How to Decide How Much to Charge for Your Freelance Work

When you begin your career as a freelancer, you will need to decide how much you will charge for your services. If you set your rates too high, you will price yourself out of the market. If your prices are too low, you may not earn enough to make a living. The other issue with low pricing is that it devalues your service. Potential customers may assume that your low price reflects the quality of your work. To get your pricing right, there are several factors to consider. Here are ten tips on how to price your freelancing work.

1. Research the Freelance Market

The first step to look at is what other freelancers are charging for the same service. You will find that rates vary a lot. So, look for people that have the same skills and experience as you do. You may need to charge less than the average price when you are starting out. This will help you build a reputation and get some reviews. Once you are more established in the market, you will be able to increase your prices.

2. Research Businesses Offering the Same Service

As well as other freelancers, you will also be competing with businesses and agencies. Looking at how much a business would charge will give you an idea of how much people are willing to pay for the service. Bear in mind, though, that businesses will be able to charge higher rates than a freelancer can. A business can offer more guarantees than a freelancer because they will have a team behind them. That enables them to offer guarantees of service that a freelancer can’t.

3. Calculate What You Need to Earn

The baseline for your freelance rate calculation will be how much net income you want to earn. This is the income that you want to see in your personal bank account at the end of every month. You will need to add taxation to this figure before you can calculate an hourly rate. There are also other factors to consider as explained below.

4. Budget for Overheads

Even if you will be working from home, you will have some overheads as a freelancer. These overheads may include equipment, telephone costs, and advertising. When you are working as a freelancer, you are running a business. As is the case with any business, you should complete an annual budget that includes all your costs.

5. Calculate Your Productive Hours

Your net earnings, plus taxes and overheads will give you your target gross income. Now, you need to work out how many hours you will be able to work a year. When calculating projected working hours, you will need to factor in several factors. These factors include things such as holidays, administration time, and marketing time. It’s not only a case of looking at how many hours a day you are able to devote to the business. It’s the productive fee-earning hours you will have available that is important. Your target rate is your gross annual income divided by your productive fee-earning hours.

6. Set Your Target Hourly Rate

Now you can set your target rate. But, when you are a freelancer, you must be flexible about your rates. The rate that you would like to earn should be your target rate as discussed above. If you have little work, you may need to take work on at a lower rate. If you have a full order book, you will be able to charge a higher rate.

7. Be Prepared to Negotiate

As soon as you start freelancing you will find that you must be willing to negotiate. People like to think they are getting a deal, so they will try to negotiate a lower price with you. It is advisable, then, to add a small uplift to your standard price to allow for this. Then, you will know that you have some room for offering a deal when you need to.

8. Don’t Undervalue Yourself

Be very wary about taking on very low paid work. You are likely to have people ask you to work for them at rates well below your standard rate. These people are likely to also offer you large volumes of work. This type of work may look appealing because it provides a steady income. But, if you accept low-paid work, you won’t have enough time available to accept higher paid work.

9. Be Realistic About Pricing

Whether you are setting a standard rate, or you are pricing an individual job, you must be realistic. Consider all the variables and unknowns and factor them into your price. For example, you will find that customers’ attitudes to freelancers vary. Some will work with you and appreciate your efforts. Others, though, will be very demanding and take up a disproportionate amount of your time. If you think that a customer may be very demanding, you should allow some extra time for that in your quotation.

10. Monitor Your Income Against Your Budget

It is important that you keep track of your income and expenditure when you are a freelancer. If you don’t, you may have a busy month, but have little to show for it. Track how much you earn from each job, and how much time each job takes. You will be able to compare your actual income per hour with your targets. Then, you can adjust your rates or the time you spend on each job to get your hourly earnings back on target.

To Sum Up…

When you set your freelance rates, it is important that you don’t undervalue your talent. It is also important that you don’t underestimate how long jobs will take. You don’t have to be the cheapest freelancer on the market. If you offer something that the competition does not, you can charge more for your services.  Calculating a standard hourly rate as described above will give a benchmark to work from. Then, if you provide an excellent service and get great reviews, you will be able to raise your prices.