Investigate the Marketplace

It's not enough to calculate how much you'd like to earn per hour: You also need to determine whether this figure is realistic. This means that you'll have to go out into the world and find out what other ICs are charging for similar services -- and what your potential clients are willing to pay. There are many ways to gather this information.

• Contact a professional organization or trade association for your field. It may be able to give you good information on what other ICs are charging in your area.
• Ask other ICs what they charge. You can communicate pricing concerns with other ICs over the Internet.
• Talk to potential clients and customers -- for example, attend trade shows and business conventions.

You may discover that your ideal hourly rate is higher than what other ICs are charging in your area. However, if you're highly skilled and performing work of unusually high quality, don't be afraid to ask for more than other ICs with lesser skills charge. Lowballing your fees won't necessarily get you business. Many potential clients believe that they get what they pay for -- and are willing to pay more for quality.

One approach is to start out charging a fee that is at the lower end of the spectrum for ICs performing similar services, then gradually increase it until you start meeting price resistance. Over time, you should be able to find a payment method and fee structure that enable you to get enough work while adequately compensating you for your services.

Make a Written Fee Agreement

Once you decide what you will charge, make sure you enter into a written fee agreement with every client. (If you choose to charge a fixed fee for a project, multiply your estimated hours for a job by your chosen hourly rate.)

To learn more about pricing your work and other issues affecting ICs, get Working for Yourself: Law & Taxes for Independent Contractors, Freelancers & Consultants, by attorney Stephen Fishman (Nolo).