Pricing work, especially in freelancing, can make or break your craft, causing financial anxiety. Going too high or too low raises eyebrows, questions, and doubts. So, how do you land at a rate that fully compensates for your experience, skill, and time?
This piece will answer all your questions on freelancer pricing. We’ll start by looking into why landing at freelance prices can be a headache, then offer 5 pricing strategies. We’ll finish with some tips to help you.
By the end of this piece, you’ll be well-equipped to set the best freelance costs for your business.
Why is Pricing Freelance Rates So Difficult?
Setting freelance rates can be a headache for a few reasons:
One: Experience varies
In every craft, be it photography or content writing, different people are on varying levels. Some are beginners, others intermediate, and others are pros. And unlike traditional jobs that value years as experience, freelancing isn’t a black-and-white business.
A content writer in their beginner stages could create better content than a pro. However, because of the lack of years in the business, they have to lower their freelance costs. Due to this, one has to suffer the test of time to raise their freelance price.
Two: Project Uncertainties
Sometimes, pricing can vary depending on the project uncertainties. Some freelancers prepare for this; however, some events can cause delays.
For example, when the client’s tools are insufficient, data analysts or website developers must use alternative ones that take longer. Then, there are setbacks like data loss, someone falling ill, internet issues, or hardware failures — things out of your control!
Such events may prolong the project. Because of this, freelancer day rates may have to change. Unfortunately, some clients are unwilling to add the extra investment.
Three: Market Value
Market value in the freelancing world differs geographically. A virtual assistant in Africa doing the same tasks as one in the US is paid significantly less. This disparity is attributed to the differing economies and, in small ways, the time difference.
Freelance rates in the UK, the US, and elsewhere differ, making setting freelance rates harder.
Determining How Much to Charge
Despite the difficulty of determining freelancing pricing, there are ways to circumnavigate this. You do this by finding a strategy to help you decide how much to charge.
Here are a few questions you can answer to determine how much to charge:
What is my worth?
Your worth as a freelancer is your skills, experience, and qualifications. To gauge your worth, start by researching the freelance rates in your region. For example, if you’re a graphic designer, search for the freelance rate for a graphic designer in your area.
Don’t just stop at a simple search. Dig deeper, comparing your skills, experience level, and qualifications.
What is my desired income?
The essence of becoming a freelancer is the liberty to choose what to work on and how much to earn. So much so that when you finally know how much you want to earn per month or year, it helps you set the best freelancer pricing rates.
Don’t forget to factor operational costs into your selected rates — software subscriptions, rent, and equipment.
Can I offer packaged services?
Since freelancing is an unstructured industry, why not bundle your services into sizable chunks? For instance, a wedding freelance photographer can set their freelancer pricing based on the number of guests. They can also use location, such as outdoor or indoor shoots, as a prerequisite of the bundle.
5 Pricing Strategies to Explore:
The pricing models come after defining your value, income, and bundling. You use these strategies to help keep the cash flowing in.
The 5 pricing strategies any freelancer should consider are as follows.
- Per Day
This is the pricing model that charges clients a flat day fee. As long as you work that day, you get paid, regardless of the work done!
This freelancer day rate offers a predictable income stream and simplifies project cost estimations. However, there is a caveat for both the freelancer and the client. The freelancer may feel underpaid if the work is in excess. The client is dissatisfied if a freelancer does the job in a rush. A freelancer might also prolong the process to get an extra payday, costing the client.
- Per Hour
This freelancer pricing mode is usually the standard one. You track your time on a project and calibrate the total using your hourly rate. This model is the best for projects with variable scopes.
Yet again, a freelancer may prolong the hours for an extra buck. However, a client can set a fixed budget and a time limit for submission to cap this.
- Per Project or Milestone
Pricing work per project is when clients set a flat fee for the entire project. They can also break down the payment scheme into milestones and pay after each phase’s completion. This payment mode is ideal for long-term work engagements that require little or no supervision. It also assures and motivates you as a freelancer to keep going.
The downside:
There needs to be more flexibility. Due to a fixed budget per milestone or project, there is little to no room for adjustments for complex tasks.
- Per Value Added
Picture this:
A client has a business website with little traffic and wants to know why. The client will pay a freelancer who accomplishes this goal by giving them reasons and ways to increase traffic. A freelancing website SEO expert or website tester would match this job description.
They might suggest the use of specific keywords, links, or the use of high-quality content. The job ends there, nothing more! Anything else beyond the scope of the task they disregard or ask for extra payment.
Advertising your freelance price based on this requires high levels of expertise.
The disadvantage is that there is only compensation if the freelancer adds value. Also, such freelancers require a reliable track record of past success and referees to secure this job.
- Retainer
The final mode of the freelancer 5 pricing strategies is working on a retainer. Freelancers using this model set working hours weekly or monthly and seek compensation for their time. Working on a retainer is stable and helps you build long-term client relationships.
On the flip side, retainers are not suitable for short-term projects.
Additional Things to Consider When Pricing:
As aforementioned, the freelancing business is not a black-and-white trade. Therefore, freelance pricing won’t entirely rely on your rates. Beyond the five freelance pricing strategies, you must also consider the following:
The Client Budget
You might have a rate card stating your hourly or daily rates, but the client has a set budget; how do you approach this?
You may have to comply, especially if it is a lucrative opportunity. Nonetheless, remember to factor in your expertise and the value you add. If you must, calculate and see if the freelancer day rate meets your quotas.
Location
Location might be a minor factor if you are an expert in your industry. However, if you are starting, ensure you know your region’s freelance rates. Most clients will hire and pay you based on where you are from.
Be Open to Negotiations
Be ready for customers to negotiate your freelancer pricing. Sometimes, a client may desire to pay per milestone or project, while your rate card mentions hourly rates. They might also negotiate a discount with a promise for return work.
In this case, go with what suits your business. Draft contracts so that both parties uphold their end of the deal.
Payment Terms
Freelancers need to define payment terms to avoid misunderstandings after completing the task. So, to avoid this, clearly state your terms: do you want to be paid in full before or after the task? Do you want a percentage of the payment before and the rest after? Or do you want it in bits?
Most freelancer platforms offer the client security by holding the payments in escrow until the client is satisfied. If you are a freelancer facing payment issues, these platforms also provide legal aid to get fair compensation. They also have late fee policies to safeguard freelancers.
Freelance Work Tips
Before we close off this topic, here are a few freelance work tips to help you streamline payment.
- Consider packaging your services for different clients and audiences.
- Use contracts outlining your freelance pricing structure, payment terms, and channels. Ensure the payment channels have easy invoicing and payment tools, like Ruul. They should also be available to the client.
- Use software tools for time-tracking and project management for accurate billable hours counting.
- Review and adjust your freelance pricing rates as you grow in your craft. Consider the evolving market prices, your growing mastery, and your skill set.
Accomplish Freelance Work Pricing Right
Freelance has its fair share of downsides; don’t let your rates be one of them!
When you master freelance pricing strategies, you set yourself apart and join the winning team. It would be unfortunate to undersell yourself when you deserve so much more. Your skills and experience are valuable assets for which you should be paid.
So, pick a model or two, and start earning what you are worth!
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