How to Go About Pricing as a Rookie Freelancer
Now that you’ve decided to step into the liberating world of freelancing, it’s time to decide how you want to start charging your potential clients. Whether you’re a freelance software developer, graphic designer or content writer, beginner freelancers all have one challenge in common and that’s knowing how to put a price tag on your services.
Getting the price right is extremely important when just starting out as a freelancer and it’s critical that you know how to establish a good pricing model at the very beginning.
So, with that said, do you charge by the hour or by the project? In our latest video series, ‘The Freelancer Lounge’, Jon Younger, author of the Forbes blog, Freelance Revolution, shares best practices on how to calculate freelance rates and which rookie pricing mistakes to avoid.
Watch the full episode below!
Here we’ll cover what you need to do before you set your freelance pricing model and a five-step process to getting the price right. Let’s dive right in…
1. Understand Your Competition
Today’s global freelance market is filled with millions of professionals seeking work and it’s important that you realize that competition is tight. You may be putting yourself out of opportunities by charging too much or you may lose the chance to charge appropriately by charging too little. If you’re working an area that is in high demand, such as AI, Software Development or Cloud Computing, you’ll need to adjust your prices accordingly. Regardless of your expertise or skill set, do keep in mind that you’re always competing with somebody, so it helps to research how demanding your area is and what your peers are charging.
2. Define What You’re Selling
Some freelancers are selling their services by the time, the project or by the outcome, but there isn’t a “one size fits all” for a freelance pricing strategy. For example, if you’re setting your rate by the project, then you’ll need to be more thoughtful regarding all of the aspects in that project such as adding additional time in case there is something that needs to be reworked. If you’re selling your service by the outcome of the project, you’ll need to be extra careful about the hours required as their may be scheduling issues during the duration of the project.
When creating your pricing model with clients, remind yourself what you are promising them and what your obligating yourself to. Let’s take a look at a five-step process you should highly consider when putting a price tag on your services.
5 Steps to Getting the Price Right as a Freelancer
Step 1: Do Your Homework
Go ahead and research what your peers are charging as well as how they’re charging their rates. How do you do that? Start with your network, colleagues and you can even get some feedback and suggestions from existing clients.
Step 2: Assess What You’re Charging For
Whether you’ve decided to charge by the hour, the project or the outcome, are you factoring in additional elements such as the fee, the amount of time it will take to complete the task as well any equipment you may need to rent or borrow in order to get the job done.
Step 3: Set Your Rate
After you’ve made your decision, it’s time to set your rate. It’s highly recommended to set your rate in conjunction with connections you know well and trust such as colleagues or peers that are working on the same freelance platforms as you.
Step 4: Pay Attention to Pricing Feedback
You’ll always receive some sort of push back from potential clients and even existing clients. Learn from your freelancing network which rates are realistic for your area of expertise. It’s important to charge what you think is fair but also factor in the homework you did on what your competition is doing, that way you can avoid constant negotiations.
Step 5: Revisit Your Experiences
As an entrepreneur, it’s vital to take the time to review and analyze your experiences with clients. Its recommended that every six to twelve months, to revisit your wins, losses, the feedback received from clients and learn how to adjust.
Do Your Homework, Assess, Decide and Learn
If you apply the tips mentioned above, you’ll be ready to set your pricing strategy with more confidence than before. Do the required research, analyze your competition, decide how you want to sell your freelance services and always be accepting of feedback. If you’re willing to learn the trade and improve the way you conduct your freelance business, you’ll definitely succeed in this industry. Consider this…your freelance rates should enable you to thrive and not just survive!
Now that you’re getting paid from clients, it’s important that you’re working with a payments solution that can help you get paid securely and quickly. With Payoneer’s cost-effective payments platform, we can help you get paid by leading freelance marketplaces and clients around the world with ease, so you can focus on growing your business.