Pricing yourself and setting your rates is one of the biggest learnings you go through as a freelancer. Putting a price on the value of your time and work is not an easy task. Obviously, you don’t want to price yourself too too low because you need to make money. At the same time, you want to keep your rates competitive and commensurate to your value. It’s all about striking the right balance.
Having worked closely with clients and freelancers at all stages of growth, Tessa from our team, has seen hundreds of jobs and portfolios. She’s helped guide both parties on how to set their rates based on the work at hand and the experience level of the Peep. She now shares how to set, negotiate, and communicate your rates as you grow your freelance business.
How to set your initial rates
First, do some research. Find at least three fellow freelancers in your field who have equivalent or greater experience than you. Check out their websites and portfolios to see how they’re advertising their rates and what they charge. Most freelancers will have been in your situation and are happy to have an honest conversation about what they charge for the work they do. Don’t be afraid to reach out and ask them for advice!
Do a quick Google search for freelance rates in your field. Even if what you find isn’t in line with what you want to charge, your clients will likely have done the same search. There are also industry benchmarks available for certain fields, such as editorial work and web design and development.
When in doubt, use trial and error. Start promoting your services at a set rate and see how clients respond. If you’re getting leads in left and right and you can’t keep up with the demand, chances are you should increase your rate. No leads in the door? You’re likely priced too high. Show your rates to fellow freelancers. Ask their advice. Ask if they would hire you!
It’s also important to know how much you need to make to live your life. Create a budget, set an income goal, and work backwards. This infographic from CreativeLive offers a great example of how to make that calculation.
If you have little professional experience to start with, you’ll likely need set your initial rates at a lower benchmark. This is great advice from Matt Inglot who spoke at UP Conference this year: “It’s okay to start out low in skills and at lower rates. Build up your experience, then start increasing your rates over time.” Remember that even the pros started small.
Project-based pricing vs. hourly pricing
Whether you price per hour or per project will depend on the type of work you do. Different projects and contracts require different types of rates. There are many Peeps on CloudPeeps who work with clients on an hourly ongoing basis and also invoice for fixed rate deliverables. An example is doing ad hoc editing work on an hourly basis, but charging a fixed rate per blog post.
Mixing up the types of rates you charge is a great way to communicate the value of different work. Don’t be bound to one type of rate, as clients often perceive value differently. Try asking them how they like to pay. This will help you communicate the services you offer and set your rates accordingly. For more on knowing when to charge by the hour or by project, check out our guide to structuring your freelance jobs by type.
Communicating your rate and value with clients
Clients want to understand the value of what they’re paying. They also often don’t know what they should be paying for certain services. When looking to hire a freelancer they want to know: 1) what’s included in your rate, and 2) how your work will benefit their business.
How you communicate these two elements is boiled down to your portfolio and proposal. Make sure you have samples of your best work, references and testimonials on your portfolio. When pitching clients, clearly outline how many hours or how much work goes into each deliverable, overhead costs covered such as tools, and what exactly you’re delivering.
Remember, your client likely doesn’t know how much goes into the work you do. They just know they have a need to fill. It’s your job to educate them on what’s involved and why it’s valuable to their specific business.
Knowing if and when to negotiate your rates
If you find that demand for your services is increasing and that your clients are exceedingly happy with your work, it’s time to raise your rates. The same stands if you find yourself going above and beyond and exceeding the scope of your contract(s) each month. That means it’s either time to increase your rates to accommodate the work you’re doing, or to push back to your original scope.
If you have a positive, ongoing relationship working with a client, negotiating your rate is a great way to re-emphasize the value you bring to them. Use the positive relationship you already have to start a conversation about the value you’ve brought to date and the value you expect to bring in the future. By increasing your rates with current clients, you then have a higher benchmark when communicating your rates with new clients.
When working with a new client, always be open to negotiating your rate – whether up or down from what you typically charge. Negotiating a rate higher than what they offered signals that your work is valued at a certain benchmark. Being open to negotiating a lower rate than your standard shows clients that you’re willing to work with them within their budget and are flexible to their needs.
The important thing is to not undercut yourself. If you quote a rate too far below your typical rate (or what freelancers at your skill level are offering), clients will take advantage of that discount. Or, they’ll question why your rates are so low. Someone who comes in with a higher rate may trigger the client to believe they’re more experienced both in their field and in negotiating their value from the start.
The relationship between pricing and marketing
The linear resume is dying. Clients aren’t as focused on years of experience and the length of time you’ve worked with other clients. They simply want to know that you can get the job done.
This directly overlaps with your personal brand and how you market yourself. You can be someone with limitless expertise within your field, but if you can’t demonstrate that value to clients, they’re not going to be convinced to hire you. It helps to get creative in how you demonstrate your expertise as well. Check out these five professionals who landed their dream jobs by standing out on social media. They showed their work and did it in a unique way their clients hadn’t seen before.
Having a polished but unique personal brand also says a lot about your value. Your online presence is represented by your website, social media channels, and headshot. Make sure yours represents your authentic self while still demonstrating your experience and expertise.
Discounting your rates
There’s a difference between negotiation and a client asking for a deal. If a client is asking you to discount your rate before you even begin work, that’s a red flag. This shows they’re already questioning your value and will make it harder for you to negotiate any rate increases down the line.
There are exceptions where it can be a good thing to discount or volunteer your services. The trick is making sure you’re in control of those conversations. If you’re looking to branch out into a new field where you have limited experience, that’s a great time to offer to work at a discounted rate. Here’s an example of how you could kick off that conversation:
“While the bulk of my experience in PR has focused on the beauty industry, I’d love to gain more experience working with clients like you in the tech industry. Since I don’t yet have the specific industry experience you’re looking for, I’m happy to offer my services at a 25% discount for our first month working together.”
Volunteering your services is a great way to help out nonprofits and organizations you’re passionate about who might not be able to afford you otherwise. You can also use the work you do for them to build out your portfolio. Chances are, they’ll be happy to provide references to new (paying) clients based on your generosity and awesome work.
Always make sure that if you do offer work on a discounted or volunteer basis, that you set a hard time limit for how long you’ll work off that rate. Clients should always understand your value and what you typically charge.
Setting your rates is a delicate balance of communicating your value, opening yourself to opportunities, and earning a liveable income. Like most things, it will become easier with experience. As you get started, make sure to arm yourself with research and a solid understanding of the value you add to your clients’ businesses. If you’re looking for a community to connect with fellow freelancers who have worked through the challenges of pricing their services, sign up to join CloudPeeps.
*Above photo from Math.*
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