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Creating a Freelance Business Plan - Part 5 | Freelance Sprout | Find, Start, and Grow Your Dream Freelance Business
Read the six part series on creating a freelance business plan
 

Creating a Freelance Business Plan - Part 5

Date January 24, 2008


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Part five in a six part series on creating a freelance business plan.

Finances

I will start by charging clients $45 per hour. I base this rate on prevailing Web design rates plus a factor for taxes, insurance, and benefits that I will lose by leaving my employer. My calculations show that I should charge $55 per hour, but $45 per hour is the midpoint between the prevailing rate and my calculated rate. Once I establish a good reputation, I will increase my rates for new clients at $5.00 per hour increments until I’m able to balance clients with personal income.

To be competitive, I know that I will have to charge a project rate. During my startup, I will charge $400 for a small Web site. After I’ve developed my portfolio—and my skills—I will charge $600 per Web site.

If a client requires extensive database or other programming work, I will charge $1,000 minimum. I will find a dependable Web host that will allow me to resell their services. I will charge double the resold rate to host a Web site unless a client requires a database; in this case I will charge three times the resold price.

Hosting fees will compose 25 - 35 percent of my total monthly fees.
I have $5,000 in my savings account for start-up expenses. I am willing to use $3,000 to fund my business. Also, if I don’t reach my income goal by the third month of business, my savings will supplement my lagging income. If my saving account dips too low, I will supplement my income with part-time work or, if that isn’t feasible, I will expand my marketing efforts to new industries.

As an alternative to shutting down my Web design business, I will contact local temporary employment agencies to see if they have contract Web work available. If there is a match, it will help me bridge my income until I can get a steady supply of clients through my own business.

My two primary expenses will be for Web hosting and various communication services, including a cell phone, an extra phone line, and my Internet fees. My Web hosting bill will be paid each quarter. If my hosting company offers a substantial discount for paying a year in advance, I will take the offer. After the first quarter, I expect to have enough hosting clients to cover my business hosting costs. The hosting costs will grow in proportion to the number of hosting clients I gain. This will be a variable cost as my client base expands. All other communication bills—cell phone, land lines, and ISP—are fixed.

Startup Costs

ITEM                            PRICE RANGE
Laptop Computer        $1,000 - $4,000
Laser Printer                $200 - $2,000
Scanner                         $50 - $300
Digital Camera             $200 - $1,500
Cell Phone                     $0 - $200
Professional fees          $0 - $1,200
Insurance                     $0 - $1,000
Software                       $500 - $1,000
Printing (biz cards)     $45 - $100
Web host setup           $0 - $100
Office furniture           $50 - $300
Office supplies             $20 - $100
Licenses/permits       $20 - $100

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Related posts:

  1. Freelance Web Designer - Quick Start Guide Step 5
  2. Creating a Freelance Business Plan - Part 1
  3. Freelance Web Designer - Quick Start Guide Summary

One Response to “Creating a Freelance Business Plan - Part 5”

  1. Andy said:

    Two ideas to consider: (1) have your starting rate at $55/hr, but offer 20% off to any new project starting by May 1. That way, you give new clients an incentive to get on board in a hurry and you get to tell people you charge $55/hr (which I still think is too low by at least $20/hr), and you get to charge full rate for any follow-on work after the initial project completes. (2) if things get too quiet for too long, look into short-term full-time contracts with agencies that handle bodies for rent.

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