Learning how to set the right rate as a freelancer can seem like an overwhelming task.
- If you set your rate too high, you might have a hard time attracting clients.
- If you set your rate too low, you might end up working too many hours just to make ends meet.
So, how do set a rate as a freelancer that strikes that balance between providing your client with value and appropriately compensating you for your time?
Research Your Rate
The very first thing you should do is research what rates other freelancers in your field are charging for their services. Look at other freelancers who’ve been at it for long time as well as less seasoned freelancers to get a good baseline. Then, determine where you fall among that grouping taking into consideration your experience and skills. Be mindful not to undervalue the services you are providing. Consider other factors that might affect the rate you set as a freelancer such as
- education level,
- employment experience,
- projects you’ve completed and
- other assets that qualify you as a professional in your desired field.
Estimate Your Expenses
When you are determining what you might want to set for your rate as a freelancer, it’s imperative that you consider your own expenses. Things such as:
- Health insurance.
- Self-employment taxes.
- Overhead expenses such as computer repair and maintenance, internet, web hosting, or task management tools.
- Vacation time and holidays.
- Sick days.
All of these expenses add up and in order to avoid paying for them out of pocket, you’ll need to add the cost onto your target annual income. For example, if you want to take home $100,000 a year, you will need to actually make $110,000 a year to cover your work-related expenses.
Vie for Value
The more value you provide to your clients, the more they will be able to justify paying you more.
- Positive feedback from clients can result in higher paying jobs. Future clients will see that you were able to deliver and take that into account.
- Deliver work on time. Clients hire freelancers because in general, it is simpler than bringing on a new full-time employee.
- Really listen to your clients and think of ways that you can make your clients look good or make their lives easier while doing the task you were hired to do. Don’t just write the article or design the logo.
Stay Competitive
Setting the right rate as a freelancer is not a static event. In order to maintain your edge in your market, and to be able to continue to raise your rates, you’re going to have to make some investment. Things like expanding your skillset, time in the industry, continuing education, streamlining your processes, or finding new ways to market your services can all be reasons to increase your rate as a freelancer. Keep your profiles on freelancing and social media site up-to-date to accurately reflect your new skills, education, and experience.
Raise Your Rates
Now that you have some experience under your belt, some newly acquired skills, and have a proven track record of success, you might think it is time to raise your rates. Raising rates for future clients is simple. You advertise your new rate and a client either hires you at that rate, you negotiate another acceptable rate, or they move on to someone who charges a rate within their budget. You may not get the sheer number of offers at a higher rate as you did at a lower rate, but now that you’re established, you’re looking for quality over quantity.
Taking fewer, high paying contracts over multiple lower paying contracts is the direction you want to be moving in.
The hard part is negotiating a raise with existing clients. Timing and tact are key. The best time to ask for a higher rate is right after you’ve successfully completed a project or assignment and the client has given you positive feedback. You should also consider that a client may not be willing to pay you at your new rate. If you really enjoy working for that client or doing the kind of work they assign, it may be worth it to keep them on even at a lower rate.
Setting the right rate as a freelancer is the first step towards a new and independent career. Start with researching other freelancer rates in your market, calculate all of your expenses, strive to provide value to your clients, stay competitive in your field, and finally, ask for a raise once you’ve established yourself as a successful freelancer.
