1. What were you making at your last job? Start by thinking about your last salary. Break that down into an hourly rate. You'll want to charge more than that, most likely, because you probably won't be freelancing 40 hours a week and you'll have many other expenses to pay above the simple calculation.
2. What kinds of expenses do you have? Your hourly rate won't just cover your time for designing a brochure, or whatever you're planning to do. It will also cover your business expenses. Think about the special software you might use, your office equipment, office space, business travel, and marketing.
3. What about personal expenses? Of course, you'll have to consider what it takes for you to live. You need to determine how much you need to make a week, a month, and a year, then use that as a factor when building out your hourly rate.
4. What are other freelancers charging? Do some Internet research to find out the going rate, and then decide where you fall in terms of experience. Some of the freelancing job boards, such as Elance.com, could give you a good idea as to what other freelancers are charging.
5. What are you comfortable charging? Often newbie freelancers aren't at ease charging what more established freelancers charge, so make sure you can confidently say your hourly rate without cringing or apologizing. You'll work up to higher rates as your comfort level allows, but make it a goal to charge just outside of that comfort zone (on the higher end). Clients are usually willing to pay much more for your expertise than you think.
6. What will the market bear? Sometimes you have to shoot in the dark when it comes to pricing. You'll quickly find out if you're charging too much or too little. If you bid on a project and get turned down, don't be afraid to ask why. If pricing was the factor, this is important market research. You could ask the client what rate they would expect to pay for your service, then decide if it's worth it to drop to that rate.
7. What are your other options? Many freelancers charge per project, and you can do this once you have a few projects under your belt. The key here is figuring out how long a project will take you, then charging accordingly. Another option is charging a flat retainer fee each month. This works well for predictable, ongoing work.
Sometimes a client would prefer you charge by project or retainer, simply because he'll have a better idea of what he'll get for his money. Charging an hourly rate can be daunting to a client, simply because he may have no idea how long a given project might take.
FreelanceSwitch.com has a calculator to guide you in the right direction for determining what you should charge.
Don't be afraid to play around with your hourly rate, but don't be too quick to lower it at a reluctant potential customer. You might charge less when you work with agencies or nonprofits, or even when you're bidding on a project with a smaller budget. But also experiment with charging more, and as you take on more clients at that higher rate, know that it's time to raise your rates across the board.
Lindsay Olson is a founding partner and public relations recruiter with Paradigm Staffing and Hoojobs.com, a niche job board for public relations, communications, and social media jobs. She blogs at LindsayOlson.com, where she discusses recruiting and job search issues.