Indirect costs, also known as overhead costs, are expenses that cannot be directly attributed to a specific project or client, but are necessary for a freelancer to run their business. Indirect costs are sometimes referred to as “operating expenses” and are typically ongoing expenses that are not tied to a specific project.
Examples of indirect costs for freelancers may include rent and utilities, marketing and advertising expenses, professional fees, insurance premiums, or software subscriptions.
Indirect costs can be more challenging to track than direct costs since they are not directly tied to specific projects or clients. However, understanding these expenses is essential to pricing services accurately and estimating project costs correctly. By tracking their indirect costs, freelancers can better understand their business’s overall profitability and make informed decisions about pricing, investment, and cost management strategies.
See also: Expenses