If you’re a freelancer, you’ve been asked that question before. You may not have known what to say, or you may not have been comfortable with the price you quoted. That’s because pricing our services is one of the toughest issues that freelancers face.
No one seems to agree about pricing. There’s a lot of opinions out there and many of them contradict each other. What’s a freelancer to do?
This post is a bit different. You’ll find not one, but twenty different pricing principles for freelancers in one handy place. You don’t have to apply all of these principles if you don’t want to. However, in my freelancing experience, these really work.
Are you struggling with how to price your freelancing services? Here’s a checklist of principles to review before you set the right price for your freelancing services.
- Base Your Fee on Quality of Service, Not Quantity–You’ll wear yourself out if you are trying to do a high volume of work for a low fee. Instead of trying to charge the lowest price, concentrate on producing high quality services that justify a higher price.
- Your Price Should Cover Your Expenses and Allow a Profit–While this may seem obvious, many new freelancers have never run a business before. They’re not used to thinking in terms of profitability. Be sure to include overhead in your expenses.
- Update Your Price Regularly–Are you charging the same rate now as you did last year? The longer you go without raising your rates, the more likely you are to slip into the red. Plus, you are worth more now than you were last year because you now have more experience.
- Base Your Price on the Current Job, Not Promises–Fairly often a prospective client will contact me wanting a price break because in the future they *may* have a lot more work for me. However, unless they are willing to sign a contract now for that future work, they don’t get a break.
- Don’t Commit to a Project Price without Knowing the Scope–You need to know how much effort is involved before you can quote a price. You can’t do that unless you know the scope of the project. Scope creep in freelancing is a common problem, so get it in writing.
- More Work Should Equal More Pay–If the client adds a task to the project after you’ve accepted it, your rate should almost always go up. It’s best to point this out sooner, rather than later. Otherwise, you could find yourself working for a lower hourly rate than you were counting on.
- Free Work Often Doesn’t Pay–Occasionally, someone will ask you to donate your services. This may be coming from a charity, or a friend or family member. Think long and hard about whether you want to do this. Remember, free = no pay.
- Don’t Work for Anything Other Than Money–Another request *prospects* often ask of freelancers is whether they would be willing to work for exposure, or even whether they would accept a barter. While some freelancers do engage in barter, remember that money is what pays your bills.
- Your Prices Are a Guideline–Remember that your prices are a guideline. You are a freelancer, so you are in control. If you feel that a particular project is going to be more difficult than most, you can raise your rates to make up for the extra effort.
- Never Guess What to Charge–While you may want to give a ballpark figure to a client before you know the details of a project, don’t commit to a firm price without knowing the scope. (Hint: if you do give a ballpark figure, guess high and give a range.)
- Do Know What Other Competitors in Your Field Charge–As a freelancer, you should know what your competitors charge for their services. You can find this out through professional organizations (which often track such information) or by looking at competitor sites.
- Understand Pricing Packages before Committing to One–Pricing packages can be a great motivator for prospects who are undecided, but it’s important to put a lot of careful thought into any pricing package that you offer. Make sure that the package makes business sense.
- Put Date Limits on Your Pricing Proposals–The last thing you want is to have a prospective client pulling out a five-year-old proposal of yours and demanding that you honor the prices quoted. It could happen unless you include a date limit on your proposals.
- It’s Okay to Charge Late Fees–Your freelancer agreements should include provisions for late fees. Most other businesses charge extra fees for their clients who don’t pay on time. Remember, as a freelancer you are also a small business owner.
- It’s Okay to Charge More for Rush Work–Are you taking on a project with an extremely tight deadline? While I don’t generally recommend accepting rush work, if you do take it then it is okay to charge extra for it. Just make sure the client knows this up front.
- Lower Rates Don’t Necessarily Mean More Clients–There’s a common misperception among some members of the freelancing community that lower rates will lead to more clients. This is not necessarily true. In fact, if your rates are too low, many prospects may think that you are not any good at what you do.
- If Your Clients Say Your Rates Are Too Low, They Are–It’s a sure sign that you need to raise your rates if your clients are telling you that your rates are too low. Believe them and fix it. Remember, they didn’t have to say anything.
- Track Your Time to Understand Your True Rate–If you don’t track your time, how will you know what hourly rate you are really earning? Fortunately, there are plenty of tools available online to help you with keep track of how you spend your time.
- It’s Okay to Have a Proposal Rejected Due to Price–I know it hurts to have a proposal rejected, but stand your ground when it comes to your prices. If price is the main objection a prospect has, they probably won’t make a good client for you.
- Understand When to Use Hourly and When to Use Project Pricing–Hourly vs. project pricing is a lively debate among freelancers, with some preferring one over the other. Understand which one works best for the types of projects that you do.
I hope that I’ve taken some of the mystery out of pricing freelancing services. Did I miss any pricing principles?
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