Are you asking yourself ‘how much should I charge as a freelancer?’. You are not alone. It is a difficult question to answer. The reason it is so difficult is because there are so many factors to consider.
Being a freelancer can be very rewarding but daunting at the same time. What should I set my hourly rate at? Should I charge more per hour than I am already? What if the client won’t pay the amount that I quoted? The questions can be endless. The good news is that we have some answers to help you properly work out what you should be charging as a freelancer.
To understand how much you can charge as a freelancer, you need to know your costs AND how much you have to make per hour (or per project) to meet them.
Once you have an in-depth understanding of your costs (which can also be called your personal survival budget), you will be able to determine the correct rate for your freelance services. The first step is to assess your expenses. What are your business costs? This includes your equipment and software, as well as operating expenses like rent or a co-working space, utilities and broadband. Depending what the nature of your business is, materials or tools might be additional costs.
Next, you need to factor in what it costs to run your personal life—your home mortgage or rent (including maintenance), car payments (if applicable), insurance, student loans, credit card debt if any and all other living expenses. Be sure to consider any savings goals you have for things like retirement or an emergency fund.
Finally, ask yourself how many hours per week you want to devote to work—and don’t forget about planning in time off! Work backwards: If I want to make $100k annually and want four weeks of vacation per year and I work 40 hours per week…
Take the time to find out what your prospective clients are willing to pay.
Once you’ve done some background research, it’s time to go directly to your prospective clients: ask them what they’re willing to pay for your services, and if they have any particular budgeting requirements.
There are several methods you can use here:
- Send out a survey. You can do this through an email or on your website. Make sure that the questions help get at their budget and expectations for pricing. You may also want to include some qualification questions in the survey—like whether they’re working with another freelancer, or whether they require a certain level of expertise from their freelancer.
- Conduct interviews over the phone, Skype, or in person (if possible). Phone calls are a little more personal than sending out surveys—which means that you might be able to ask tougher questions about their budgets and expectations for pricing—but less personal than interviews in person. Either way is fine! While you’re having these conversations with potential customers, listen carefully so you get a sense of how much weight different factors carry for your clients: For example, how important is experience compared to costs? Once you know what matters most to the people you want as clients, tailor your services accordingly.
Pay attention to your hourly rate when you’re figuring out how much you should charge as a freelancer.
If you’re not sure what to charge, one good place to start is your hourly rate. Knowing exactly what your hourly rate is, coupled with figuring out how much time a project will take will help you set a fair price for it.
For example, if you’re wondering how much to charge for your first freelance writing job, consider:
- How long will it take you to research and write the piece?
- How long will you spend revising the piece in response to editor feedback?
- If the client wants two similar pieces, how much of that revision work can you reuse? Can you reuse some of your background research too?
It’s important to understand the limitations of an hourly rate though. If your goal is to make $50k a year running a business, then it’s easy enough to calculate: divide by 2080 (the number of hours in the year) and get $24/hour. But not all clients pay equally well; many have limited budgets or are willing to pay more for certain types of projects. Charging people different rates based on their budget isn’t always feasible either; things get complicated fast when there are lots of factors at play like seniority and experience level.
Price your offerings in three tiers.
What steps should you take to price your offerings?
Think about the services and packages you intend to offer. Then, break those offerings down into three tiers. The first tier can be called basic, the second professional, and the third premium. Each tier should offer higher-quality service, more benefits, a better return on investment for your client, or some combination of all three. This will allow you to have a few different price points for clients with varying budgets and needs. Once you’ve thought through what each tier looks like in terms of benefits offered and quality of service provided, decide on how much you want to charge for each offering or package at each level.
Base quotes on well-defined expectations.
Before you quote a rate, make sure that both the client and you have a clear understanding of what you’re expected to deliver. The more clearly defined your expectations are, the better position you’ll be in to provide an accurate estimate.
- A good way to clarify expectations is to write down a list of the deliverables (e.g. logo design, copyediting) and bullet point any additional specifications (e.g. color palette).
- While it sounds obvious, before stating a price tag, make sure that all parties involved agree on what they’re getting out of this relationship—so there aren’t any surprises later on!
A good pricing strategy can help you win clients and reach your goals.
Your pricing strategy should be the cornerstone of your business. When done right, you’ll win more clients and reach your financial goals more comfortably.
Under-pricing yourself is a self-defeating practice that can discourage clients from taking you seriously.
Over-pricing yourself will cause prospective clients to move on to a competitor who offers similar work at a lower price.
When you don’t have a pricing strategy, potential customers may feel uneasy about spending money with you because they don’t know what to expect in terms of value for their money.
Conclusion: So how much should I charge as a freelancer?
At the end of the day, you can charge any price you want. It all comes down to an individual judgment call. And it’s a judgment that you need to make yourself. If you want to charge more than the going rate and think your clients will pay it, go right ahead. You’re under no obligation to use any specific rules, the truth is that freelance rates can vary wildly depending upon experience and speciality within any given industry.
Just make sure that you know what your costs are. There’s nothing worse than working hard and eventually getting paid to realise that you didn’t charge them enough and you are unable to cover your costs.
