If you’re struggling to set your freelance fee, you aren’t alone. It’s a common challenge for brand new freelancers, but even people who have been in the game for years have a hard time settling on the best rate for their freelance services.
So let’s take a look at 3 common ways to set your freelance fee and then explore some of the most important questions to consider when you are working out your service prices.
3 Ways To Determine Your Freelance Fee
Generally, most freelance rates fall into one of three categories. Each has its pros and cons, so it’s worth your time to determine which is the best choice for you.
#1 Price Per Project
Pricing per project simply means that you charge a specific rate to provide specific deliverables. For example, the client pays $50 and you write them a 1000 word blog post. The client pays $25 and you design a logo for their website. And so on.
This is by far the most common way that freelancers on Legiit set their fees. It’s simple, straightforward, and easy for both clients and freelancers to keep things honest. They know exactly what they are getting and you know exactly what you are making.
#2 Hourly Rate
Hourly rates are common in some freelance industries, especially when the exact timeframe of work is difficult to estimate. Effectively, the freelancer is expected to keep strict records of the time spent working, and the client pays a specified fee per hour.
An SEO professional who is performing a website audit, for example, might charge $60 an hour if they can’t determine how long the audit will take until they really start digging. Likewise, an editor may have trouble charging per project because the time invested will depend largely on the quality of the writing they are proofreading.
But charging an hourly rate does have its fair share of drawbacks. First is the headache of logging your time. Beyond that, though, you are limiting your earning potential to the hours you have available to work, which can make scaling your freelance business difficult.
#3 Value-based Pricing
Value-based pricing is when you determine your rates based on the value that your services provide to the client. For example, an on-page SEO optimization project might require the same investment of time and resources for a plumber’s website whether the business is located in a big city or a small town. However, because the big city plumber stands to profit more from the service, a freelancer could charge them more.
Value-based pricing is beneficial because it allows freelancers with a proven track record to compete for high ticket clients and earn more money with less time invested. The biggest drawback is that you will have a hard time implementing this pricing model until you are well established in your niche.
Questions To Consider When Setting Your Freelance Rate
Choosing the way you charge is just one aspect of setting your freelance fee. There are also several questions you should answer in order to set a rate that you are worth.
How much do you want to work?
Are you in this part-time or full-time? Take some time to decide the ideal number of hours you would like to work in an average week. Be realistic with where you are at, but keep in mind that this can always change as your life and your business evolve.
How much do you want to earn?
Put a number on your ideal annual salary, then divide that by 52 to determine your desired weekly income. For example, if you want to make $52,000 per year from freelancing, your target weekly income would be $1000.
Next, divide that number by the desired hours per week that you came up with in the last question. This gives you an average hourly rate. If you are looking to make $1000 per week by working 20 hours, for example, you can calculate an average rate of $50 per hour.
Now, that formula is obviously helpful if you are charging per hour worked. If you are pricing per project, then you’ve also got to estimate how much time a typical project takes you. For instance, if you realize that you can design a logo in about two hours, and your calculated hourly rate is $50 an hour, then you could price your logo design service at $100 per logo.
What is your TRUE competition charging?
Supply, demand, and competition are a natural part of any economic system—including a freelance marketplace.
So you have to spend a little time researching what your true competition is charging. By true competition, we are talking about the other freelancers who are attracting the same level of clientele as you. In other words, the people fishing in the same pond.
For example, if you create custom-coded websites for international businesses, you aren’t competing with every other freelance web designer out there. The guys charging a few hundred dollars for a simple WordPress site aren’t your true competition. You aren’t fighting for the same clients.
So look at what your actual competitors are charging. If you plan to set your freelance rates higher, you need to find a way to justify it. Likewise, if the calculations above turn up a lower rate than your competitors, you can feel comfortable raising your prices.
What is the cost of doing business?
Don’t forget to consider your expenses. If you have to pay for staff or tools, for example, you’ve got to include these in your financial planning. Providing a service for $10 isn’t going to be very profitable in the long run if it is costing you $9. You’ve either got to increase your prices or find a way to reduce your expenses.
Can you outsource some or all of the work?
Training a team is one of the surest ways to skyrocket your profits. If you can teach a few people to provide the same quality work that you do, then you can fulfill many more orders than if you are doing all the work yourself.
For example, imagine you charge $30 for a service. Doing all the work yourself, maybe you max out your schedule at 10 sales a week, or $300. If you can train someone else to work under you, you may be able to improve productivity to 20 sales a week—you do half and your staff does half. Let’s say you pay your employee $15 per sale, so now you are profiting $450 per week.
You could even lower your prices by a few dollars and still turn a profit while getting a leg up on the competition.
You’re Worth More Than Five Dollars
As you can see, there are a lot of factors that go into determining your freelance fee. But one thing we want to make clear is this: you are worth more than five dollars.
Someone out there needs you. They want a trusted professional to make their life easier, save them time, and provide high quality service.
Don’t be fooled into thinking that you need to undercut everyone else just to land a sale. Don’t work for peanuts just because the other guys are. Charge what you’re worth, serve your clients well, and keep it Legiit.