How Much Should I Charge? Top 5 Ways To Calculate Your Freelance Rates
How Much Should I Charge? Top 5 Ways To Calculate Your Freelance Rates When you start freelancing, one of the most challenging issues you will face is determining the appropriate fee you will charge your customers.
You must have a method for calculating your freelance rates because your price needs to be competitive to attract customers.
If the cost you propose is unreasonable for the customer, they may never respond to your offer. If your rates are too low, the client may become suspicious of you and consider you a low-quality amateur freelancer.
However, there is no reason to be concerned about it at all. It doesn’t matter if you’re starting as a freelance writer, designer, developer, or marketer; tips and tactics will help you determine the right price for your freelancing services. And I’ll demonstrate how to do it.
Hourly Rates Versus Fixed Prices
The critical decision is whether to charge hourly or provide set pricing for each project. The majority of independent contractors are faced with this problem because both of these approaches have their positive and negative aspects.
In my experience, set pricing has been more beneficial for me and, more importantly, for the customer t serve. When I charge by the project, I have the opportunity to provide the customer an estimate of the cost of the service based on the degree of difficulty of the task and the number of hours it will take.
Pricing based on the hour provides its own set of advantages as well. For instance, some proficient freelance copywriters charge more than $250 per hour.
This is because while working on projects such as writing copy for websites and products, you cannot establish a price based on the word count of the text. After all, the material must be revised and tested numerous times before use.
Therefore, before you get started, you need to decide if you will charge a flat rate or a rate per hour for your services. It will be straightforward to figure out, mainly if your service falls into one of several categories. If you are a freelance programmer, designer, or copywriter, an hourly wage should be the choice that comes to mind immediately.
You can produce the best results by working on each project more without worrying about the hourly rate if you opt for a set price instead of an hourly rate.
However, choosing a fixed price will give you more freedom to spread your work hours on different projects. It is for this primary reason that I recommend that newcomers select a pricing structure that is fixed.
A Few Important Considerations to Make
When you have settled on a pricing strategy for your services, the next step is to investigate a few scenarios that frequently arise for freelance workers, including the process of negotiating.
Customers will nearly always attempt to negotiate a lower price for their purchase. You must ensure that your rates include some wiggle room if something like this occurs.
Never answer “no” when someone suggests slightly lowering your price. You should add $5 or $10 to your worth to honor the customer’s request for a discount without appearing rude when they make the request.
Nevertheless, it would be best to never deviate from the price you initially offered. Do not give a lower price only to secure the client’s business if it appears the client is pulling out of a transaction.
If you choose that job with low pay, there is a good possibility that you will miss out on an opportunity for one that pays more and is more responsible.
Several clients will also try to convince you to perform additional work besides what you have already agreed to. We refer to clients who behave in this manner as “scope creeps.” They will initially agree to your price, but then at a later point, they will ask you to do additional work or make extra changes for no additional charge.
Before beginning a project, you must ensure pricing is agreed upon for additional work or changes. Keep a copy of your freelance contract close to defusing sticky situations.
When determining the cost of your services, you should be sure not to forget to factor in your taxes and other professional expenses, such as hosting your website and any paid app subscriptions you use.
Putting together an accurate estimate of the cost of your services can be accomplished using the following strategies.
1. Establish Your Pricing Structure
No matter how you price your services, the amount of money you bring in will always be proportional to the quantity of work you can complete on a given day and the amount of time you have available for that job.
Therefore, the first step in setting pricing for your services, which is also the most rational, is to build a budget for your monthly business expenses and determine how much you will need to charge to meet your monthly budget objective.
For the sake of argument, imagine you have a monthly budget of $2,000 worth of expenses that need to be paid. If you work five days a week for eight hours each, you will have forty hours of work each week and a total of one hundred sixty work hours each month to earn your monthly budget amount.
First, double the total cost of your budget by three. Because of this, you can make a profit and won’t have to put in the 160 hours of labor required to meet your financial obligations. After that, divide that sum by 160, the number of hours you work each month. ($6,000 / 160 = $38)
Your hourly fee ought to be $38 at the very least. You will have the flexibility to work on the projects of your choice and sufficient wiggle room for discussions if you choose to approach things in this way.
2. Peruse Websites That Offer Freelance Work
You may also determine the optimum price for your service by looking at what other freelancers charge for similar work on platforms catering to freelancers.
Visit a well-known platform for freelancers, such as UpWork or PeoplePerHour, and browse through the categories on those websites to get an idea of the rates at which other freelancers offer their services.
