Pricing is probably the most contentious aspect of being a freelancer.
Scour any freelancer forum or talk to anyone who works for themselves and you’ll often find that setting the perfect rate for freelance assignments is a subject that leaves people scratching their heads.
And there’s a reason for that: everyone places a different value on different projects.
For example, someone who doesn’t know much about graphic design might think that charging $500 for a logo is pretty pricey, whereas the designer knows it takes a hefty amount of work to produce something a client is happy with.
Then there’s living situations.
The global nature of the freelance economy means that you’re regularly up against people that work in parts of the world where living costs might be much less than yours. This means that a $15 writing assignment might be pennies for you, but for someone elsewhere in the world it might be the equivalent of a whole day’s work at a full-time job.
So, with all this in play, how do you decide what the right rates are?
Do you drop low enough to compete with freelancers in countries with lower living costs? Or do you crank up your rates to make up for a lack of projects that seem to be going to freelancers that charge less?
And, finally, there’s this ever-present notion that clients have tiny budgets and are constantly seeking out the cheapest freelancer with the skills they need (just for the record: this absolutely isn’t true!).
This often means that we’re afraid to negotiate on a price a client has given because we actively believe they’ll either think less of us or ditch us straight away for someone who has blindly accepted the rate that was offered.
Which begs the question…
Will You Lose Freelance Assignments Because You Negotiate?
The short answer is: maybe.
Some clients won’t be willing to move an inch from their budget, and some simply won’t be able to due to tight financial constraints from the people pulling the puppet strings above them.
If you think a rate given is much less than you’re willing to take, would you want to take that job if the client wasn’t willing to move on budget?
Often, when we say yes to doing something because we feel like we should, we quickly build resentment and don’t do our best work (and this can then lead to the client being justified in their low pricing — vicious circle, right?).
But for the most part (and let me shout this LOUDLY), clients won’t think any less of you because you’ve asked for a higher rate.
Want proof? I’ve got you.
Here’s a chart showing that 64% of freelancers occasionally ask for a higher rate when they’ve been given a price already. Only 2% always ask, and a fairly sizeable 14% literally never ask for more money. They just accept what they’re given.
This is all well and good if you’re happy with the prices being offered, but what if you’re not?
What if you’re just grinning and bearing it and saying yes because you’re scared freelance assignments will be whipped from underneath you and given to someone else?
Well, you could be missing out!
In this chart, out of the freelancers that ask for a higher pay rate, 47% occasionally get more money, while a huge 45% often do. That’s more than you thought, right?
Only 5% never get that higher pay rate.
Makes it kinda worth it.
If you’re still holding back because you’re worried clients will think less of you for gunning for a higher rate, hold tight because I’ve got some news for you.
76% of clients say that freelancers requesting a higher pay rate has absolutely no effect on their perception of them.
In fact, 16% said they think more positively about a freelancer that negotiates a higher rate. Mind-blowing, right?
So, with that in mind…
What Should You Be Charging?
This is a really tricky question to answer because, like I said at the beginning of this post, every freelancer has different needs, values, and lifestyles. What might be a massive amount of money for you might be a measly amount from someone else and so forth.
However, there are three key factors that will affect your pricing for freelance assignments, and those are:
- Your personal budget
- How good you are at what you do
- How much time you have to complete freelance assignments
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Your Personal Budget
First of all, you need to decide how much money you need to make to comfortably cover your living expenses. That includes housing, bills, and any extras you need to get by on a day-to-day basis.
This is where lifestyle comes into it.
Someone living in the centre of London will need to earn more than someone living on the beaches of Costa Rica.
Figure out exactly how much you need to live each month and then add on any desired extras you want, like savings and an increased budget for going out and doing fun things.
How Good You Are at What You Do
Now, it’s unlikely you’ll be able to go in from the get-go and charge $300 an hour unless you’re incredibly good at sales or have worked a similar position in a company setting for many years.
Freelancers have to work their way up and, with every new client you get and have a successful experience with, the higher you can push up your rates.
To give you an idea:
When I first started writing four years ago, I charged $50 a piece. Now, I charge an absolute minimum of $250.
You don’t have to wait years to up your prices either.
Unlike in a full-time position where you can only really go for a pay rise every couple of years, you’re completely in control of upping your rates as a freelancer whenever you want.
If, over a three-month period, you work with a series of absolute baller clients, you are well within your rights to drastically increase your prices (as long as you’ve got proof that you can do what you say you can).
How Much Time You Have to Complete Freelance Assignments
Time is the only thing we can’t get more of.
We can get better at what we do and we can make our living expenses smaller, but we can’t grab ahold of more time — unfortunately.
This is why it’s worth thinking about how many hours you can dedicate to your freelance work every day, week, or month.
And remember, you won’t be working 8 hours a day on direct projects. You’re running a business, so a large portion of time (usually around 30%) will be spent on work-related tasks that aren’t client work, like bookkeeping, invoices, marketing, sending emails, quoting, and everything in between.
Charge By the Hour or By the Project?
Then you need to decide whether to charge by the hour or per project. Both have their benefits and both have their downsides, so let’s just do a quick overview.
- Charging by the hour means you can account for all the time you’ve spent on a project and get paid for it, but it also means if you’re a fast worker you won’t get paid as much as someone who takes longer to complete the same task
- Charging per project means you can work at your own speed on a project without any repercussions from the client, but you might be thrown through a loop if a project takes longer than expected or the client wants revisions that are more difficult than you anticipated
How to Effectively Negotiate Your Rates for Freelance Assignments
1. Establish Your Value
It’s really important that you know the value you’re bringing to the table when going into rate negotiations.
If you can confidently share with prospects what results you’re going to bring them (by using case studies from other projects), you instantly become a more desirable candidate than someone who can’t do that and, therefore, the client will instantly be willing to pay more.
2. Build the Relationship
Talking about money is always a tricky topic, but remember that freelancing is a business.Clients expect you to charge for your skills and time.
Going into negotiations with an open mind and an honest approach has worked wonders for me in the past.
Rather than bulldoze over the price they’ve offered by saying something like “this is way too low how can you even consider paying that measly amount?!”, I think about the long-term relationship with this client and spark an open discussion with them (because if we can’t openly talk about freelance rates, they will always be a problem).
Instead, I might start by saying:
“I understand you have a tight budget to stick to, but I predict this project will take X amount of time to complete and was therefore wondering if we could talk about upping the price on this.”
3. Phrase It Just Right
This kind of ties in with the whole relationship building process.
Most clients will be willing to talk about upping the rate on freelance assignments if you ask in a friendly and open way while remaining professional.
It can be really tempting to cut people down for charging less than you think they should, but that’s not going to do you any favours.
Instead, think about using phrases like:
“While I appreciate you have a tight budget, my usual rates for a project like this are X. Is there any room for movement on the pricing here?”
This shows that you’ve actively carried out projects like this before at a higher rate, which instantly gives you the edge over someone who hasn’t done something similar before.
Talking About Money is Hard
I know that talking about money and prices is hard.
Even now, four years into this journey, I find myself stumbling over my words when I’m on a call with a new client and they ask what my rates are.
And this is despite knowing what my rates are and what I will and won’t accept.
But remember, freelancing is a business and, to drop in a cliche quote right at the end: if you don’t ask, you absolutely don’t get.
This post originally appeared on Wanderful World.
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