Came across this post by Mary Mulvilhill entitled 'How much for a day's work?' via Damien Mulley's round up of today's fluffy links.

Mary presents 2 ways of working out your fees.

Method 1
1.3 x desired salary/n days
Multiply your desired salary by 1.3 (yes the 30% should cover your overheads) then divide that by the total number of days you want to work during the year perhaps 2 per week term time only.

E.g. 1.3 x 50k/80 days = €812.50 per day

Method 2
Set a target daily rate, and then calculate the number of days work needed to reach a target turnover. Mary's example is as follows:
If you plan to charge €200 per day then, apart from allowing yourself 20 days holidays in the year (bank holidays included!), you will need to be sure of getting work for literally every working day in order to hit a gross turnover of €47,000. And if you’re paying your own overheads, that translates into a net salary of €36,000.


To be honest I've a problem with both methods as they are focussed on what the freelancer wants and doesn't take other factors into consideration such as level of competition, market demand and its effect on pricing, comparisons between freelance and SME service costs etc. but it's an excellent starting point.
I think the real merit of this work is to use method 2 to demonstrate to prospective customers what actual equivalent annual salary arises from your daily freelance rate (if working at full capacity - we wish!). This might just help you make the case for your rate when people can directly compare it to their own monthly or annual salary.

Personally I use the opportunity cost method, which is the minimum I'm willing to accept for a project ranked against the other things I could be doing with my time i.e. is it worth it for me to put myself out to do x, y or z? That's of course when things are flying and I can afford to be fussy but as all freelancers out there know, there have been times that I've taken projects at sub-optimal rates for cash flow. Anyway, for me the most important thing is to do a job well and over deliver so there's less price sensitivity. I have clients who can ring me, brief me and be sure that a good job will be done without too much hand holding and they're invariably willing to pay more for that.