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I started doing freelancing. I got my first job to create a set of reports. The business team has provided me with the sample reports and also some sample codes. My job is to query the database and generate output as pdf using iText. There are around 25 such reports with different complexities.

I am not sure how much to charge them. Can some one please help me in this?

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closed as off topic by MichaelT, Glenn Nelson, Kilian Foth, Martijn Pieters, World Engineer Feb 21 '13 at 22:43

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Is there any way you can reopen this question? I'd love to see some more algorithms from other experienced freelancers. –  Damien Roche Dec 19 '10 at 8:02

5 Answers 5

up vote 18 down vote accepted

The formula that I usually follow:

Initial Rate = Your hourly rate * worst case estimate of number of hours you'd need to finish this project + Expenses

Expenses = Power Cost + Money transaction costs (wire, western union etc) if applicable + Any hardware or software that you needed to purchase for your work + Internet Connection Costs

Final Rate = (1 - 0.3 * Probability of repeat business) * Initial Rate

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I disagree with billing the cost of internet connection, unless it's hidden from the employer. If it was my office, I'd get the best possible connection, but for remote workers, I'd treat it as a basic equipment, just like I won't buy them an operating system either. –  pestaa Dec 19 '10 at 10:34
@pestaa The expenses part is what my expenses are, and what I'd use to determine my rates. The client only sees the final rate. –  Fanatic23 Dec 19 '10 at 12:24
Yea, that's what I thought. The formula is good, I like the <=30% discount the most. –  pestaa Dec 19 '10 at 13:49

price = desired hourly rate * (estimated number of hours to complete * 3) + expenses

Thats what I used to use, at least, when estimating projects.

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Why the inflation by 3? –  Gaurav Dec 19 '10 at 5:08
as this is my first job what do you think might be my desired hourly rates. –  rgksugan Dec 19 '10 at 5:13
@Gaurav Programmers are notoriously bad at estimating time. Triple your estimate seems to be a common expression. –  Keyo Dec 19 '10 at 5:26
@Sugan: In the US, it's common to take the typical annual salary in your area for a regular employee with your experience, and divide by 1000 to get an hourly contract rate. Effectively, you figure there are about 2000 hours in a normal work year to calculate the hourly rate for a salaried employee. Then you double that hourly rate to cover expenses that you have as an independent contractor which an employer would cover for an employee. –  Bob Murphy Dec 19 '10 at 5:51
@Keyo - and you've got to allow some extra slack for unclear specifications, feature creep, "can you just put rounded corners on the foobar widget", etc. –  Stephen C Dec 19 '10 at 6:58

A very different formula to those already posted, used with great success by some people, is

price = whatever you think the customer is willing to pay at most

Obviously, this formula contains a variable that is hard to determine, but I've seen cases where a customer was willing to pay €800 for a task that hardly takes an hour to complete. And similar differences on a larger scale. The task is very important for the customer, because it makes or saves him a lot of money, so he is willing to pay a lot, without considering how much it takes to do it.

So imagine you were the business team, and your really needed those reports a.s.a.p., how much would you be willing to pay instead of looking for someone to make it cheaper? Maybe they have a budget of USD10K for those reports, so why should you make it for USD2K?

You should do the other calculation, price=rate*expected hours*uncertainty factor+expenses, too; if this results in a higher price, you should reconsider doing the job at all.

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true, now tell us how to know what is the price the client is willing to pay(above our red zone where prices are not profitable). –  Display Name Dec 19 '10 at 11:01
I know. Sometimes I wish I could say: "10k..." ... "Ok, $5k" .. "No, I'm joking! My ACTUAL quote is $3000-3500". Problem is, I don't feel comfortable with what I would consider as 'ripping people off'. I'll do work but when I'm rewarded with $100/hour mark I don't ask for more even if I know the client will pay more. –  Damien Roche Dec 19 '10 at 11:28
@Zenph: +1...I wouldn't feel comfortable either. –  Hippo Dec 19 '10 at 12:29
bold: Good question; there is no "method" to know it; it's more a matter of experience, intuition, common sense and sheer luck. –  user281377 Dec 19 '10 at 14:28
@configurator: I've been in that position many times! Try not to assume too much. I don't know, it's a bit of grey area. Like ammoQ said above, if I already have a framework which would reduce my hours to 10 from 50, would I charge 10..probably not. But I wouldn't charge 50 either. –  Damien Roche Dec 20 '10 at 11:34

Something else to consider: How much depends on the accuracy of the reports? If you're producing them and they're used for strategic planning, bonus compensation or other vital decision making, the responsibility lies on you to produce flawless and reliable numbers.

Consider that you may not just be hired to run the actual DB query. You may be in charge of reviewing the integrity of the data at hand, if you know it or not. If the numbers fluctuate drastically all of a sudden, and it later turns out there was a reporting error somewhere upstream from where you ran your report, can you get away with simply saying 'well I ran the same report as always', or are you expected to do some additional research.

Time spend or the expertise you have isn't the only factor in pricing.

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price = (expenses + hourlyrate *time it would take to finish*4) * 10 for waking in you up in the middle of the night when the company printer is out of ink and your reports don't print

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I like the reality of the waking in the middle of the night bit.. –  Tominator Sep 20 '11 at 12:14

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