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Setting your freelance rates might be one of the hardest parts of doing business. You're terrified of scaring potential clients away, and you really want the work, so you end up charging a fraction of what you're worth. I know I can't be the only one, right?
… Guys? Hello?
If you want to build a stable career as a freelancer, you have to know how to set freelance rates that make sense for you. This blog will offer a few helpful tips.
How to Set Your Freelance Rates
Consider How Long the Project Will Take You
Work is time, and time is money. Whatever time you spend on one project or client is time that you can’t spend elsewhere. It has to be worth it.
This should also include any phone calls, emails, and other meetings that your project will require. These things suck up more time than most of us realize. Don’t just give it away.
We’re not saying you should bill for an email you spent 45 seconds responding to. But if you’ve got a client who tends to keep you on the phone for an hour at a time, you should consider establishing an additional hourly rate specifically for communication. Remember, you could have spent that time doing work that pays.
If you’re dealing with local clients, the same goes for any in-person meetings and even your driving time. This can easily add up to several hours each month — make sure you’re compensated for your time.
Don’t forget research. Research is work. It doesn’t matter that you only spent three hours “doing” the actual project. If you invested four hours prior to that acquiring the information you needed in order to complete it, you should charge accordingly.
Take Into Account the Scope of the Project
It’s not just about the time it’s going to take you to complete the assignment. It’s also about how robust the project is. Theoretically, you could finish a huge assignment in less than 24 hours, but you wouldn’t want your freelance rates to reflect the single day it took you to do it if it’s still a hefty assignment.
This is why you should never set your freelance rates based solely on time. It doesn’t tell the whole story.
For example, when I’m blogging for a client, oftentimes, I handle the entire process from start to finish, beginning with keyword research and ending with publishing the blog on their CMS.
My goal is to take as much of the work off their plate as possible.
There’s a lot more time, knowledge, and skills required to do this compared to only writing the content and handing it over as a Word doc. This is one of the reasons my rates are higher than other writers’.
Factor in the Knowledge and Expertise This is Going to Require
Are there but few freelancers out there who can really deliver when it comes to a project like this? Is it more specialized and focused on specific expertise?
Your freelance rates should go up to reflect this.
The more a client needs you — the more they’re relying on you to deliver the goods — the more you should be charging for your services. You’re in-demand and desirable, and there aren’t many people who can offer what you can. Why charge average rates when you’re an above-average freelancer?
And on a similar note…
Think of the Value You’re Going to Provide
It’s not just about the knowledge and expertise you can offer. It’s also about the value you bring to the table.
If you have a decade of experience behind you, you’ll bring more value than someone who’s been in the game for a couple of years. If you’ve trained under a well-known coach or teacher or attended workshops, conferences, and boot camps, your value goes up.
The more you’ve invested in your career, the more clients should have to invest in you.
Clients have a hard time wrapping their heads around value, and it’s understandable, to an extent. You can’t really measure or count it. In large part, value is an abstract variable. A client will understand if you charge $200 for a 1,000-word article because you’ve assigned your content a concrete, numerical value: 1,000 words.
However, having higher rates because you have a respected degree or many years of experience is different. Clients don’t always get why there’s a bigger price tag when the value it’s associated with is so abstract.
Don’t budge, though.
Ultimately, if they want it for cheaper, let them go get it for cheaper. That’s not your ideal client, anyway. You want to work with people who understand what an asset you are, don’t you? (Of course you do.)
Consider How Involved the Client is Going to Be
We’re all thinking it and I’m going to say it. If you suspect a client is going to make your job harder, your rates should go up.
There. I said it.
For example, a client who insists on micromanaging is ultimately going to take up more of your time and energy. Charge extra for it.
A client who is especially picky and demands excessive edits is going to take up more of your time and energy. Charge extra for it.
Your time and energy are. not. free!
On the other hand, clients who maybe keep a watchful eye but ultimately let you do your thing are much easier to work with. You might take this into account when setting your freelance rates.
I know this might sound kind of shady. We’re going to charge people more if they’re annoying? Really?
Yes, really. I’m going to say this again because I really want to drive this point home. It’s the “annoying” clients that take more from you — more time, more energy — and this isn’t free.
A Few More Tips for Setting Your Freelance Rates
You should now have a better idea of how to go about deciding on a number. Here’s a little more advice for communicating with clients and handling your money — all based on things I’ve personally screwed up.
Don’t Give Your Rates on the Spot
If a potential client puts you on the spot and asks for your rates — whether over the phone or in person — don’t give them a number, because the odds are that you’re going to go too low.
This should happen one of two ways.
If your discussions with this business have just started and you don’t have enough information to give them a quote yet, then that’s exactly what you should say. “I don’t have enough information yet. I’d like to learn more about your goals and needs some I can come up with a fair price that makes sense for the both of us.”
