Worried about how to set your freelance rate? Pricing your services as a freelancer can really be daunting.
You want to avoid undercharging and burning yourself out, but you also do not wish to price your services too high and lose clients.
We get it, striking that balance is key to not only your financial success but also your long-term satisfaction in your freelance career.
If you are reading this, you will learn how to price your freelance services better and the pitfalls that come with it.
By knowing this, you can protect your time, position yourself for greater success, and raise your freelance rate in the freelance market.
1. Understand Your Value as a Freelancer
This is important. Before stating your price, learn how much value you can provide.
Reflect on your skill sets, knowledge, and experience that you bring to the table.
Take into account your work experience and specializations. For example, if you have 10 years of web design experience and a freelance portfolio full of completed and satisfied projects, you will probably charge more than others who have just started freelancing. This is called value-based pricing
Also, think about the client’s pain point you are solving for. How are you helping them save time, make more money, or grow their businesses?
The more impact you have, the more you can justify your charges. This helps determine your work value correctly and get the right clients.
2. Research the Freelance Marketplaces
Now that you know what your value is, research the average freelancer rates in your field.
Begin by seeing what your service is worth on freelance platforms like Upwork or Fiverr. You should be able to join online communities, ask other freelancers, or find industry reports that outline an average rate.
Remember that rates in freelance business can differ greatly depending on what you do and where you are located.
A freelance graphic designer in New York can charge more than a freelancer doing similar work in a smaller city. This is not about copying someone else’s rates but to get an idea of pricing strategies in the market.
3. Factor in Your Expenses
Your freelance hourly rate needs to include more than just the time you spend on a project.
As a freelancer, you have bills to pay and you need to earn for your monthly expenses such as:
For instance, if you want to develop the skill of video editing (as your freelance service), then you may be required to invest in video editor software, a high-spec computer, a portable monitor, and possibly a studio space for video shooting.
Calculate and list all of your actual and potential costs and factor these into your pricing to make a real profit.
4. Assess the Project Complexity
Not all freelance projects have been created equally.
If it is a straightforward project that only needs one or two revisions, you will spend less time and effort than on something complex with the research involved or new drafts to write or get your committee/stakeholders to collaborate on.
When pricing a project, it is important to determine the complexity of the project.
Ask yourself:
- How many steps does this entail?
- How many free revisions are offered?
- Would it require more research or resources?
This can be as short as a few hours for a 500-word blog post if you’re paid by the hour and/or up to several days, or even weeks depending on the scope of the project while being paid per piece.
Make sure that the complexity of work is factored into your rates and ask for deposits.
Reminder: Do not undercharge your value.
5. Consider the Client Type
Different clients have their own budgets, requirements, and expectations.
For example, a startup probably has less money to throw around than a corporation that’s been around for decades, and every non-profit is working with limited funds.
Different types of clients have access to different amounts of money, so the rates you should charge will reflect that competitiveness while ensuring that you never sell yourself short.
While a big company might have a bigger budget for your work, which would justify a higher rate, but they may also expect more detailed work and multiple revisions.
On the flip side, a small business could be price-sensitive but veer towards being easier to work with.
Here’s a tip: Discuss and get to know your client well as well as their budget and expectations. This will help determine your service strategy price.
Questions to consider:
- What’s your budget for this project?
- What are your key goals and priorities for this project?
- Have you worked with freelancers before? If so, how was that experience?
- How do you measure success for this project?
- What level of detail or involvement do you expect from me?
6. Choose a Pricing Model
When you know what your value as a freelancer is, the going rates in your market or niche, and the details of a specific project, you can finally decide on which pricing model to choose.
The most common pricing models for freelancers include:
- By the hour: Fee is determined by how many hours you had to spend working on a project.
- Fixed by project: You set a price for the whole project.
- Retainer: You can bill a flat monthly fee for continued service.
- Based on value: You charge for the value that your client gets from what you deliver.
Every pricing model has its upsides and downsides.
Hourly rates are good for small projects, but they may limit your income as you only have 24 hours a day.
On fixed-project pricing, although it is more flexible, the more accurate you must be in terms of predicting how much time it will take to do the work correctly.
Otherwise, retainers can provide you with consistent pay but can sometimes have you tied to the same company for a longer period.
Tip: Go for the pricing model that suits you best. Factor in your working style and what type of clients you want to work with in the long run.
7. Common mistakes you can avoid:
| What to avoid | Explanation | Solution |
| Pricing too low | Quoting low prices may initially attract clients, but it often leads to burnout and clients perceiving lower quality. | Set prices that reflect the value of your services. Understand that clients often associate higher prices with better quality. |
| Experience not taken into account | As your expertise increases, your hourly freelance rate should grow as well. Sticking with the same rates despite improvement undervalues your progress and skills. | Regularly reassess and raise your rates based on the value you bring to clients through improved services. |
| Ignoring scope creep | Scope creep happens when the project expands beyond the original terms without additional payment, leading to overwork for no extra compensation. | Clearly define the project scope and rates upfront, including any additional charges for extra work. Communicate limits from the start. |
| Not researching industry rates | Without knowing what others charge for similar work, you might underprice yourself and miss out on fair compensation. | Research industry standards and what peers are charging for similar jobs to ensure you set competitive, yet fair, rates. |
| Not budgeting for overhead costs | Freelancers often overlook expenses like software, taxes, and insurance, which can drastically cut into profit if not accounted for. | Factor in all overhead costs such as subscriptions, insurance, and taxes when setting your rates, ensuring they cover both personal and business expenses. |
Final Thoughts
Pricing your freelance work is never going to be easy.
But with detailed research, introspection, and some planning, you can begin charging a fair rate that also pays your bills.
The crucial thing is to continually revisit your prices and adapt them based on how much better your services or skill performances are getting at or the rate of demand for your skills dictated by the market.
Remember, you bring lots of value, whatever you’re charging for. The way to sidestep common pitfalls is by understanding your value, knowing the market, and setting your pricing properly from the very beginning.
How should you set your freelance rate?
You have to gauge your value, research the market and industry, factor in financials like expenses, and size up the workload of each project they tackle when setting rates. The pricing model can include hourly, project-based, or retainer pricing as a freelancer. Regularly reviewing the pricing model and adjusting to new market conditions is also crucial as it continuously changes and varies.
How to charge hourly rates?
If you do plan to charge by the hour, estimate how many hours it will take to complete a project and choose a rate that covers overhead costs and leaves room for revenue. Use time management tools such as Toggl or Harvest to track your hours accurately. Make sure clients know how you quote your hours and make certain to add extra time for revision if it adds up to work.
How much should freelancers charge?
This will vary greatly depending on your industry, location, and experience. You can benchmark what other professionals charge in the industry you want to work for with your skills and the kind of value you think you should give to set a price. In general, make sure that your rate will cover your costs, taxes, and savings as well and remember to leave some profit margin in there. As your skills and experience increase, do not hesitate to increase your rates.
