The thing I wondered probably THE MOST before starting to work with clients was how much should my hourly price be. You know it’s not polite to talk about money, so it’s super-hard to find information about it. And I tried asking around and googling, but I got no good answers.
So to help you out when deciding on how much to charge, I’ll share with you the factors you need to consider. Including things, you might not even think about, a step-by-step guide to calculating your hourly price and why I actually prefer working with monthly charges instead of hourly charges.
Get your coffee and let’s get into it. This is going to be one long post.
My work must-haves: coffee (cup Sip It), my phone, and my planner.
How to calculate your hourly price as a social media manager?
First, there is no ONE answer to how much should a person charge as a social media manager. But how much should YOU charge depends on these key factors:
Are you just starting out or have been doing it for years? My hourly price is definitely not the highest in the market, because I have less than 3 years of experience. And I cannot compare this to someone working in the industry 10+ years. BUT at the same time, my fee is not the lowest because I have been working with different brands for the past year. And I also have a degree in advertising. The more experienced you get, the higher your price can be, dah.
How big is your skillset and how much value can you bring to the client? If you have different skills you can definitely ask for more. Like in addition to managing social media you can also write blog posts, do email marketing and paid ads. But don’t get too broad with your skills – in the end, you are doing everything averagely and nothing really well.
The location you are working in
It doesn’t matter where you live, but it does matter where your clients are. The prices in Estonia, Australia, and Indonesia are TOTALLY different. I work with clients in Estonia, so I have to keep in mind the average market fees there. And it’s no point for me to work for an Indonesian brand as they are not able to pay me the price I’d be happy with. (I don’t have a working visa here anyway but you get the point.)
Take all of these things into consideration and evaluate yourself truthfully. I always believe in starting smaller and working your way up.
But what you CANNOT do is just take the employed social media manager’s monthly salary and divide it with the monthly hours. Let’s get deeper into WHY.
Things to consider when calculating your fee as a social media manager
If you are starting out, you might not know this, but there are 3 ways to look at salaries.
- The net salary is the sum the employee actually gets.
- The gross salary is the sum of salary including the tax and insurance(s). Mostly people talk about this when they talk about salary.
- The employment cost is the total sum the employer has to pay.
To give you an example of the minimum wage in Estonia (in 2019):
- Net salary is: 540€
- The gross salary is: 570€
- The employment cost is: 763€
This means that when you start paying yourself, you need to take into account the employment cost NOT the net/gross salary. That’s why it’s not possible to take the average employed marketer’s monthly income and just divide it with monthly work hours.
#2 Your desk/office
When working for someone else you never have to worry about paying rent for an office or renting a desk at a co-working space. Even working at cafes can get pricy with the tens of coffees per month. You can decide to work at home (like I do right now), but your monthly income should still be enough to get a workspace if you feel you need one. Think of yourself as a business and the business is not really sustainable if you don’t even have the money to rent a space for working.
#3 Your means of work
Again, working for someone means that you’ll probably get a company’s computer and maybe even phone when you’re lucky. Working for yourself means you have to buy all these things yourself. My most expensive tools as a marketer are my laptop and my phone. You should divide your means of work prices with how much will they last.
Example: if your laptop costs 2000€ and you think you can use it for 4 years than per month the cost is: 42€.
You should also include the apps (like Later, Canva, etc) or programs (Photoshop, Illustrator) you are using. And the educational materials (books, courses) you are buying.
#4 Your 13th salary
This is something I didn’t think about AT ALL. If a regular working person gets 12 months of salary per year and has 1 month of vacay (in Estonia at least) then technically she/he gets 12 salaries for 11 months of work, right. If you are working with clients, you can charge them only for the work you do (no one is going to pay for your 4 week holiday), so you technically need to calculate your 13th pay into your monthly/hourly price.
