You’ve chosen to try your hand as a freelancer. You’ve polished your portfolio, organized your office, and established an online presence for yourself, which includes a professional website. The only thing left to do is decide on your freelance pricing.
It takes a lot of thought to figure out how to determine a freelance rate. If you overprice yourself, you risk alienating potential clients; if you underprice your service, you risk losing out on well-deserved cash. You must also decide how you want to be compensated (by the hour or by the project). Plus, how much do other freelancers in your field charge? Given your area, experience, and market, what’s the typical price range for your services?
Fortunately, we have plenty of guidance on identifying your freelance rate and tips to make sure you get what you ask for.
Examine Freelance Rates
Before you set your freelance rate or set your heart on a dollar amount, do your research to see if your desired freelance rate is realistic enough to attract clients.
Ask your “Coworkers”
Reaching out to your network is one of the greatest strategies to set your freelance rate. Speak with other freelancers in your field to get a sense of the going pay in your industry. Inquire about any additional expenses that may be incurred so that you can factor them into your calculations. By doing so, you’ll guarantee that your rate is competitive and reasonable.
Speak with clients who are used to hiring freelancers
Have any of your personal and professional connections ever paid someone else for the freelance services you want to offer? If so, how was their experience? How much did they pay? Were they pleased with the pricing? What were the terms and conditions?
Even if they haven’t hired anyone in your industry, there’s a good chance they’ve hired freelancers in other fields. Ask the same questions to obtain a basic estimate of how much someone is willing to pay for a subject matter expert.
How much do freelancers in your field charge?
What do other freelancers in your sector charge for the same work? What are the freelance rates offered by employers on trustworthy job sites? Search the internet for job ads aimed toward freelancers or job sites that connect freelancers with businesses to get a sense of what you should and could charge.
How to determine your freelance rate
You can determine your freelance rate once you’ve got a basic idea of what other freelancers in your field charge.
What’s your annual base income?
What’s your desired yearly salary? To come up with a realistic income, conduct some research using Glassdoor or PayScale to find out the usual salary range for your chosen field.
A salary calculator can also help you determine a reasonable wage for where you reside. Enter your job title and the city/state where you work to get an idea of your potential annual income if you were an employee.
Determine your baseline freelance rate
Once you’ve determined how much you want to earn per annum, you’ve got to figure out what it would take to achieve that goal. Begin by multiplying your desired annual pay by 52. (for a start). This offers you the amount of money you need to earn each week. Take that total and divide it by 40. This gives you the hourly fee you’ll need to charge your clients.
However, that’s not the final price you should charge clients. This is only a starting point.
Include “Extras”
When you work as a freelancer, you’re your own boss! It’s thrilling, but it also entails additional obligations that you won’t want to overlook. For example, if you are a paid employee, you know that taxes are deducted from your compensation. However, your employer must pay a portion of your taxes on your behalf, which is not deducted from your paycheck. As a freelancer, you become responsible for both components of those taxes.
You should also keep in mind that as a freelancer, you’ll be required to pay for health insurance, life insurance, and disability insurance, to name a few. You’ll also need to save for retirement and won’t be able to do so through an employer-sponsored retirement savings account with company matching.
You’re also unlikely to work all 52 weeks of the year. Vacations are vital for mental health, so plan for a few weeks of paid vacation each year.
Finally, consider the “feast-or-famine” side of freelance business. After all, freelancing isn’t as stable as a 9-5 job; therefore, your income will likely fluctuate.
That’s a lot to think about, but you must compute hidden costs and add them into your charge. This will ensure a business model that is both sustainable and successful.
How to get the freelance rate you want
Some freelancers prefer to be paid by the hour, while others prefer a one-time, flat sum for each freelance project, a recurring retainer, revenue sharing, or other choices. There is no correct or incorrect response here. Determine which one you favor, what is typical in your field, and then go for it. However, if your client insists on another payment method, be flexible.
Master the art of negotiation
When you offer your freelance rate, you may find that most potential clients will try to cut a deal with you, just like in a traditional job offer. So, if a prospective employer objects to your rate, don’t assume your only options are to cut your charges or lose the job.
Yes, you want to stick by your number, but study the circumstances: Is this a brand that can help you open a lot of other doors? Is this a tiny business? Is this project simpler than most? Consider what’s fair and what other benefits you might receive from the job, and go from there. Furthermore, if this is going to be long-term, ongoing freelance work, that’s something worth thinking about.
Consider what you can provide the client to help justify your rate while negotiating. Perhaps you have a higher level of education than others in your area, or you have an exceptionally excellent portfolio. Discuss the project’s scope together. If there is resistance, it’s conceivable that the client is unaware of the time and effort required to accomplish the desired results. You should also include any applications or tools necessary for you to get the job done and any costs associated with them.
Get it in writing
Although most companies should have no problem with you signing a contract to lock in your salary, you may come across one that isn’t keen on the idea. If this occurs, you should still request a contract. This could be a reason for you to reconsider dealing with the prospective client as well. Always have a contract for your freelancing work that specifies the extent of the work and the rate you’ll be paid.
Final Thoughts
It’s critical to be paid what you’re worth, regardless of where you work or your job circumstances. You have the freedom to determine your own freelance rates. The trick is to make sure you consider everything included in the pricing and communicate that information.
We have more information on the pros and cons of freelancing, as well as how to manage your finances as a freelancer. However, if you want even more materials, consider signing up for our newsletter. We’ll give you more tips and tricks like this, as well as special offers and deals.
