When it comes to pricing your services for projects such as web design or copywriting as a freelancer, there are three main pricing strategies for freelancers, alongside their pros and cons, that you should take into consideration before determining which one works best for you.
The three main pricing strategies for freelancers that you should know about are:
- Time-based pricing
- Project-based pricing
- Value-based pricing
Each one of these pricing models works best for different freelancers and different types of projects. If you’re just starting out as a freelancer and you’ve no idea how to charge for your work, hopefully, this guide on pricing your services will help.
Time-based pricing
This type of pricing strategy is arguably the most popular with new freelancers when they’re just getting started. It involves you charging your client for the work that you do on either an hourly basis (hourly rate) or your daily rate (e.g. for eight hours of work).
It’s a popular pricing structure for beginners as you don’t really need to figure out how much you’re “worth” right away, which can be pretty difficult to determine if you have little to no experience at first.
It’s a fairly simple concept in that if you work for one hour, you invoice your client for that one hour of work.
Pros
- A good way to set your own working hours.
- Ideal pricing method if the client doesn’t have any expectations on the length of time it will take to complete the project.
- You can earn more money, the more hours you work on a project.
Cons
- You only get paid for the number of hours you work, so in order to earn more money, you’ll need to work more hours which might not always be possible.
- It can be limiting on your other projects if all your hours are taken up by one project.
- You may be selling yourself short in terms of your earning potential as you don’t get a chance to gauge what your client might be willing to pay.
If you choose the time-based approach to charging for your services, you’ll need to work out your hourly rate in order to provide clients with an invoice for the number of hours you’ve worked and the work that you’ve actually completed.
You’ll need to work out all your monthly expenses including bills, food and transport costs, rental costs and any other expenses you have each month. You should then have the desired income figure in mind each month and add your expenses to that total while thinking about the amount that will be tax-deductible.
Your hourly fee will be calculated when you divide your desired monthly income by how many hours you’re willing to work each month.
You can use our freelancer rate calculator to determine what you should be charging for your freelance services.
If your hourly rate seems extortionately high and clients aren’t willing to pay that amount, then you might need to rethink how many hours you can realistically work a month and how much you want to earn in order to determine a more “realistic” hourly rate.
Another way to calculate your hourly rate is to see how much your industry competitors are charging for their services and try and determine whether you think that’s a reasonable amount that you could also charge based on your experience.
Project-based pricing
The project-based pricing strategy requires you to estimate how much time and effort is required for your client’s project and then provide a quote for the entire project based on your estimations.
This type of pricing strategy can be a good way to increase your earnings if you price a project at a certain amount but then perform better than you expected and complete it in less time than you thought, thus meaning you earn more money for your work.
On the contrary, however, project-based pricing requires a certain level of prior skill, knowledge and experience so that you can accurately estimate how much time and effort will go into a project in order to price it according to how much you want to earn.
Pros
- You can earn a lot of money if you complete the project in less time than you thought as you’ve charged the client a set price, so it’s not dependent on the number of hours you work.
- There’s more focus on the quality of the project, rather than the amount of time worked on it.
- You’ll be more incentivised to complete the project quicker to maximise your earning potential in less time.
- You can charge different rates on a project-by-project basis, meaning that you could charge one client double what you charged the previous client, for example.
Cons
- Your estimations need to be pretty accurate so that you don’t undersell yourself and spend more time on a project than you’d like to, meaning that you’re working more for less money.
- Project-based pricing usually involves a bigger upfront cost for clients, so some people might be reluctant to pay that much money upfront.
In order to calculate a fixed price for a project, you will essentially need to determine how much you think your work is worth and how much time and effort you’re willing to put into it.
You will need to consider the following points in order to calculate your ideal fixed price for a project:
Estimate how long the project will take
If you’ve worked on similar projects before, then you should be able to estimate the length of time it will take you to complete this one. However, if you’ve had very little experience working on a project of that scale, then it can be a little harder to estimate how long it will take you. Spend some time thinking about everything that you need to do for the project in order to get a rough estimate of how long it will take you.
Consider your client’s budget
This doesn’t mean to say that you actually need to know how much the client’s budget is, but if you know the client to be somewhat prestigious, then you might want to try your luck and charge a little bit more than what you’d actually happily settle for. It’s usually always better to try and charge more than what you’d ideally want, than less, as it means that there’s always wiggle room for price negotiations.
Think about the timeline of the project
You might have an idea in your head of how long you expect the project to take you to complete, but does your client need it done in half the time? If there’s a more pressing deadline for the work to be complete, consider upping your price in order to accommodate for all the extra hours you’ll have to work.
Consider how easy or hard the client is to work with
Clients who are more friendly, accommodating and who pay on time probably deserve a slightly discounted rate for the work that you complete as it’s a joy to work for them. However, if you come across a not-so-nice client who has ridiculously high expectations and is very demanding or someone who doesn’t pay on time, make sure you price your services at a value that is worth your time and effort.
Value-based pricing
Value-based pricing does exactly what it says on the tin and involves you pricing your services based on the value of your actual work, rather than your time or skills.
This type of pricing strategy may be used in events where the work that you’ll be completing is likely to bring in a high level of sales for the client. For example, if you create a website with a product page that is expected to return approximately £10,000 in sales within the first month of going live, it’s not unrealistic to charge a decent percentage of that potential income.
It’s likely that only highly reputable and established freelancers will be able to take advantage of this pricing structure as you’ll need to be able to provide evidence that you’re worth the industry-high charges.
The price at which you offer your freelance services could be the difference between you landing the job and being passed over for someone else. That’s why it’s so crucial that you come up with a pricing strategy early on, understand the factors that go into that strategy, and know what the freelancing market is like.
All of these pricing strategies for freelancers have their advantages, but can come with certain disadvantages, too. It’s up to you to decide which one is the best option for you and your freelance career based on your situation and experience. In the end, there really is no wrong way to price your services as a freelancer. Just choose one that works for you, and can help you reap the rewards of your hard work in the long run.
