One of the most common questions newbie freelancers have is: “how much should I charge?”
It’s a difficult thing to decide one before you even get into the minefield of finding clients and managing your business.
There’s no right or wrong figure but here are some key things that everyone should take into account when deciding on fees:
- Time taken to complete work
- Your expertise and experience
- Value to the customer e.g. more web traffic and higher conversion rates
- Budget of the client
- Your own enjoyment of the work
- How busy you are
- Competition with other freelancers
- Cost of living and doing business
To display rates or not
One thing you have to decide is whether to put your rates on your website or get potential clients to ask for a quote. There’s no right or wrong choice here, freelancers who do either can still achieve success.
The good side to displaying rates:
- Fewer time wasters. You only get enquires from people who are willing to pay your rate.
- Less wiggle room. Clients will usually be unhappy if you want to charge more for bigger projects.
How to compete
With more people going freelance and the internet at everyone’s fingertips, competition is harder than ever. You need to stand out and make a name for yourself. How can you compete?
Charge competitive rates
This is usually how new freelancers get into the market, by either doing some work for free or for low fees because they lack the experience to charge the same rates as people who’ve been doing this for years.
While this can work, it can also come back to bite you when your client chooses a new, cheaper freelancer over you later on. Low rates bring the value of everyone’s business down because there will always be clients only willing to pay the cheapest rates.
Getting into the habit of competing on price also makes it harder for you to push ahead into the higher fees because once you charge premium rates, you’ve lost your competitive edge. Instead try…
Price your services based on value to the client. Instead of looking at your work as a standalone project, look beyond to what the client wants from it and how it’s going to improve business at their end.
If your web design work is bringing in more sales through your client’s website, then you’ve produced something very valuable to the client and this should be reflected in your payment.
How to set your rates
The next question is how to choose a pricing model. Are you going to be charging per hour, day, project or something else entirely?
A lot of people instinctively choose hourly rates because they’re used to it from traditional, salaried work. While some people manage just fine with charging hourly rates, there are some downsides.
The main one is that the better you become at your job, the less time it’ll take you to do your work. This is great for the client because they spend less money and get the work quicker. However, that’s no good for you when trying to grow a business.
Ideally you want to be working fewer hours for more money, not less. So a lot of freelancers find that they end up outgrowing hourly rates.
Day rates will give you more room to breathe than hourly rates. If you complete the project earlier than expected, then at least you’ve got the rate of the whole day to fall back on to minimise the loss. However, you are still in the same position as with the hourly rates overall.
Another popular pricing method is to charge per project. This allows you to come up with a figure that takes multiple factors into consideration like time taken to complete the project, your expertise and experience and the overall value of the work to your client and their business.
This way you are free to charge a different fee for each project you do if you want. The more work you do and the more you play around with figures, the better you’ll get at quoting an appropriate amount. Once you’re comfortable that you can work in this way and get better at your work, you can then start to experiment with charging more.
Charging high rates
The chances are that at some point in your freelance career you’ll be undervaluing your services. A lot of freelancers are hesitant to charge high rates.
Impostor Syndrome plays a big part in this. However, in order to grow your business, you should learn to get comfortable with charging more.
Good reasons to increase your rate:
- You’re more experienced and getting better at your work
- You’re overworked but not making much
- You’re attracting clients with bigger budgets who can afford to pay more
- You’re struggling to pay the bills or save money
- You’ve had a lot of client interest in your work
- And finally: you just want to make more money. You’re running a business after all.
How do you price your services? Which method would you recommend for new freelancers? Please leave your thoughts or tips in the comments!