You’ll find that every freelancer charges different pricing for their services. Going to the category for your industry on the freelancing website and selecting the two freelancers whose prices are the lowest and the ones whose costs are the highest is an effective strategy for determining the price at which you should offer your service.
Take a more in-depth look at their profiles to get a better idea of the kinds of knowledge and experience they possess. The next step is to consider your professional expertise before settling on a price that falls somewhere in the middle of the other two freelancers.
Bear in mind that this strategy is best suited for those who are just starting. Freelancers that use popular platforms frequently set their fees significantly lower than they should be charging. Therefore, you should take those prices as a starting point and gradually increase them.
3. Check Out Websites That Offer Wage Estimates
Investigating websites that provide wage estimates is another straightforward method for determining your prices.
Internet resources such as Glassdoor and Payscale are ideal for researching various occupations’ median annual salaries and hourly wages.
These websites have compiled information from the work of thousands of other professionals and independent contractors. Therefore, this represents a reasonably accurate representation of the current rates that individuals are charging.
You only need to enter your work and location to view the pricing.
4. Make Use Of A Tool Found Online
In addition, there are tools available online that you can use to research what other people are charging for their services. This will help you understand how much the professionals charge so that you can figure out a competitive price to offer your customers if you are starting.
There are several online resources available to you that you may utilize to research freelance pricing.
Glassdoor is the most sophisticated technology available that determines freelance prices by taking into account the comments of actual freelancers in a specific location.
In addition, Bonsai provides a fantastic tool for calculating freelance rates. This tool provides an extensive range of hourly rates for freelance graphic design and web designer based on your region, expertise level, and professional experience.
The LinkedIn Salaries tool is yet another resource that enables users to examine and contrast employers’ monetary compensation in various localities and nations. Regrettably, certain countries still do not yet have access to it.
If you are a software developer, you may determine the right price for your product by utilizing reports such as the one that Triplebyte provides.
5. Consult an Expert in the Field
If you still can’t figure out how to locate the perfect price for your services, the finest thing to do is to inquire with an experienced individual.
Now, we all know this will not be an easy task. Mainly because most seasoned and veteran freelancers won’t divulge their pricing information to other freelancers. Obviously, for motives related to competition. Therefore, you are unable to question them about their prices directly.
You’ll have to go about this unconventionally. Pretend that you are a customer and ask for a price estimate.
Take, for instance, the scenario where a customer approaches you with the prospect of working on a web design project, but you are unsure how much to charge. You are now in a position to send an email to an experienced freelancer in the capacity of a customer and request a price estimate for the project in question.
Posting a job opening on a freelance network as a client is an even more effective method. If you do it this way, you will gain a lot of knowledge from observing how other people price their services and how they compose proposals.
I am aware of how deceptive it is. But it does the job! However, not all people who work for themselves are jerks. Some people are willing to assist others as well. Therefore, do not be reluctant to inquire.
6. Allow the Customer to Make the Call
This strategy is unconventional and might not work with most of your customers. But give it a shot if you come across a good customer with previous experience in the industry.
When you first approach a client with a proposal or even when a client initially approaches you, you should avoid mentioning the cost of your services in the initial conversation.
Continue talking about the project, and ask questions to grasp better what the customer wants to achieve from working with you.
For instance, if you’re talking to a client about a graphic design project for a social media campaign, you could ask them how much buzz they’re expecting to generate with the posts by asking them how much buzz they hope to produce with the posts. You might also ask them about their advertising budget and how much they are currently spending.
And when it comes time to negotiate the price, all you have to do is ask the customer how much it’s worth to them, given the amount of buzz generated from the campaign they’re participating in.
As expressed, the client should be the one to determine the price of each project.
It can be challenging to initiate this discussion with a client using a freelance marketplace. Therefore, you should only test it out with customers you approach through online job boards or by email.
Play Around With Different Prices
Remember that there is no “right price” to discover a rate for your services because it all depends on your abilities, experience, and quality of work.
This is essential to remember when finding a rate for your services. Because of this, the majority of experienced freelancers have a pattern of raising or modifying their fees on an annual basis. This is because they continually enhance their knowledge and skills.
Use these suggestions to establish a basic price plan for your freelance services. Experiment with alternative pricing structures as you accumulate more experience and better customers. After some time has passed, you will be in a position to request more excellent rates and potentially quadruple your current rates.
There is no such thing as an inappropriate price so long as you are content with the amount of money you receive in exchange for the work you put in.