costs of freelancing

Pensions

Some of these costs won’t apply to you, but most of them probably will.

Think about pensions for example. As a freelancer, your pay from a project doesn’t include any contributions from the employer, so it’s reasonable to add a little extra to cover this.

Remember, when a company hires someone, they are paying that person a little extra than it first appears, because they are also funding their pension.

Related: Freelancers, We Need to Talk About Pensions…

Holiday and sick pay

Holiday and sick pay is not really a thing in freelancing.

Most traditional jobs in the UK get at least 25 days worth of holiday a year, so you should factor this into your calculations as well. The same applies to sick pay.

There’s no reason why you shouldn’t get holidays and time off too, and your clients actually benefit from you taking the time off to refresh, because you can do better work then.

Equipment, Marketing & Admin costs

Let’s not forget about your marketing costs, the time you spend on admin work, chasing work, the taxes you have to pay, the bills you have to pay, and the costs of your office space – whether it’s a home office or co-working space. This is even more essential during a cost of living crisis, with energy bills rising through the roof.

In addition, your clients are benefiting from you having the subscription to the latest software, good equipment and overall conditions for work..

These are all things that your monthly earnings have to cover, so make sure you include a percentage of it when forming your prices.

Self-development and training

Last but not least, don’t forget that you are responsible for your own development and training. Nobody else is funding your training at this point, which again, is another saving that companies have when they hire you as a freelancer, rather than hiring an employee.

There are many more costs associated with being a freelancer too – so be sure to think about all of these before you decide that a quote is too high, or ‘nobody would pay that much’.

Remember you are a mini-business and you have operating costs. Your project rates should allow you to cover these and make a profit.


How to tell clients you are raising your rates
Three lessons on pricing and negotiations (free eBook included!)
How to price your freelance services right
Package up and sell more!


When you start to consider all these costs associated with being a freelancer, it’s much easier to then get a better idea of your true value and to start adding an extra into your quotes without feeling bad about it.

Charging too little is just unsustainable in the long term. And, as I mentioned above, you deserve to earn a proper living – there is no shame in making a profit.

This list of hidden freelancing costs is far from exhaustive, but you can already see that there are so many expenses associated with you being a freelancer that you probably don’t think about very often. It’s really easy to also forget about these costs when you are pricing your services – you just think of the time you are spending, but there is so much more to it than just that.

If you want to build a long-term freelancing business, you have to account for these hidden costs and not be ashamed of them.

Remember, you are a business, and you need to charge the right amount to cover all your expenses and make a living that makes it all worthwhile.

Until next time,

Maja

The Freelance Roadmap book has hit the digital shelves!

The Freelance Roadmap is a complete guide to building your freelance business and living life on your own terms.

This book will teach you how to develop a clear vision for your business, use storytelling that makes others want to work with you, develop a rock-solid freelance mindset, build the confidence to bring your ambitions to life and more!


Three lessons on pricing and negotiations (free eBook included!)
How to price your freelance services right
The Fall Of The British Pound: What It Means For UK Freelancers?
Don’t Compete On Pricing!
The Hidden Costs of Freelancing You Need to Cover With Your Pricing
FAQ: Freelance rates for UK-based freelancers

Leave a Reply

Your email address will not be published. Required fields are marked *

Let’s connect on social media!
,