Pricing your services is something both beginning and experienced freelancers struggle with.
Charge too little and you lessen the perceived quality of your service in the eyes of potential clients. You’ll also end up working more for less money.
Charge too much and you'll fear pricing yourself out of the market. Nobody likes to lose work to the competition.
(In the coming weeks we'll get into pricing and positioning according to different markets, but we'll keep it more general for now)
The honest answer is that it depends on a lot of different factors. Keeping stuff we can’t control (e.g. the economy) out of the equation, there are several things we have to consider when we price our services.
From our experience, most freelancers wants a fair, easy to calculate rate that reflects the value of their work and skills.
Hey, being a starving artist might be glorious (?) but I’m assuming you’re in this game to make a living and build a career for yourself.
Clients, on the other hand, want fair and transparent pricing. They want to feel that they are getting value for their money and be reassured that aren’t being ripped off.
Balancing both is tricky, but this article outlines one simple way we can try to achieve this.
Many experienced freelancers generally charge per project or per hour (and then there's per word pricing in the world of translators and other word masters, but we'll get into that next time).
Freelancer who charge on a per project basis quote a flat fee for a specific piece of work. For example, if you’re a fashion photographer, you might charge X amount of money for a one day photo shoot.
Freelancers who charge per hour tell the client that their fee is ‘X’ per hour of work they do on the project. Alternatively, they might say their rate is ‘X’ per hour and they expect this project to take ‘Y’ amount of hours in total.
Which pricing method is best for you? Let’s look at the advantages and disadvantages of both approaches.
Clients love per project pricing. Why? Because they are paying for their desired outcome, not how long it takes you to deliver it. The freelancer carries the risk that the job might end up being more complex and take longer than anticipated.
Why would any freelancer agree to project pricing? Because such a fixed-fee arrangement can be more lucrative.
Imagine this. You are a web developer and your client needs a new website. You quote them $5,000 and they feel that that is a reasonable cost for getting the website they desire.
However, if you charge this sum per hour it might be hard to justify without detailed explanation. If you charge $200 per hour, you’re telling the client that it would take 25 hours to create their website and they might not agree with that.
Bottom-line is that with pricing per project you’re simply telling the client that for ‘X’ amount of money you will deliver the results they are looking for.
Pricing per hour is also a viable option for freelancers and should be considered if:
By the way, it's important to keep your hourly rate consistent. It doesn’t make much sense if a graphic designer charges $50 per hour to design a logo and then quotes $35 per hour to create a Facebook cover photo.
Ultimately, it’s your call…
At the end of the day it’s your business and your life. You have to decide what works for you.
I know freelancers who are happy to charge on a per project basis and others who love their hourly rate.
A friend of mine charges his hourly rate and hasn’t looked back since. He tells clients his rate and estimates the amount of hours their project is likely to take. They are happy and he’s happy.
Choose the method that works for you and your unique circumstances.
BUT this is true whatever pricing method you choose:
You should charge more than you are comfortable with at the beginning. Beginners with valuable skills tend to underestimate the value that they bring to the table. Don’t let this be your case!
For those looking to use an hourly rate, here’s a tip:
Calculate how much you are currently earning per hour from your day job. Simply divide your annual income by the 2,080 working hours in a year (based on an 8 hour, 5 day working week).
Got your current hourly rate? Great. Now multiply it by 2.5!
Why? Because as a freelancer you’re also bearing the cost for the benefits you’d get if you were employed (e.g. health insurance, sick days, equipment and etc.).
There you go, super easy and totally painless.
Pricing your freelance services right is a vital part of your success.
Use the easy formula in this article to calculate your hourly rate if you’re not sure how to do it.
Most importantly, don’t be shy to price yourself at a level that reflects the value your services bring to the client.
You don’t need permission to charge what you’re worth and make a good living freelancing!
By the way – the money topic is so wide it's impossible to cover it with one article, so here are some really valuable resources I've personally come across and highly recommend:
How Much Should I Charge? – the no bullshit step-by-step guide to pricing your work. Just type in your data and BOOM, you'll have an implementable rate for your next project.
How to price a logo design: free tools and tips from the pros – The title of this article really says it all.
Value For Money – a must-read ebook for all freelancers out there.
Now go on and keep rocking!
PS: Pricing your freelance services is only the first step. You need to continually get new work to keep that money flowing into your pocket. Freelancer at Work can help.
Turn your laptop into your own personal billboard. Get painless, fresh offline marketing for the price of breakfast!