How much to charge for mobile design in NYC?
February 19, 2020 10:00 AM   Subscribe

I've had full-time employment for so long that I'm out of the loop on freelance rates plus I've moved to NYC. a freelance Senior Product Designer should I charge an hourly rate commensurate with annual salary or is there a better strategy?

It's been a good while since I've been freelance and even when I was, it was in a smaller town with smaller-stakes projects. But having been a product designer for software for 12+ years, I don't want to short-change myself.

Currently I'm being offered a 3-month contract with a startup in Manhattan. A rate of about $65/hour works out to be what would be commensurate with an annual salary with 8-hour workdays. Since it's only 3 months, though, should I be charging more or less? The contract would involve some product research, wireframes, prototyping, visual design, and app design.

posted by deern the headlice to Technology (17 answers total)
You should be charging a lot more.

1) It's only 3 months
2) You're paying for all of your own benefits including health care, time off, and unemployment insurance.
3) You're paying for your own taxes.

I regularly hire contractors for software dev work - usually not designers, but generally at a senior level, and up and down the east coast. I have never seen a rate under $100 and generally I'd expect $150+. If you're actually good at all of those things, you're basically a badass unicorn and a full design team in a single person, which is amazing, and you can and should charge a premium because either they know that's an amazing deal to have all in one person, or they think "it's just design" and will be shitty to work with anyway because they don't know the value of your discipline.
posted by Tomorrowful at 10:26 AM on February 19, 2020 [10 favorites]

Sorry, too late to fix this with an edit - $150+ if they're part of an agency or other supporting company, or otherwise have really specialized/in-demand skills. For a more "normal" senior-level person ~$100-ish doesn't surprise me.

Long-term commitments can change this. I once got a great discount from of a wonderful contractor by committing to pay them for X hours over the next N months, structured as a retainer, rather than a simple hourly rate; they knew we'd pay them for that many hours no matter what, so they were able to unwind the typical uncertainty from the rate (plus having all that time locked in freed them up from looking for work as much.) That commitment was, IIRC, close to a year, not 3 months (and nowhere close to full time).
posted by Tomorrowful at 10:37 AM on February 19, 2020 [2 favorites]

Remember that a company has more expenses than just your salary for you, as a person, that is typically calculated as overhead. In my industry, our client billing rates are typically 2-3 times our hourly pay. Company overhead is not the same as your personal overhead, but you should definitely be including it.

Other than just benefits and taxes, there are practical expenses that you would expect any office to have -- if you're working remotely, what's the extra cost of utilities that you wouldn't have if you were at an office? What are you spending on coffee? Part of overhead typically covers business development expenses, so if you're working full time and can't look for contacts when this is done, how long will it take you to find more freelance work and how much money do you need to cover that gap? These are all the types of things that your rate needs to cover beyond your equivalent annual salary.
posted by DoubleLune at 10:44 AM on February 19, 2020 [1 favorite]

$65/hour is about what I pay for junior assistants to help me on my freelance gigs in a large market. At the very least you need to double that number. You have overhead, taxes, etc. what your W-2 job pays you is not remotely close to a freelancer's rate.

If your client is having multiple freelancers bid on the project (and they will, even if they already know they want to hire you), they're going to wonder why on earth you're so cheap and what that implies about your work (ie. you're inexperienced at quoting and delivering freelance jobs).
posted by bradbane at 10:48 AM on February 19, 2020 [3 favorites]

Another freelancer chiming in: at $100/hr you're putting yourself down; at $65/hr you're insulting yourself.
posted by anadem at 11:01 AM on February 19, 2020 [5 favorites]

There's a saying I've heard (seen) with freelancing: "If they don't flinch at your rate, you aren't charging enough." At the very least, study up on anchoring and the value of starting high.
posted by rhizome at 11:34 AM on February 19, 2020

As a consultant, you are doing all the work that your company would normally do, such as doing the books and finding new business. This means that when you're not doing actual work-work you're hustling for the business.

Consultant I know and consultants I've read tend to recommend a rule of thumb of an hourly rate of 3 times what you would make as an employee. Especially while you are building your business you are going to be doing fewer payed hours of work than you probably expect.

So, let's do some back of the envelope:
Median income for 2018 was $63k and was easy to google, so let's shoot for at least that.
There are 2000 hours of work in a work-year, assuming 2 weeks of vacation: 40 hrs/week * 50 weeks.
$63k / 2000 hours = $31.50 / hour
Remember, we're being conservative here and betting that 1/3 of our hours will be paid, so we'll need to charge $94.50 / hour to make that $63k.

Also, if you're highly skilled, like in product design, you would command a rate above the median, so probably take that into account.

If these numbers seem high, it may be because the labor being done to support the paid work of a company is sometimes invisible. The individuals in a company who are considered Talent are usually supporting and in turn supported by a couple of other people. When you're an independent contractor, you don't have any aides, secretaries, file clerks, sales people, accountants or custodians. You have to type your own letters and clean your own toilets.

My brief time as an independent contractor made me really appreciate all of the people in a company and gave me strong egalitarian tendencies.
posted by Horkus at 11:50 AM on February 19, 2020 [4 favorites]

Go with something like $175/ hr, then go down if appropriate/ necessary to something precise like $137.50/ hr. Sounds silly, but uneven numbers work better for giving quotes.

