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For many freelancers, working out what to charge clients can be a massive pain. It’s a total minefield, not made any easier by the fact that talking about money isn’t something that always comes easily.
Knowing how to set your freelance rates is tough. Over-price yourself and you risk the client turning you down. But going too low can not only mean working for next to nothing – clients may actually wonder if you’re experienced enough to do the job.
It’s all a bit of a balancing act. Putting a price tag on your own freelance skills and competence is something that beginning freelancers and even the most seasoned freelancers can get wrong. How are you supposed to know how much your skills are worth in the marketplace, and communicate this to the world?
We’ve put together a few practical tips to help.
Understand the difference between freelance and full-time income
When starting out on the rocky road to freelancing success, it’s easy to assume you’ll earn about the same amount as someone doing your job full time for an employer. Alas, that’s not usually the case.
The fact is that yes, sometimes you will earn as much as you would have done as a full-time employee. Sometimes it’s much more, but in a bad month you might be lucky to scrape by on far less.
It’s worth keeping in mind that clients paying employees have other costs in addition to their basic salary. For example, paying employees also means employer’s National Insurance contributions, pension contributions, annual leave, sick pay, and all sorts of other things.
Keep this in mind when you’re ready to step in and provide a service that a freelance client needs – they might be happy to pay you a little more for ad hoc work, than they would for the responsibility of employing someone.
After all, your client has chosen you for your specific skills. They may not have those skills in-house, or other staff may be too busy. You’re ready and waiting to fill the void, and many clients will be willing to pay a premium for top quality work.
Ask yourself how much effort is needed
Before you eagerly pull your freelance rates out of the air, make sure you’re really clear what the job entails and how long it will take. We’re not just talking actually doing the work either – consider the add-ons too.
Things like client phone calls and progress checks, consulting work, meetings (either in person or via Zoom), to name just a few. You may also need to think about any equipment you’ll need to buy and how to source it.
These things all take time, and as in any business, time is money for freelancers. By forgetting to factor these costs into your rate, you may find the project wasn’t worth it after all. Better to discover this before you start the work, not half way through.
Take a look at your competitors
There are so many different types of freelancing work. From copywriting and web design to gardening and photography, it’s crucial to understand what other people are charging for the same work you plan to offer. If you know anyone working in the same field, ask them if they’d be willing to discuss their charges with you, and get inspiration from other websites run by freelancers.
Compare your experience, portfolio and skills to see how the land lies. This will not only give you a better idea of what to charge, but will also make sure your fees align with industry rates. That way, clients are more likely to agree.
Work out a realistic hourly freelance rate
An hourly rate is a must when it comes to freelancing, not least because it helps you understand how much you need to earn to live off.
As well as checking out the market and your competitor’s rates, you also need to add up all your own living expenses and arrive at a realistic figure. Again, it’s a bit of a balancing act.
Don’t forget to set aside money to pay your Self-Assessment tax bill too, as obviously you won’t have an employer to deal with your tax for you. This will need to be reflected in your fees – so don’t leave yourself short!
Revisit your freelance rates regularly
Although your skills and experience will dictate the fees you can charge, this isn’t the be-all and end-all. Many freelancers test the water by charging a fairly high hourly rate to start with, and dropping it by 10% if nobody bites.
You can even offer discounts on packages of work – for example, three or more blog articles at once. After all, you’re in charge. You can increase or decrease your fees whenever you want.
In fact, it’s well worth revisiting your pricing structure every six months, comparing it with your competitors, and matching it to industry demand.
Quick tip on price increases: We all know the cost of living is sky-rocketing and increasing your fees is a fact of life. Be upfront with clients about your freelance rate increases, explaining to them why you’re doing it. You’re an asset to your client’s business – be proud of that!
Remember it’s fine to say “no”
It may seem a little counterintuitive, but sometimes saying no to projects that just aren’t a good fit is a very smart move.
Yes, freelancing is an uncertain way of working and the temptation is to grab any money-making opportunity that comes along. But sometimes the client’s budget is too low, the work they’re asking for is unrealistic, or they seem a little disorganised. Maybe you’re just too busy, or you’ve simply got a gut feeling about it. Whatever the reason, never feel guilty for turning down work.
A huge draw with freelancing is the flexibility to choose the kinds of projects you really fancy doing. Although you want to work hard and impress them, it’s not up to you to dig your clients out of a hole or take on extra work as a favour. It’s about picking and choosing exactly what works best for you and pricing yourself accordingly.
Set the right freelance rates for your line of freelance work, and you’ll earn the money you want to earn.
Want to learn more about freelancing? Take my free mini-course here.