Ive had the same dilemma before and heres how I worked it out.
Basically, I worked backwards and its not really rocket science.
I figured out how much I wanted to earn each year this was minus all the expenses, the essential items, the cost of running by business and stripped it back to a raw figure.
When I had this figure I then had to determine how many hours per day or per week in total I wanted to work including the days off I would need to ensure I had the right balance in my life. From there it was simple, based on the number of hours I was able to calculate an hourly rate.
There was a process of updating this to suit what I felt was fair, but this was the process. I didnt ask around, I figured out what was fair, what i would be prepared to pay and this was the rate.
There are plenty of apps that can help you with this.
Here is a more detailed breakdown from the Motiv App:
- You enter the number of days per week you want to work on average
- The number of hours you want to work on average per day
- The percentage of these hours you want to be billable
- The holidays you want to take each year (in days)
- The personal days you want to take each year (in days)
- Days off for religious holidays (in days)
- About you want to save for superannuation or retirement
- Amount you want to save each year in profit
Personal expenses (monthly)
- Office rent (monthly)
- Travel (monthly)
- Software and subscriptions (monthly)
- Computers, furniture and equipment (monthly)
- Office supplies
- Advertising / promotion
- Anything else worth noting
From here you can usually calculate your hourly rate.
Of course, if youre doing freelance its going to be harder however if youre starting out this might be able to help you determine your rate a little better rather than getting setting it and hoping its the right rate.