Freelancers:Why Your Rates Are Too Low and What You Can Do To Raise Them


One of the benefits of freelancing is that it is somewhat unconnected to the state of the local economy. This is certainly true for people who do business globally rather than only locally.

There are newspaper headlines everywhere about the loss of American jobs abroad, but for freelancers, the overlooked truth is that it’s possible to complete on quality instead of only trying to compete on price.

The mistake is to attempt to complete on price with someone in India, the Philippines or Indonesia. We all know that purely based on price, you’ll lose almost every time. Don’t play a losing game. Quality matters and clients will often pay for quality if your service can be shown to be demonstrably better than the offshore competition’s.

Also, don’t tolerate attempts from prospective clients using a like-for-like price comparison when the other service provider is in a third world country and cannot deliver the quality, reliable service or clear communication that you do.

Why Your Rates Are Too Low and What You Can Do To Raise Them

Why Are Your Prices Too Low?

Being Complacent About Investing In Your Skill-set. It’s important to invest in yourself and your business in order to maintain your current level. It’s even more important to add continuous learning if you want to layer in new services, raise the quality of existing services, and achieve increased earnings over time.

  • Solution: Take some time in the evening or weekend to do some reading. Whether it’s online tutorials to get you started with a new computer language, brushing up on your English grammar or editing skills, or reading tutorials on using Photoshop to create exciting logos; all these will help to develop out your service offering.

Outgrown Your Initial Market Yet? When getting started with freelancing, you’re likely to have undercharged for your services to get your start. This meant offering heavily discounted (or even free) services to build up samples or a portfolio. Have you outgrown this market yet? You’ll know because you will have hit an earnings ceiling and be unable to get beyond it.

  • Solution: Look at the different levels in your market. What do more successful individuals or companies do differently than you in order to operate at a higher level than you are presently? What can you do to achieve that same level, charge what they charge and earn more? Brainstorm, research your competition and develop a strategic plan to advance upwards.

Where Is Your Confidence? If you are not confident in yourself and also confident in the quality of the services that you offer, then prospective clients will see right through that.

Other freelancers may ask for higher prices, justify why their service is worth it, and their confidence will help sell their high priced services. If they didn’t act the part, prospective clients would’ve started having doubts and this would have probably cost the sale.

  • Solution: Carefully review what you offer compared to your competition. Establish correctly in your own mind whether what you offer is (just like the optician’s test) better, same or worse.

Regardless of the rating, what can you do to raise the stakes? Is your customer service better with a faster, more helpful response to queries? Do you have greater skills or a better portfolio? Complete an inventory of what you offer and how you present yourself to the outside world to see what can be improved.

Not Managing The Project Correctly. Particularly with design projects, the real dangers are not correctly assessing the project initially when quoting a price, not continually reassessing what is/isn’t within the scope of the project agreed upon with the original quote and not stamping out issues of scope creep early on.

  • Solution: Be flexible within what has been agreed, but clear when new items come up that are surely outside the agreement.

For instance, if you have agreed to develop a web site and priced for that, then mid-way through the project the client announces that they expect a custom Facebook page to be developed too, then make it clear that this isn’t included and provide a fresh quote for this extra piece of work.

Not Tracking Hours Worked Versus Projection. With design projects, typically a client is quoted a fixed price for the project. A designer will estimate how many hours they believe the project will take.

By tracking actual versus estimated hours, the freelancer can see whether their guess-timates tend to be accurate or not. If it takes 50 percent longer to complete the projects than expected, then guess what, your hourly rate is 33 percent lower than you thought.

Poorly judged estimates affect either your personal life when you have to burn the midnight oil to still get the project in by the deadline or delay other client projects which can damage business reputation and cause losses of other clients and their income stream.

  • Solution: Track working hours to know what you’re really earning and to increase your rates to reflect actual time worked rather than imaginary time worked. Change how you create estimates if you find that you’re consistently wrong by a certain percentage each time.

Working Too Many Hours Per Day/Week. Most freelancers or indeed small business owners will tell you that they work more hours than they ever did at their full time job where they complained about working too much…

Reality for independents is that until you reach a certain size where you can afford to outsource many of the essential tasks to others, you’ll be run off your feet.

  • Solution: Better planning, effective systems, and good scheduling of your time can ensure that you fit in everything you need to within the time that you have available for work.

Not Knowing What The Market Will Bare. Many freelancers are somewhat clueless about what current rates are. Unless you’ve been purchasing these same services elsewhere or have worked for a larger competitor before, then often it can be difficult to know what people charge for their services.

  • Solution: Solicit your own quote in order to get an idea about pricing. Ask around with other freelancers to get their own ideas on the matter. Quote different prices to a range of prospective clients to see how they react. See if you can discern which clients will accept a higher price point and which will not. Are there any early indicators or tell-tale signs either way?

Not Charging More For Rush Jobs. If someone wants a task completed much faster than what is normal in the industry, then it is okay to charge more. This is particularly true if it will involve encroachment into your personal life or get in the way of other deadlines already set.

  • Solution: Hold firm that if a client wants a faster delivery date, then there will be a premium added on for faster delivery.

Sometimes you’ll discover that the client only came to you because you’re newer and they thought they could get away with paying the same price for faster service. In other situations, they’ll think twice about the rushed due date and suddenly the project will become less important… In a few cases, the client will actually pony up the extra money and you can readjust your work schedule.