Are you skilled in data analytics? Ever dreamt of being your own boss? If so, becoming a freelance data analyst could be the perfect career choice for you!
As more and more companies recognize the importance of making data-driven business decisions, the demand for those who can interpret those data sets continues to increase. And with the COVID-19 pandemic influencing remote work patterns, hiring remote workers and freelancers on a contractual basis is becoming more common than ever before.
A Freelance Data Analyst: someone who conducts data analysis in order to improve business decision-making, on a freelance or contractual basis.
The biggest challenge so many people face when they just start out as a freelance data analyst (or any other sort of data freelancer for that matter!) is figuring out what and how they’ll charge.
I completely understand the struggle. While I’ve now scaled Data-Mania into a full-scale training and advising company that supports data professionals in becoming better data leaders and entrepreneurs (we’ve trained over 1 million data professionals and counting!), I too started off as a solopreneur selling freelance data services.
What I can let you know is this – it is of vital importance that you get your pricing right from the start. It’s always harder to backtrack once you’ve set your rates too low, so read on to know how you can set yourself up for success selling at premium rates from the beginning – and start charging $100 or more per hour.
👆 Before we continue, an important note: while I will be using the term ‘freelance data analyst’, these strategies can help ALL data services providers. Perhaps you don’t call yourself a data analyst, but instead provide services as a data scientist, data visualization expert, or machine learning engineer. While your rate will vary depending on your title, you can still use these tips to start increasing your rates and making bank! 💰
How To Determine Your Rate as a Freelance Data Analyst
Before we get into the nitty-gritty of determining your freelance data analyst hourly rate, I first want to let you know that we are going to be abandoning the hourly rate model (there are multiple reasons for this that I will get into). So while we will be determining your hourly rate, it will be for the purposes of putting together a package price later on.
The Golden Rule for Figuring out Your Hourly Rate
If you are just starting out offering freelance data services, a simple, golden rule I like to tell my clients to use is to make their hourly freelance rate DOUBLE their hourly employment rate.
For example, if you make $50 an hour as a data analyst at your corporate job, you’ll want to be charging at least $100 as a freelance data analyst.
This is because as a freelancer, you don’t get all the same perks as when you work a job, and you have to pay out of pocket for a ton of expenses.
You’ll have operating costs such as tech and marketing, you don’t get any paid holidays or time off, and don’t forget that you’re responsible for your own health insurance as well as saving for retirement.
Trust me…all that adds up quick!
And companies expect freelancers to charge a higher rate…because they don’t come with the same overhead employees do. At many companies, benefits can account for up to 40% of an employees’ base salary. So many businesses actually save money when working with freelancers!
This is why you shouldn’t be afraid to double your corporate hourly rate. I know you’re a total boss…now it’s time to start charging like one 😉
How much should I be charging as a freelance data analyst?
If you are in the United States or Europe, you have a STEM degree, and you’ve been working in the data space for a few years, your base rate should be a minimum of $100 an hour.
If you are in a developing country, and you were educated there, because of the economics at play, things are a little different. But honestly, if you’re a badass and you know how to market yourself properly, it doesn’t really matter so much and you can still charge $100+ an hour.
Important note 👉 if you are a freelance data scientist in a Western country, you need to be charging at least $150/hour.
Building Your Brand is Key
For example, my husband is Russian – he came from Russia, he doesn’t have a green card or anything like that, but he’s managed to secure a job with a US company making six figures – where he’s able to work remotely from Thailand. Although he’s from Russia where the economy is different, he was able to market himself in a way that makes his nationality totally irrelevant.
We could also take the case of my Phillipino social media VA. With the rate I pay her, she’s currently earning three to four times the national average for others doing the same sort of work in the Philippines. But because she’s learned to position herself as an expert, she’s able to charge more than people in her local economy and secure those premium rates.
She’s built her brand to the point where there’s a high demand for her services, due to her professionalism and the incredible results she achieves for her clients. So even if I decide I didn’t want to pay her price, she’d have other clients lining up to do so. Now that is how you can become a powerful freelancer, no matter where you’re from!
Hourly Rates vs. Packaging Services as a Freelance Data Analyst
Once you’ve determined how much you should be earning per hour, let’s discuss why you should actually be packaging up your data services.
First things first: it’s time to STOP charging by the hour 🛑
We’re going to throw that pricing model in the trash, right now 🗑️
When you charge by the hour, you:
- Turn your services into a commodity rather than positioning them as high-value
- Put yourself in a position where your client can try and nickel and dime you based on how long something took you
- PUNISH yourself by being a badass, efficient worker – the quicker you complete a task, the LESS you get paid (and how is that fair?!)
As data freelancers and entrepreneurs – we are NOT employees. We are not paid to sit around, clock in, and put in time at a job. We are paid for the VALUE we bring an organization.
I want you to try and get out of this employee-mindset type of thinking and instead start creating packages and selling those based on their value.
High-end clients literally do not care what your hourly rate is. They care about the value that you deliver for their business.
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How to Create a Package Rate as a Freelance Data Analyst
In order to create your package rate, I would like you to think about the service you are offering and try to estimate how much value it creates for the organization that wants to hire you. Really think about the numbers. You can strategize what kind of revenue it will bring in, how much money it will SAVE the organization, and how much time it will save their internal team.
Come up with an estimate and put that number in the back of your head.
Then, you’ll want to go ahead and craft a proposal. Remember – this is outlining your service, your deliverables – not how many hours it will take you or anything to do with an hourly rate.
Now, if you’re brand new in business and don’t feel comfortable charging based on value, or you lack awareness of how much value your work is creating from a revenue standpoint, there is another option.
I still want you to charge in packages and not hours (have you figured out I’m not a fan of hourly rates yet 😂), but what you can do is estimate how much time something will take you and multiply that by your hourly rate to figure out your package price.
Let’s say you wanted to charge an hourly rate of $100 and you estimated that something would take you six hours, you’d want to charge $600. It’s also always a good idea to bake in a little wiggle room for contingencies and client communications, as things always tend to take longer than we think. So you can tack on an extra 20% to whatever number you come up with!
I remember back in the day I did a project where I got paid $300-$400/hour for market research. It was for a large company, and they were thrilled about it! They didn’t know my rate of course – they simply asked how much the deliverable would cost. And because I knew I could use an application to generate the insights they needed and would take me about 5-6 hours, I created a quote for them based on that estimate – and it actually came out to be a lot less than they were expecting to pay. It was a total win-win for both me and the company because they came in under-budget yet I still made $300-$400/hour because I’d figured out a way to get them their results efficiently.
This is exactly what I want you to start doing – it’s time to ditch the hourly rate model and start selling a package based on how much value it creates for your clients. It’ll be SO much easier to start earning $100 an hour this way (or even a WHOLE lot more).
Lastly, you’ll want to make sure that you’re continuously striving to create an outstanding brand around your around the services you deliver or around your offer. When you are the go-to thought leader in your industry or niche, it’s easy to stand out from the crowd, and you’ll never have to feel like you need to compete based on price.
Another key to making more money in your freelance data business is standout processes and tools that improve efficiency. I’ve created The Ultimate Toolkit for Data Entrepreneurs to help you discover the best free and low-cost tools that will help you set your data business up for success!
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