Pricing your services is hard. Plus, just asking for money can be an uncomfortable challenge unto itself. But, with the right information and a little confidence, you can set freelance rates that are fair to your client and fatten your wallet.
I’m guessing your biggest question is…
How Much Money Should You Charge as a Freelancer?
Well, that depends. (Sorry — no cut and dry answers here!)
There are lots of factors to consider when you set your freelance rates. And each new client you work with and project you take on will vary. But, there is a process you can follow to determine what to charge.
First and foremost, your freelance rates have nothing to do with you as a person. Your pricing should be all about the value you provide. If you start conflating the worth of your skills with your self-worth, shove those thoughts right out of your brain!
Got it? Good. Now that your mind’s in the right place, you can objectively work through the rest of this process.
Should Freelancers Charge an Hourly Rate or per Project?
There’s a longstanding debate on whether freelancers should charge by the hour or per project. If you’re a writer or editor, you have the additional option of charging per word.
In reality, no method is perfect. You’ll have to decide what works best for your business. But, here are a few things to keep in mind:
If you charge by the hour and you’re super efficient, you can set yourself up for one bummer of a payday — no matter how good your work is. You actually get penalized for putting out a quality product quickly.
But, if you charge per project, and it takes longer to complete than you thought or the scope broadens, your original price might be too low. Note: If you find yourself doing more work than you previously agreed to, speak up. Your client should pay you for the additional task(s).
As a freelance writer, I usually price per project. Often, my rates involve a tiered structure. Depending on the client’s expectations, that could look like:
- Up to 1,000 words is $300
- 1,001-1,500 words is $400
- 1,500-2,000 words is $500
…and so on.
Charging per word does let you be more precise. (And, you’ll notice I earn more per word on the lower end of each word count range.) But it’s also messy. You’ll most likely end up billing for an odd amount. Plus, you’ll need to make sure you get paid for what you write — not what’s left over after the editing process.
What Goes into Freelance Pricing?
Now that you’ve decided which pricing method is right for you, you can use it to create a quote for a specific project. Note: You don’t have to stick with the same pricing method forever. You can change how you set your freelance rates as your business evolves or as new types of gigs present themselves.
When a current or prospective client approaches you with a new project, get as many details as possible before providing a quote. Important things to know include (but are NOT limited to):
- When the work needs to be complete (tight deadlines should be priced higher!)
- How large the project is (bigger project = bigger paycheck)
- Who else is involved (having to collaborate with or interview people adds complexity… so you should add dollars to your quote)
The bottom line? Don’t be afraid to ask the client lots of questions to understand the scope of the project before spitting out a price. The more you know upfront, the fairer your rate will be for both of you.
Pro Tip: Chat up other freelancers who provide similar services in similar industries. They can be invaluable as you set your freelance rates. Many of them will freely share how much they charge. So, talk to multiple people and look for trends. Then, decide how you fit in.
Factor in Your Freelance Expenses
Once you have a number in mind, take a look at your expenses.
Your business doesn’t run on hopes and dreams. It takes cold, hard cash to cover your website, computer, special software, office supplies, marketing, training and development, etc.
You also need to account for the dreaded T-word (taxes!). And, you should consider the cost of benefits, like your health insurance and saving for retirement.
You deserve to earn a sizeable profit after all of those things are paid for — so make sure that they’re factored into your freelance rates.
How to Calculate Your Freelance Rates
So, you understand the scope of the project, and you’ve factored in your business expenses. What’s left? Here are three more important things to consider:
1.) Size matters. A major corporation has a bigger budget and can afford to pay you more than a small mom and pop. Keep this in mind as you set your freelance rates.
2.) Experience has an impact. If you’ve just started freelancing, chances are, you’re going to make less than someone that’s been doing it for years. (Although there are always exceptions!)
3.) A price buffer is your friend. If you’re pricing per project, add a little bit to your quote. That way, if it does take longer to finish than you expected, you’re covered.
Name Your Price
It’s the moment you’ve been waiting for — actually talking about money! My two best pieces of advice for this conversation:
1.) Get your client to throw out the first number. That way, you know if they’re even in the same ballpark with you. It gives you a place to start from.
If their first number is laughably low, you can gracefully bow out of the situation — and find freelance clients with a better budget. But, if your client is ready to play ball…
2.) Negotiate! If they come in a little low, counter. If you talk numbers first, start a little higher than your target rate in case they want to haggle.
How to Increase Your Freelance Rates
So, you’ve successfully priced and completed a few gigs. Now what?
Increase your rates!
As you progress in your freelance career, you’ll get better at what you do. Your clients should pay for that expertise.
You can increase your rates at two key times:
- As you take on new clients
- After you’ve worked with a client for a while
I like to use both strategies. As I onboard new clients, I often ask for a little bit more than the starting rate of my last client. (Of course, the size of the new client, the scope of the work, and other factors may deter me.)
I also slightly raise my rates with some clients when we celebrate a full year of successfully working together (and at each anniversary thereafter). I don’t ask them — I advise them of what I’m doing.
Yes, a client could object to the increase. If they do, you have to decide whether or not to keep them.
Related Reading: As a Freelancer, Who’s the Boss?
Final Thoughts on Freelance Rates
There you have it – a crash course on setting your freelance rates.
Don’t worry — asking for money DOES get easier over time — promise!
Learn by listening? Check out this podcast for 10 tips on how to set your freelance rates.