How To Set Your Rates As A Freelancer (and get paid what you’re worth!)
As a freelancer, setting fair pay for yourself can be a tricky task. Not only do you have to take into account your own experience and skills but you also need to consider the market demand for your services. If you’re not careful, you could end up undervaluing yourself and leaving money on the table.
In this blog post, we’ll go over some key steps you can take to ensure you’re paying yourself what you need as a freelancer.
It’s important to assess your value as a freelancer
This means taking into account factors such as your experience, skills and the demand for your services. For example, if you’re a highly experienced website designer with a strong portfolio, you’ll be able to command higher rates than a less experienced designer. Similarly, if your skills are in high demand, you’ll be able to charge more than if they were not.
To get a better understanding of industry standards and rates for your specific field, you should do some research. Check out what your competitors are charging but don’t fall into the trap of seeing those cheap-as-chips rates on Upwork and Fiverr and thinking you have to go that low – there will always be some people that undercut others, or can charge cheaper rates because they live elsewhere in the world and the monetary value is different.
Once you have a better understanding of your value and the market rates for your field, you can start setting your rates.
Here are my tips for setting your freelancer rates
These tips work for both hourly or by-project rates.
- Work out your business expenses – I do this by looking at regular monthly outgoings and annual payments – I try to have all my software on annual subscriptions as it saves money over the year and include savings for things like new hardware.
- Work out how much you want to pay yourself – this should be made up of a combination of what you NEED to earn each month and what you WANT to earn – initially, you may only have what you NEED but you can set a goal of what you WANT to help you stay focussed as your business grows
- Add the two figures together – this is what you need to bill each month to cover your expenses and what you want to pay yourself.
- Decide your working hours each week – take 10% off for non-billable work – note down the number of hours you have a week.
- Decide how many weeks a year you want to work – make sure you allow time for the holidays you want!
- Multiply the number of hours you have a week by the number of weeks you want to work and then divide this by 12 – this gives you an average number of hours per month
- Finally, divide the figure from step 3 by the number of hours per month from step 6 – this is your approximate hourly rate
You can now use this to set your rates or help determine your project fees knowing that once you have filled your available hours you will have the income you need.
One more thing – repeat this exercise annually – review your business expenses and make sure you get rid of anything you don’t need to pay for.
Don’t be afraid to charge what you’re worth
Remember, you’re providing a valuable service and you deserve to be paid accordingly. If you want to work with a client and they are unable to pay your rates, consider changing the scope of work instead – does the project need to be tackled in one go or can it be broken down into smaller steps? Maybe you can set up a payment plan for your client to help them with their cash flow while ensuring you’re getting paid what you deserve for the work.
Ensuring you have established boundaries in place is also important to avoid scope creep from your clients. It’s not unusual to agree on a project price or to x amount of work, only for a client to want to add ‘just a little thing’. Problem is, one little thing becomes another and it might not be a small task after all! It’s important to be firm but fair – if they want additional work done, it is reasonable and right to provide them with an additional quote for this.
I hope you’ve found this blog helpful and you can implement my tips to establish what you should be charging for your work soon. For more business management blogs, head over here for some other quick reads.