If you’ve just gotten the information, you should still hold off on giving your rates. You need to get off the phone or go back to your office, digest everything you just learned, and really think about the rate you’ll offer. In this scenario, you can say something like, “Now that I have the information I need, I’m going to crunch some numbers, and I’ll get back to you with a number within the next day.”
On a related note, what do you do if the first words out of a potential client’s mouth are, “What do you charge?” When this happens to me, I say, “I come up with a monthly rate based on your needs and goals, but my rates start at $1,000 a month.”
This response accomplishes two things: (1) It leaves the door open for me to charge more, if it makes sense, and (2) They at least know what the minimum is.
I know what you’re thinking: What if they hear the minimum rate and immediately run away?
Bye-bye! You don’t want to work with cheapskates, so if they peace out after hearing your minimum rate, look at it this way: You dodged a bullet. Yes, sometimes people just need to be educated on why you charge what you charge. If you can salvage the conversation and convince them to at least be open to that price, of course, you should do so.
But ultimately, if they already believe you’re way too expensive, let them go. They’re not your ideal client.
Raise Your Rates as You Gain Experience and New Credits to Your Name
If you’re charging the same thing that you were two years ago, something’s wrong.
Remember what we talked about earlier, regarding charging based on the value you offer. You’re offering more now than you were two years ago, and you’ll be offering more in two years than you are right now.
It’s only natural for your rates to increase over time. This is the case in nearly every field. And if you were employed by someone else, you’d (hopefully) get raises. So, give yourself a raise when it makes sense.
What about raising your rates with your current clients? People have differing opinions about this. Personally, I’m on the fence.
I committed to a set rate for a specific workload, and I need a good reason to contact these people and tell them I’m going to be charging them more, or I have a hard time sleeping at night. I almost feel like I’m going back on my word by reaching out to clients who’ve been with me for a long time and saying, “Hey, I know I’ve been charging you $1,000 a month this whole time, but now I’m going to charge you $1,400.”
Again, this is just my take on the situation.
Other professionals have no qualms about this, and honestly, I don’t disagree with them. You have to find what works best for you, your services, and your industry.
Be Careful How Much Time You Spend Negotiating
Those really annoying people who endlessly negotiate and try to knock off even a couple of extra dollars? Yeah, they’re not just annoying. They’re red flags.
Negotiating is fine, even normal, even good. It’s a skill we all need to get comfortable with because there is a time and a place. Negotiating is part of business, and you should try not to be offended when potential clients try to get you to lower your price. They’re just looking out for their own budget.
However, if you’re communicating with someone who is so incredibly fixated on the price that they’re completely dissecting your quote, trying to shave every last cent off of it that they possibly can, I hate to say it, but you might want to reconsider working with them at all.
None of this is to say that their money isn’t important or that they shouldn’t be careful with it. But this kind of extreme behavior is a telltale sign of a client who’s very likely going to be a major pain.
A potential client who dissects your rates, I guarantee, isn’t taking into account things like your knowledge, experience, and value — all of which, you know by now, are worth the money. These people will say things like, “This isn’t that much work,” “The rates don’t match the workload,” and my personal favorite, “Another freelancer has offered this to me for cheaper. Can you match it?”
No. No, you cannot.
A client who’s obsessed with the number is one who cares more about the price they pay than the quality of the work they receive. They won’t understand that you’re an investment (which they’ll see a return on, BTW), and that you’re worth every penny.
On a similar note, this is why you should consider giving a slightly higher rate than you were planning — so that if you end up negotiating down, you’ll still get paid what you want. The alternative is that you just don’t allow for any negotiating, period. You state your freelance rates, and they take it or they leave it.
Always Get it in Writing
Wouldn’t it be nice if we could all just trust each other?
Well, we can’t, so get it in writing.
Even two honest, well-intentioned people forming a business relationship can miscommunicate or otherwise have a misunderstanding that leads to drama over your freelance rates. At the very least, the details of your arrangement should be discussed via email so that you have the paper trail to reference, if need be.
Better yet, make them sign a contract. You need to make sure you’re on the same page regarding all the important details, including:
- What your deliverables are.
- What the client owes you and when.
- How they’re going to pay you.
- How many edits your work includes.
- How much notice, if any, both sides need to give in the event they want to terminate the contract.
I know they sometimes feel “stuffy,” but written agreements like this are important. Heck, you have to sign a paper when you go to yoga class just in case something goes awry and you get your head chopped off or something.
Don’t be scared to send your clients a contract. You don’t want to get screwed over, and you better believe they don’t want to either. Contracts are a good thing.
There you have it: the complete guide to setting your freelance rates. Go forth and charge your clients.