How much does it cost to start freelancing in instructional design?
Are you looking to make the leap as a freelance instructional designer? If so, you are in good company. The instructional design job market is red piping hot and there are so many wonderful opportunities out there for you. Before you go after that first gig, however, I recommend getting all of your affairs in order. There is a start up cost associated with doing business as a freelance instructional designer. I have freelanced since 2017 when I started my LLC.
In this post, I’m going to break down the costs of subscriptions, LLCs, and all the things you will need to get started as a freelancer in instructional design. Please note these are what I use, you don’t have to use all of the same tools or do things the same way that I do. Again the beauty of the world is that folks can do things differently. Also to help give you more information I am a sole proprietor living in the United States, specifically the state of Ohio. Some of this advice may not apply to folks outside of the United States so if you have any tips from a non-US perspective, please be kind enough to share them in the comments below. Without further ado, let’s do this!
Setting up the business
**Please note that this is an individual decision and the way I did it may not work for you**
According to the Internal Revenue Service (IRS), there are many ways you can approach setting up a business. “A Limited Liability Company (LLC) is a business structure allowed by state statute. Each state may use different regulations, you should check with your state if you are interested in starting a Limited Liability Company. Your form of business determines which income tax return form you have to file. The most common forms of business are the sole proprietorship, partnership, corporation, and S corporation. A Limited Liability Company (LLC) is a business structure allowed by state statute. Legal and tax considerations enter into selecting a business structure.”
For me, I set up my LLC as a single member limited liability as I knew that I would be doing it on the side to start. For now, this still works well for me.
So how do you set up a LLC?
The first thing I did was go to my state’s Secretary of State website. Kudos to Ohio because they make it super easy. I should also note that it's important to see if the desired name of your LLC is available. For general guidance, I recommend checking with your state's Secretary of State website. For an example, here is the one for Ohio.
You will then be asked to fill out some information such as name of the LLC, purpose of the LLC, and the agent who is most likely you. For Ohio when I made my LLC, it cost $99 to file. I filed and about a week later, I was told that that state of Ohio recognizes The Learning Camel.
Once you get recognized by the state, you can then apply for a federal tax ID. This way when you take freelance contracts, you can provide a tax ID # instead of your social security number so it can be counted as business income. I'm not an accountant (have I said it yet that this is just my experience?) so your experience and needs may be different. Once you have the tax ID #, you can open a business banking account and be eligible to pay taxes quarterly. Yay for money, right?
In addition to setting up a LLC, you need a website. It's the digital business card and allows you to showcase your instructional design skills. It should go without saying you need a portfolio on your website too :) This has a lot of variance and admittedly, I don't have The Learning Camel's website up anymore because I am not actively looking for freelance gigs as I have my hands more than full with my full-time role. For now, my personal website (cough cough where you are now) works. There are so many options for you setting up a website. I also think it's a smart move to purchase your LLCs name or your name domain. Here are some estimates of prices for you:
Domain purchase: $50 a year. You can purchase domains from a variety of places. This is a conservative estimate as you can often lock in a good rate for a few years. Sometimes you can purchase them from the webhosting site too.
Where should you host your website? Wherever works for you. Here are some options and prices
Webflow: $192 a year for light plan
Wix: $276 a year for a mid-level plan
Wordpress: $300 a year for business level and use plug-ins
Budget estimate for setting up the business: $300-$500
Equipment is also something that depends on your personal taste and may be something you are ready to rock with. For me, I wasn't so when I set up my LLC, had my tax ID and all the things I was ready to do some shopping. Here are some of the things I purchased:
A computer: Knowing that Articulate Storyline doesn't natively work on Mac, I went for a PC. I use an Alienware x17 gaming laptop. I bought it during a sale promotion and got it with a 512 GB SSD + 16 GB memory. I also purchased two Dell 20 inch monitors & a dock. Total cost with taxes: $2300
USB Headset: You can always do the Blue Yeti and headphones but the USB headset is 'ole reliable. I love the Plantronics Blackwire 3210 $35
Webcam: I use the Logitech C922 Camera and it's great! $100
Budget estimate for equipment: $1500-$2500
Here is where you can get really carried away but this is the magic :) Again, these are what I use and subscribe to so your needs may be different.
Articulate Storyline 360 personal subscription. The GOAT of eLearning authoring tools in my opinion. $999 a year
TechSmith Camtasia & SnagIt bundle. My go to for creating video. $274.99
Adobe Creative Cloud. Best investment for creating all things visual. I have the student rate via my Ohio State email address. $240 a year
Dropbox subscription because the cloud yo. $119 a year
Otter AI Subscription. This is my go-to to create SRT files for quick captions for videos $119 a year
Budget estimate for learning technologies: $1100-$1600
You need to keep your skills fresh and connect with other folks in the industry. My main way I do that is through the Training Learning and Development Community I am a member & it's the hardest working money I spend a year since I've gotten so much out of this org. Bless you, Luis Malbas. $75 a year
Also I recommend checking out local ATD chapters in your area to network and connect with other folks. The membership price will depend on your area and I will warn you not all local chapters are created equal. They are ran by a board of volunteers so your value and mileage may vary.
There are also a few books you need to have including:
Design for How People Learn, Julie Dirksen $30
Telling Aint Training, Harold Stolovich & Erica Keeps $35
The eLearning Designers Handbook, Tim Slade $42
Budget estimate for professional development: $500-1000 (padding for a conference)
So how much does it cost to start as a freelance instructional designer? My estimate is between $3000 and $5000.
What did I miss? I'm sure I missed some stuff. I look forward to hear about your set up, learning technologies, and costs.