Setting Your Rate: A Flexible Approach to Getting Paid What You’re Worth

Freelancing can sometimes feel like the Wild West, where we question, “What exactly are the rules?” I notice this, especially when it comes to rate setting.

As a contract/freelance software developer, one of the most challenging aspects is setting the right rate. Whether you’re working on an hourly basis, a monthly retainer, or determining a desired salary, getting that number right is kinda important to both your financial success and professional satisfaction.

But how do you make sure you charge what you’re worth, while also staying competitive in a fluctuating market? It’s a big question that I get a lot. Where to start tends to be a good first question.

Gun.io Profile Feature: Rate Recommendation Calculator

At Gun.io, we believe you should always be in charge of your rate and how it reflects your value as a software developer and the realities of the marketplace. What’s submitted on your rate card, or what you’re comfortable applying with is up to you. 

We have three primary ways to structure your rates: hourly, monthly retainers, and full-time employee salary expectations.To help you understand what those numbers could be for you, we’ve introduced a Rate Recommendation Calculator to Gun.io profiles. 

We love it for two main reasons:

1. Data-driven: It provides a market-driven estimate based on current trends in the freelance and contract workforce. This can be useful for setting a competitive rate and understanding your value in relation to the broader job market.
2. Time-saving: For those who aren’t sure where to start when it comes to setting their rates, it offers a quick, easy tool to estimate what they should be charging, based on data

These numbers can help ensure you’re pricing yourself competitively while also giving you an informed baseline for what you can expect for each engagement type. 

What to Consider When Setting Your Rate

1. Hourly Rates: Flexibility and Precision

Hourly rates are often the default pricing model for many contract software developers. The primary advantage here is the flexibility for both you and your client. Hourly contracts allow for clear tracking of work done and can be especially useful for short-term projects or engagements with unpredictable requirements.

How to set an hourly rate:

Your hourly rate should be based on several factors, including:

• Skill Level: Are you an entry-level developer, or do you bring years of specialized experience?
• Industry Demand: Some technologies are in higher demand than others, justifying a higher rate.

Tip: Use an hourly rate calculator (like the one in your developer account) to determine a baseline that is based on your experience and geographical location.

When Gun.io will recommend clients use hourly rates:

• Short-term projects, less than 6 months
• Projects with flexible requirements or scope
• When unsure of how long a project will take, think more task-oriented

2. Monthly Retainer Rates: Consistent Cash Flow and Stability

A monthly retainer is an agreement where the client pays a fixed amount every month for a set number of hours or ongoing work. You make yourself available to the client for the stated number of hours, and they agree to pay you – regardless of whether they utilize the total contracted hours or not (Gun.io clients usually do). This model is ideal for financial stability, as you’ll know exactly what you’re earning each month, regardless of possible fluctuations – high and low – in tickets each week.

How to set a monthly retainer:

To set an appropriate retainer rate, consider:

• Guaranteed Hours: How many hours are you committing to each month? We do part-time (80 hrs) and full-time (160 hrs) monthly rates. 
• Scope of Work: What will the client expect from you every month? A retainer should reflect the workload and complexity of the tasks.
• Client Needs: Are they looking for ongoing support, or is it a more intensive project?

Tip: Use your hourly rate as a starting point to calculate a fair monthly retainer. Multiply your hourly rate by the number of hours you expect to work.

When Gun.io will recommend clients use a monthly retainer:

• Ongoing projects with recurring requirements
• Clients who prefer predictability in their budgeting

3. Salary Expectations: Transitioning to Full-Time 

Transitioning to a full-time salaried role as a developer is an exciting step in one’s career. Many companies hire developers directly for full-time positions, often bypassing the contract phase. This provides long-term job stability, benefits, and opportunities for professional growth. However, it’s important to set realistic salary expectations when entering negotiations.

How to Set Salary Expectations

When determining your salary, consider factors like your experience, the job market, and the company’s compensation standards. Research industry salary trends for your specific role and location. Be honest about your skills, and understand that salary offers can vary depending on the organization’s budget and needs.

Consider the Following When Determining Your Contract Salary:

• Market Demand: The demand for developers with your skillset can heavily influence your salary. If your expertise aligns with high-demand technologies or industries, you may be able to get a higher rate.
• Location: Geographic location can significantly impact salary levels. Urban areas or tech hubs typically offer higher salaries to compensate for cost of living.
• Experience & Skills: Your level of experience and specialized skills should align with your expected compensation. Advanced experience and expertise in niche technologies typically mean a higher salary

When Gun.io will recommend clients hire someone full-time:

• Long-term, stable work: If a job requires long-term commitment and stability (like in management roles), a salaried position is often recommended
• Contract-to-hire: We look at this two ways
  • It might make sense for a client to initially onboard someone hourly or on a retainer to see if the work environment fits, and then move to bring them on as a full-time employee
  • As some long-term roles develop, role requirements and expectations might change (for the better!), and it makes sense for a client to bring a contract employee on full-time

We Want You Hired on Cool Projects and Paid Well

Gun.io is always looking to make rate-setting an easier, more transparent process. We’ll keep iterating and improving to ensure you are compensated fairly for your time and expertise. Our goal is to effectively communicate the value developers bring to the table, ensuring both sides of the equation understand and respect the value of knowledge and skill being exchanged. 

My words of advice: As you continue to work and expand your skillset, don’t undervalue yourself—but also remain open to negotiation, especially when working with long-term or high-value clients who may be looking for a deeper partnership (or if a project is just really freekin’ neat).

As your skills and experience expand, or as market dynamics shift, it’s important to adjust your rates to reflect that evolution. This means being proactive in evaluating your worth not just based on current demand but also based on the unique value you bring. Whether the market is on the rise or facing downward pressure, flexibility and adaptation are key.

Know that at Gun.io, too, we also work hard to negotiate on your behalf, ensuring that you, as a developer, are prioritized. While you have the final say in any decision about your rate, know that we are dedicated to advocating for what you deserve, keeping your best interests in mind throughout the process. Our aim is to foster long-term, mutually beneficial relationships where both you and your clients are aligned on expectations and value.

If you ever have questions about the rate listed on your profile or if a posted job description has you wondering about the rate offered, don’t hesitate to reach out to [email protected]. We’re here to help clarify and make sure you feel confident and supported while you’re on the hunt.