#5 Your working hours
Yeah, the regular working hours are 40 hours per week and 160 hours per month (in Estonia), but it’s usually the time spent AT THE OFFICE for people, not doing the ACTUAL work. If you start tracking your time, you’ll see how much of your workday is actually the productive getting-things-done time. Spoiler alert! It’s not 8 hours per day. At least that’s how is it for me. When I exclude my lunches, coffee making, and little stretches, I get around 6-7 hours of work per day. If you are interested, take a look at my weekly schedule as a social media marketer.
#6 Non-billable working ours
So, to get things even more complicated, even if you manage to work 7 or 8 hours per day, not all the hours are billable meaning as an entrepreneur there are things you need to do that no one is going to pay you for. And that’s normal. Like invoices, accounting, offers for potential clients, potential client calls, managing your web page, working on your future plans and vision, hiring help, etc (the list is endless). So the actual work that IS billable per day is more like 5-6 hours. At least in my case.
#7 Not being fully-booked
Another thing you need to think about is managing yourself during the low season. If it’s not the best-case scenario and you are not fully-booked, you’ll not get the monthly income you have counted on. But you still need to eat. So there should be a small security fee in your hourly price as working with clients is not as certain as being employed.
PS! If you are struggling with getting clients, read my tips about it here.
So these are all the things you have to think about (I’m learning new things every season). This might seem overwhelming, but actually, if you sit down and add all the costs together, it is a one-time task to calculate how much should you charge.
Let’s do it now:
Step by step guide to really calculating your hourly price
Here is what I would do (and probably did when I started thinking about this):
- Think of what monthly net salary you would be happy at this point (taking into account the 3 main key factors discussed at the beginning).
- Calculate this into employment cost (the taxes in each country are different, but there are many online calculators for this. For Estonians I suggest this).
- Add all the additional costs we covered (desk, tools, apps, etc)
- Multiply this sum with 13 (12 + 1 salaries)
- Divide this sum by 12. This is the sum you want to be making in a month.
- Divide the new sum by your expected billable hours (I’m calculating with 120 per month). If you think you will not be fully booked, decrease the billable hours to 100 or so.
- There you go! You should have an understanding of how much your hourly price is.
To end this already way too long blog post, I want to share with you why I actually prefer working with monthly-based fix fees rather than by hourly fees. But I’ll totally agree that both have their strengths and weaknesses and I am flexible to do both.
Why I prefer monthly based fees over hourly based ones as a social media manager?
With most of my clients, I agree with the amount of work and the fee for it. In that case, there are no (unpleasant) surprises on both sides. Plus I have a better estimation of how big my income is every month.
To me, this feels like a steadier deal than working hourly-based. If all your clients are hourly-based the work amount might change a lot month by month. In that case, it will be hard to figure out how busy you are and if you are able to take on new clients or not. And of course, how big your average income is.
What I also like about monthly agreements is the fact the better and more productive I am, the higher my hourly price becomes…kind of.
Quicky – how I calculate the monthly fee is based on the amount of work I’ve agreed on with the client. As I’ve been doing marketing for some time now, I have quite a good understanding of how much every task takes time. So when I calculate the monthly fee, I just multiply the number of tasks x the time it takes x my hourly price.
So if I’m high on coffee and in a super-productive mood, I can smash a task faster than I have calculated the task to take time. Then this is a “win” for me. And if I’m super-slow and procrastinating, the task, which I’ve thought takes an hour, takes 2 hours, then “I lose” on my hourly price.
Some people see this as a downside, cause in real life things tend to take longer than expected and you run into errors. But the feeling of reward motivates me to get on with my to-do list and work faster. With the hourly price, I think I wouldn’t be that motivated to finish the task ASAP, cause in that case, I’d get less money. You get what I mean right…
Ok, this blog post got way too long, but I hope at least one of you got some valuable information from it. Thank you, Gertrud, for suggesting the topic to me! If you have any other ideas, what you’d like me to write about, let me know!
As always, sending good vibes from Bali