Here are some crucial tips and sources which are worth to consider when determining prices for your work as freelancer:
This is the most important factor in setting your price and is the common denominator when estimating your hourly rate. The first step is to consider the nature of the project and approximate the number of hours, on average, it would take you to complete. For example, you know that it will take you 4 hours to research, write and edit an article of 1,000 words, so, in 1 hour you can produce 250 words. This might take some time and practice to approximate correctly, but its essential to know your working speed, so that you don’t get yourself into projects that overwhelm you.
It's important to keep in mind that some companies will set a fixed price per project. This is great when you’re a fast worker as you can finish quickly and leave spare time to complete other projects. However, if you’re not a fast worker, you might find that your hourly rate drops. Don’t fret! As you progress, you should be able to increase your speed as you become familiar with the type of work. You could also try discussing a slightly higher fixed rate with your client - but only if the work you offer is worth the price increase.
Life's not cheap. This is why you must consider all your living expenses to make sure these are being covered by your freelance projects. The most obvious are the costs of tools and equipment used to complete the project as well as office rental costs and travel expenses - but there are many more you might not have thought of. Don't forget to include your healthcare insurance bills, vacation savings, pension payments and taxes!
The best way forward is to add all your monthly expenses together and then divide by the estimated number of hours you expect to work over the coming month. For example, you know that your monthly expenses amount to € or $ 1000 and you estimate you will work 100 hours on your projects that month. You then divide the total cost by the number of hours to arrive at your hourly expense rate – in this example, its $/€ 10/hour. You now know that you need to be paid a minimum of $/€ 10 to simply cover expenses (with the condition that you work 100 hours within that month).
It goes (almost) without saying, that if you have an excellent set of skills and extensive experience in your profession, you should be paid a higher rate. The skills you develop through education and professional experience will enhance your project, producing better results than a newbie. For example, as a trained graphic designer, you have become competent across a wide range of software and can offer your clients more options – then you must charge for this! Too many new freelancers underestimate their skills or don’t take them into account when setting their rate.
You will notice over time your price will steadily increase as you learn to incorporate your experience as a freelancer into the price. Regardless, if you are going to charge more for skills and experience – you should be able to deliver on this promise!
This factor might not be obvious, but you have to consider who your clients are to determine how to price. Some jobs might be slightly riskier, some clients might require you to make a greater effort, or offer a job that you’re not very interested in and some might require you to do a “rush” job. In these cases, you should charge slightly more for the added effort, hassle or risk involved. But, keep this within reason, as you don’t want to overcharge and deter the client from asking you to work with them again. It is also important to be transparent about the reasons why you charge them more for the job.
On the other hand, if your client offers you a project you are really interested in, or you know the client will offer you repeated projects – then the opposite applies. You should lower your price slightly to beat the competition and encourage the client to hire you again.
You should get into the habit of clearly recording the details of all your projects including your clients, the jobs they hired you for and the price you charged them. This way, you can always refer to it later if they decide to work with you again and you can make sure you offer a consistent or logical rate.
Another important factor to consider are the industry standards and the market demand for your type of work. Since these vary between profession, city and country it is impossible to give a clear rule of thumb. However, you can always call your local employment bureau to get advice. You can also join a coworking space in your neighborhood or associations such as the Freelancers Union to discuss your rights, rates and connect with other freelancers.
Now get out there and negotiate!
Once you have figured out your working speed, the industry standards, estimated your costs, and the effort/risk involved with the project, you are ready to set your price. However, it is still recommended to do your own calculations.
As you head into your next interview, don’t be afraid to negotiate; getting a better price will often come down to whether you have the confidence to ask for it! If you are professional and reasonable about your price, then more often than not, the clients will be willing to accept a price increase.
Words of Wisdom
Franz Brueck, a well-known freelance photographer, told us that in the end, pricing all boils down to a feeling: how you feel with the client, how you feel about the project, even how you feel on the day of the interview. He also explains how important it is to be open to any opportunity – often the ones you least expect, end up being the most rewarding.