Whether you’re doing a bit of freelance work on the side as you complete your studies or are fully self-employed, knowing how to price your services can be a headache.
Every full-time freelancer has had the experience of accepting lowly-paid work out of desperation or the belief that the more clients, the better. At the same time, you’ve also dealt with eager potential clients that later disappeared after finding someone cheaper.
Your friends in the same line might tell you they’re charging $x, but there are so many variables that the same pricing system may not work for you. Your friends might have more regular clients, outsource their work to others or offer greater value than you can. Here’s a guide to what you should charge.
Any freelancer will tell you that your rates will rise and fall depending on the client and the projects involved. But before you start doling out discounts to clients who promise you lots of work, you need to work out your bottom line—the minimum rate you will accept.
If you are working on a more or less full-time basis, you can simply add up all your expenses and then divide them by the number of hours you expect to work to get your minimum acceptable rate, ie. how much you need to earn per hour in order to cover all your monthly expenses. Of course, in an ideal scenario you’ll be earning more than this minimum rate.
On the other hand, if you’re just starting out as a freelancer or you have a day job that pays the bills, you are probably not working at full capacity so you might have no idea how many hours to use in your calculations.
At the start, you might need to take on a few cheap jobs for portfolio-building purposes, and if you’re still a noob and not yet sure of how long certain jobs take you, you might not be able to ascertain a minimum acceptable rate yet.
Unfortunately there’s no way around this problem. Hustle until you are in a position where you have some experience and bargaining power, and then decide on you minimum acceptable rate and stick with it.
Even if you have an hourly rate firmly fixed in your mind, trust me when I say that clients do not want to hear about it. It is best to not even mention an hourly rate. The only exception is if you are a tuition teacher or are otherwise going to be on your client’s premises for a set amount of time.
Besides, as you’ll soon find, it is very hard to correctly estimate how long a particular job will take you, even if you’ve taken on comparable projects before. To put things simply, some clients are more of a headache than others. I once had a client who engaged me to write a number of Facebook posts, only to discover later that they also wanted me to write them based on lengthy recordings that I had to spend hours listening to.
It’s a good idea to ask your clients for as much information as it will take to decide how to price your services. Do the math in your head based on how long it will take you and then quote them a lump sum.
To put it bluntly, if you’re offering more value to a client, you charge them more. Some might argue that this is price discrimination. But most successful freelancers do charge more when offering services that fewer people can offer or when they work for bigger companies.
For instance, there is a reason tuition teachers charge more to teach JC students than primary students. They’re offering more value and doing a job that fewer can do when they take on older students.
Let’s say you’re a copywriter. Even if it takes you the same amount of time, you would charge a large company like McDonald’s more than you would a small neighbourhood business. This is not just because McDonald’s would be able to pay more, but also because you would be helping them to make a lot more money. A simple slogan for McDonald’s might not take you weeks to think up, but the potential for McDonald’s to make a ton of money out of it is huge.
This is also why you should aim to work for bigger clients as you progress in your freelance career.
4) Find out what the competition is charging
While I wouldn’t recommend the “monkey see, monkey do” approach to pricing your services in the long run, unless you have some fantastic connections you can’t expect to operate competitively without knowing how other people are pricing their services. Unfortunately, many freelancers are unwilling to divulge how they come up with their rates, so a bit of sleuthing might be necessary on your part.
Starting a conversation on internet forums for freelancers in your field, checking websites like Elance where freelancers hawk their services and asking friends who have used similar services much they paid are some tactics you can use. The information is going to be constantly changing as your industry evolves, so it’s a good idea to get things down in writing so you can compare price changes over time.
See: Employee retention means more than a good salary