Freelancers occupy around 46.5% of the total global workforce.
As a freelancer, you can establish your rates. If you leverage your skills the right way, your earning potential is unlimited.
But pricing can be a concern for freelancers.
What makes setting rates for freelancers challenging?
Determining freelance rates requires a delicate balance between
- understanding your value,
- target clientele, and
- the broader competitive market.
Pricing your services too low leads to undervaluing yourself and missing out on potential income. On the other hand, if your rates are too high, you risk losing clients to other freelancers who charge less.
Fortunately, as a freelancer, you can adjust your rates as needed. You can start low, and work your way up, so there’s no need to overthink it.
This post draws on my experience of three years as a freelance writer. By the end, I hope you get some clarity on how to set rates and ensure you’re getting paid what you’re worth as a freelancer.
1. Recognize the value you bring
You need to anchor your price point on the value you provide to your clients to establish your price point.
But how do you value your knowledge, skills, and services?
- One way is to reflect on your experience, skill level, and past work portfolio. The more experience you have, the more you can charge for your time.
- The rarity and complexity of your skill set also play a role in your pricing strategy. For example, a freelance programmer proficient in three different coding languages can charge more than a programmer with the same level of proficiency in just one coding language.
It all comes down to how you pitch your services. If you can demonstrate high quality and return on investment to your clients, you can set a higher price for your services.
2. Key Considerations for Pricing Your Services
When determining your freelance rates, consider the following factors:
- What is the minimum amount you need to make to support your lifestyle?
- What is your income goal?
- How much do other freelancers charge for similar services?
- How much do you need to work to make that much money?
Let’s consider a $50,000 annual salary.
- Assuming a 40-hour workweek spread over five days and accounting for four weeks of vacation, sick leave, and other absences, you’d have 48 working weeks or 1920 working hours.
- Dividing the annual salary by the number of working hours gives you an idea of your hourly rate: $50,000 / 1920 hours = $26 per hour worked.
3. Effective Fee Negotiation Strategies with Clients
Negotiating rates with clients can be challenging, even if you have a general sense of your value. You might need help to assert your rates or explain why your services are worth the cost.
You could establish a “minimum acceptable rate” (MAR), the lowest rate you’re willing to accept for a project.
To calculate your MAR, consider the hours needed to complete the assignment and only take work that pays above this figure. This way, you can ensure you’re paying attention to your skills and time.
When quoting rates, add a cushion of 10% to 25% to your actual rates to account for negotiation. You can also ask the client what their budget is to get a better understanding of their expectations and market value.
To effectively negotiate, record all communication and offer the client multiple options with only a few favorable ones. It gives them a sense of control while allowing them to uphold your value.
4. Reassessing Your Rates Over Time
When deciding on your freelancer rate, adjust the ratio of billable to non-billable hours to meet your specific needs and processes.
Once you’ve calculated an hourly rate that covers your desired salary and expenses, compare it to the market rates. This way, you’ll know you’re charging a competitive rate for your services. Research and analyze what other freelancers charge for similar services to do this.
You can start by checking out your competitors’ rates on freelancing platforms like Upwork or job sites like Glassdoor. You can join Reddit communities and Facebook groups to explore industry-specific data on average freelance rates.
Setting Rates as a Freelancer: Final Words
As a freelancer, you can determine how much to charge for your time, attention, and expertise.
When deciding on your rates, there are multiple factors to consider, such as,
- calculating your ideal annual salary,
- reviewing your competitors’ rates, and
- assessing the value you bring to your clients.
Keep in mind that your rate isn’t set in stone. You can select a number you feel comfortable with and test it out. The market and potential clients will provide feedback, and you can adjust your rates based on your service’s perceived value, experience, and income goals. Modifying your rates as you progress in your freelance career is a part of the journey.
What strategies do you follow to price your rates as a freelancer? Leave your insights in the comments below.