Setting fees

A frequent problem for freelance technical authors is to decide how much to charge. Some popular methods of deciding how much to charge are as follows:

"As much as the market will accept" or "what your competitors charge". However, these methods can cause you to charge too little.
According to The Chartered Institute of Marketing, many consultants charge "1% of their most recent salaried role". However, the method does not help you to calculate how much to charge.
Base your fee on an employee's wage, and add a mark up for employer's costs such as National Insurance and administrative costs. However, this method does not include all the costs of a freelance business.

Christopher Juillet discusses how to set fees in The Meter is Running... But What's the Rate? Christopher's article contains the best formula for calculating fees that I know. The top-level view is:

daily billing rate=daily labour rate+daily overhead rate+daily profit

The article explains in detail how to calculate each of the values.

Whether you charge by the day or whether you charge a fee for a job, calculating your rate has the following benefits:

You will know whether your rate gives you sufficient profit
When a potential customer says that your rate is too high, you know that your rate is not too high, and you can reject the project.

Download an Excel spreadsheet (blank-consulting-rate-calculator.xls) that uses Christopher's formula.