Freelancing is a big marketplace that continues to thrive with every passing year. The gig economy is the emerging workforce that many businesses outsource to in order to complete their projects. Being a new freelancer can be tricky as you have to take into consideration the various aspects of this profession, including the pricing of a freelancer.
Being a freelancer does not mean that you are any less valuable than a non-freelancer. As a professional, you have every right to be given what you are justly deserved. However, there are no hard and fast rules to regulate the pricing of a freelancing profession, so there is not a single standard to price your service. As a general rule, you need to set your rates by taking into consideration the following criteria:
- The revenue you need to break even
- The value of your skills, talent and experience in comparison with other freelancers within your niche
- The total time you will spend on a project
The aforementioned are some of the crucial factors that define the pricing you need to set for your freelance business.
It is commonly observed that newbie freelancers tend to underprice their services to lure clients into buying their service. While it is alright to rate your service a little lower than the competition, setting too low of rates only make you come across as a mediocre businessperson who is desperate for any work. Being a freelancer myself, I can say that pricing does affect the way your potential clients see your business.
But there is no “one-size-fits-all” standard to setting the pricing of your freelance business. What you need to do is build criteria based on the following insightful tips:
Don’t Set Unrealistic Rates
Freelancing is a big marketplace but there is no regulatory body to set the pricing. The professionals are free to ask for whatever they want to charge for a particular project. The majority of the newbie freelancers either charge too high or too low for their services which hurt their chances of getting a project.
When I started out, I would undercut my rates to have more clients. In spite of sending many proposals, I managed to grab only a few projects. Over time, I realized that clients must have been second-guessing my pricing criterion which is why they were not responding to my proposals.
Prior to setting your rates as a freelancer, it is important to conduct some research on market price and gather information on the pricing of your fellow competitors. This will provide you with enough information to set the right rates for your services.
Don’t Use Hourly Pricing Criterion
In a freelancing business, every project is different. During my first six months of freelancing, I could only manage to earn $5000 dollars for more than 50 projects, which significantly undermined my capacity to generate good income. The mistake was to price my services on an hourly criterion. I was charging on an hourly basis and it limited my chance to earn more money.
During that time, I did many projects that I regret today. For one of the writing projects, I walked away with only $60 for a web content that could have been done at a cost of $100 dollars. Again, it was the hourly set price that restricted my earnings.
The point is that every project is different. So when you put up an hourly price tag, you undervalue your skills for a project that can give you more bucks. Setting a “project-based” pricing is a much more valuable option than fixing your rates on an hourly basis.
Price Yourself Based on the Value of Your Work and Not the End Result
A client values good work. Often clients are reluctant to go beyond their fixed budget. If you can convince your client about the benefits he or she can get by hiring your services, he or she will be willing to upsize their budget. What you need to do is make the clients realize the value of your services and how it will help them achieve their goals.
In my own experiences, I came across many clients who underpaid me for the work I did for them. But it was during formative years of my freelancing career. Then I learned how to convince the client about why they should invest more in their project. Remember that freelancing is also salesmanship. If you can press the right buttons of your clients, you can definitely earn more money.
Take into Consideration All Indirect Expenses Before Setting Your Rates
When you are running a freelance or home-based business, there are indirect costs that you need to keep tabs on. This will include the taxes and operating costs of running your home-based office.
If you cater to B2B services, you will also take into consideration the costs of materials and labor you will pay for in order to get the project completed. All these factors make up a significant amount of costs that you will bear when running a freelance business.
Therefore, you need to keep all the indirect costs in mind when you determine the rates of your freelancing job.
Freelancing has the potential to boost your income and you can earn a good amount of money by selling your services. But you can only do so by setting the right price for your services.
Discuss Your Terms of Service
Every freelancer has his or her own work criteria. Therefore, it is always better to discuss your terms of service with your client before closing a deal. This will include everything from revision policy, refund criterion, and rates for additional work.
Discussing these things in advance will secure your position in the event where a client requests additional work or asks you for a refund. It is smart to clarify these things upfront with your clients regarding your work criteria.