I do pricing for some large projects that include lot of professional services work (developers, UX designers, R&D, testers, etc.), and I always "round" to some seemingly specific number. Quote for $96,750 or $103,000 looks like a result of some deterministic process and thus is harder to question.
posted by zeikka at 12:10 PM on February 19, 2020

Thanks everyone, this is tremendously helpful, there are multiple "Best Answer" candidates.

FWIW, they adverstised on a job board as "$40-$80/hr" and it's an established Manhattan-based small startup with a few years experience so surely they know this is low?! And perhaps expect someone to come back with a much higher rate and then meeting in the middle...?
posted by deern the headlice at 12:15 PM on February 19, 2020

Another thing to keep in mind is you can have a difference between your quoted rate and the rate you charge a specific company that you want to work with. So I have my full rate that I charge corporate places, and then I offer a generous discount to smaller companies, usually in exchange for something else like limited ability to reuse something I make for them. But I always start negotiations with "x is my standard rate, but I am flexible" and pick a high number in my range.

This particular job may be aiming a bit below your experience. But as it's your first contract job it's reasonable to negotiate below what you would normally charge, but you should start high
posted by JZig at 12:23 PM on February 19, 2020 [1 favorite]

If they don't know it's low, that's a reason to charge them extra due to added risk, because their cluelessness will invariably be a source of problems down the line. That said, you can still ask for a real rate and negotiate. For instance, if they want to pay half-price, how about they make do with 20 hours a week, or half-time? You can tell them you're going to need the other 20 hours a week to make up for the charity you're giving them (don't use the word charity). I mean really, Manhattan at $40/hr?

There's always a knob to adjust in these situations. Not like I'm a master negotiator, but I've read these strategies in multiple places.

But I always start negotiations with "x is my standard rate, but I am flexible" and pick a high number in my range.

Also known as "bench" or "rack" rate if you want to use jargon to communicate that you mean business. Keep in mind that New Yorkers have a reputation for being hard-nosed!
posted by rhizome at 12:27 PM on February 19, 2020 [2 favorites]

"I mean really, Manhattan at $40/hr?"

No kidding. That's an employee's wage, not a consultant's rate.
posted by Horkus at 12:33 PM on February 19, 2020 [1 favorite]

FWIW, they adverstised on a job board as "$40-$80/hr" and it's an established Manhattan-based small startup with a few years experience so surely they know this is low?!

I would say in NYC an entry level freelance rate is about $50-60/hour. Like straight out of college, no experience, no work history - for jobs where the big responsibility would be getting coffee for the real talent. As everyone has pointed out, your billable hours are an optimistic 1/3rd of the time you will spend actually doing the work and dealing with the client.

Being a senior designer with more experience is certainly a good negotiating point. For instance, you get more done in an hour that someone with less experience, requiring less billable hours than someone who doesn't know what they're doing. Obviously if you are a freelancer, as you get better you wouldn't want to make less money for being more efficient.

Others have already said this but a tried and true tactic is, "My rate is $X but I am flexible depending on the specifics of the project." This is the point where you get them to put the project specifics in writing (in corporate speak, a "Statement of Work") and then use that to negotiate the rate.

If they can't budge on the rate (usually some variation of: "this is the budget we have approved, take it or leave it"), then you negotiate down the scope of the work or deliverables to match their budget. But it's basically impossible to do the reverse - once you've quoted them a rate, you're going to have an almost impossible time convincing them to go higher, even if they increase the scope of the project.
posted by bradbane at 12:52 PM on February 19, 2020 [2 favorites]

Just stopping by to say that startups notoriously underpay people, it's practically part of the culture, so that doesn't surprise me. Don't take that range seriously.
posted by mekily at 12:54 PM on February 19, 2020 [1 favorite]

Another point: If they are hiring a freelancer, that means they don't have someone in house with the skills or experience. So how on earth would they know how long the project will take, what's required, or what the rate should be? They don't, they're just throwing out a number to see who bites. Part of the non-billable hours of being a freelancer is determining the actual scope of the project, and then explaining the actual cost to the client.
posted by bradbane at 1:05 PM on February 19, 2020 [3 favorites]

Freelancing can be a pain the ass: invoicing and if you have to go through multiple people, like the agency uses someone to actually pay you, that means your boss has to sign off on it, then you need to send that sign off to someone else. It can be easy or hard depending on how much the recruiting/payroll company is. For example I had to “Bill” the internal company weekly but payroll would only accept twice a week. So effectively I had two invoices. I would not go below 85-90 for Manhattan unless there’s significant WFH.
posted by geoff. at 12:29 AM on February 20, 2020

FWIW, they adverstised on a job board as "$40-$80/hr" and it's an established Manhattan-based small startup with a few years experience so surely they know this is low?!

There is no particular reason to believe a company's posted rate is reasonable or fair.

They could be:

1) Incompetent
2) Inexperienced
3) Unrealistic
4) Strapped for cash and desperate
5) Just really cheap

These things are all not just possible but very, very common.
posted by Tomorrowful at 11:56 AM on February 20, 2020

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