When thinking about pricing, in many ways it doesn’t get easier until you are much more established with a staple of long-term reliable clients and good pricing rules set. For new freelancers though, pricing is often a minefield filled with uncertainty, self-doubt and concern about what is the correct fees to levy.
This article is here to help with these matters and to provide some price guidelines to aid in setting sensible prices for freelance work.
Here are some general guidelines which can help shape your thinking when it comes to different considerations for setting prices the first time or reconsidering the prices that you’ve already set in the past.
Focus on Quality over Quantity. Try to avoid being the lowest price operator when it comes to your chosen service. There will always be cheaper providers, so there’s no point trying to become Walmart and charge the lowest price; you cannot sell your time/service in bulk. Focus on improving the quality, so you can justify higher pricing.
Freelancing is a Business. This fact may escape new freelancers who forget that they need to cover reasonable business expenses, technology improvements, subscriptions and more, then make a profit. If the only person financially benefiting are your clients, then you’re doing it wrong.
Many small business owners will claim they cannot afford much, but they’re also the ones driving late model vehicles, going on long annual vacations and saving heavily for their retirement, while you’re left living on a meager income. Don’t accept that.
Increase Prices Regularly. Don’t forget about annual inflation and other rising costs. Increase your fees in order at least to keep up with inflation.
Also consider that you should have greater experience and more knowledge than you did last year, so if that is translating into higher quality products or better services then the prices should rise further to reflect that too.
Don’t Cut Prices in the Hope of Future Deals. Many clients will talk up the idea of future business that will come your way if you perform well the first time around. However, such clients try to use this dangling carrot to wrangle a discount the first time around.
The issue here is that the majority of these kind of follow-up deals fail to materialize, which leaves the freelancer with lower income because they kept discounting their services on a hope and prayer.
Another reason not to cut prices is because once you cut it the first time, you’ll forever be cutting them for that same client, and anyone else they refer too you later who was no doubt attracted to you because of your cut rate pricing.
Beware of Unknown Project Scope. You’ll often be asked to quote a price right at the start before knowing the scope. Writing clients will want to set a price and only later tell you that you’re expected to post new articles on their site too (because they’re too cheap to pay for a VA to do that).
Design clients will often take an initial quick quote they pushed for and then expect that to be unchanged as the truth of the scope of project reveals itself. Defer the setting of pricing until all factors are clear, or at least exclude certain known add-ons that come up, i.e. writing does not include posting the article, etc.
Beware of Project Creep. A major issue with design projects, but also an issue with clients who expect multiple rewrites for articles. If the rate was already discounted, then that shouldn’t be expected to include rewrites.
Don’t Expect Clients to be Reasonable. Often clients will try to take advantage of what they can get for a fixed price. Wherever possible, don’t agree to fixed prices. When having to agree to fixed price deals, carefully spell out what is and is not included in the deal.
Be Firm About Additions. When a client adds a new items to a project, be clear right away that this is outside the scope of the project and quote the cost for the item. More often than not, the client thought they could get away with sliding something in unnoticed and will say, “Okay, don’t worry about that then.”
Don’t Work For Free. Other than the occasional piece of charity work which usually is discounted rather than free, one should not provide professional services for free. Even with friends and family, they would have to pay other professionals if they ordered the same service, so they should not get a free ride.
With charitable giving, do this when you are established, successful and highly profitable; not when you are starting out and cannot afford it. Don’t allow yourself to be pressured into it.
Only Money Pays The Bills. Sometimes, especially with new freelancers, you might be asked to exchange services on a barter basis or heavily discounted because of the promotion you will receive from the deal.
Most often such people don’t care or necessarily even believe that you will do well out of the added exposure. Exposure is great, but that doesn’t always mean more sales and so doesn’t actually pay the bills. Paying clients pay the bills.
Barter only really works when your services are being exchanged for something that you actually need and would have purchased almost immediately anyway. Otherwise, the benefit is all with the other party who perhaps lack the means to pay any other way. Being offered equity in a business that cannot pay for essential business expenses is also not attractive either.
Research Your Competitions’ Fees. Find out what others in your industry charge for their services and determine the quality of what they deliver. Ensure that you’re not over or undercharging relative to what your competitors are offering. You should make fair comparisons, because you know for sure that your prospective clients are doing exactly that.
Put An Expiry Date On Prices Quoted. Avoid issues where clients want to take you up on an offer that you made three years ago. Also, if you are selling support in the form of a certain number of hours at a fixed price, ensure you put a date on when that support ends.
Think About Charging Late Fees. For particularly tardy clients who are notoriously late payers, consider tacking on an extra fee if they pay especially late. This may provide an added incentive to get the payment in on time.
Charge More For Urgent Work. Be sure to charge extra for late night projects, especially if it will mean having to give up either evenings or weekends, or cause inconvenience having to push back other projects.
Lower Rates Isn’t Always A Way To Win. New freelancers starting out may want to charge or be persuaded to charge lower fees because of their lack of experience.
Often this just means that at best you’ll be overrun with offers, extremely busy and still not making decent money. At worst, too few deals because people think cheap means low quality, and you’ll have too little to live off.
Be Sure Your Rates Aren’t Too Low. If you hear clients repeatedly say that your fees are low compared to your quality, then take this as a sure sign that you need to raise your rates to close the gap between rate and quality.
Track Metrics In Your Business. In order to truly know what hourly rate you are achieving, you need to track how many hours you are working for. Also, without tracking what hours you are using for different parts of your business, how will you know how many hours go into income-producing work versus administration or marketing?
Consider A Blended Rate. Instead of charging a fixed price per word for freelance writers or a set cost for developers, consider the budget of the client you are dealing with. Some people will make for good, regular clients but can only afford a lower fee. Other clients will be able to afford more and can be quoted a higher price. Your rates may average out over time.