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Judging Your Worth: How To Plan Your Pricing As A Freelancer

Judging Your Worth: How To Plan Your Pricing As A Freelancer

Read Time: 5 Minutes

instantprint

05 Dec 2017

One of the most common questions any new freelancer asks is: “How much should I charge?”. This is a tricky question to answer, as it depends on a range of factors such as experience, qualifications, niche expertise, and speed. There is one answer that’s always wrong, however: “As little as possible”.

New freelancers are tempted to price themselves low, but that’s a bad way to start your new career.

Pricing yourself low when starting out might seem like a great way to attract clients but then they’ll always expect a low rate from you. It’s much harder to climb the rates ladder if you start out very low, even if you think it’s the best way to undercut your competition.

Instead of setting yourself unrealistically low rates, show clients why they should be paying your actual, living wage, rates. Point out that your services will make them money and that, by using a freelancer, they’re saving on the costs of finding and hiring a permanent member of staff too.

Step One: Research

Understanding how to price your services as a freelancer involves some market research and self-assessment (not the tax kind, the soul-searching type). Take a look at your industry’s professional bodies, as they will often have ‘average rates’ listed on their websites – such as the National Union Of Journalists which lists rates for freelance writers.

This will help to give you a ballpark figure, and also provides a reference point if clients insist on trying to drive your prices down.

After you’ve got an idea of the national rates, try to do some more research in your local area – especially if you’re planning on targeting local businesses. This will help you to keep your prices competitive, without under-pricing, and still deliver a living wage for your region.

Step Two: The Living Wage

This is a pretty important place to start. When you want to go freelance, whether it’s as a side hustle or full-time job, make a budget. List all of your annual outgoings, from rent to car payments, weekly food allowance and party pennies, and allow for additional savings. Then add one third onto this amount to account for your taxes and overheads. This is what you need to make in a year, minimum.

Remember: as a freelancer you don’t get a pension, sick pay, holiday pay, or other employee benefits, so it’s important to add at least a third on. Many experienced freelancers up this to at least 40% of the annual minimum to cover all of their bases.

If this sounds like a lot of money when it’s written down but don’t panic: people will employ you as a freelancer. They will understand (or you can explain to them) that your rates include your taxes, National Insurance, business rates, and all the other stuff they would otherwise have to pay a full-time employee equivalent.

Break down your annual wage into twelve and that’s what you need to earn each month. However, once again it’s best to add a buffer in here: freelancing is notorious for being ‘feast and famine’ with some months earning you lots of cash and other months with nothing.

You’ll need to allow for a financial buffer for the lean months.

When you’ve got your monthly wage figure, break it down by how many days you want to work each month, and then break that down by eight to get your average hourly rate. Don’t give this rate out though! This is your mental, can-never-work-for-less rate. This hourly rate will help you in the next few steps, but it’s only for yourself and not for your clients.

Step Three: Finding Clients Who’ll Pay

This is the tricky bit. When you’re starting out as a freelancer it’s tempting to use bid sites such as Upwork or Fiverr to build your portfolio and get some work. However, the rates on these websites are notoriously low, and you’re not likely to be able to maintain a high enough work level to reach your desired monthly income.

That’s why it pays off to get to know business owners in your area. Go to networking events, and get involved on social media. Cold call businesses, or send a tailored pitch via email that’ll catch their attention. Work on the local connection as a basis to hire you: it’s much more likely a company will hire someone they can easily meet for coffee compared to one who lives on the other side of the world.

Work out who your ideal client would be and find ways to contact them that’ll make them pay attention. For example, a graphic designer might like to create a presentation pack with samples of their work on flyers and posters, so that potential clients can immediately see the quality and style of their work.

When you’re starting out, try to find established businesses to offer your services to. It’s absolutely fine to build relationships with some entrepreneurs and other startups, but these typically will have less cash flow and won’t be able to pay you the best rates, nor guarantee the payment time.

An established business will have a better grasp of their cash flow and will be able to provide regular payments – something which is essential to surviving as a freelancer.

Step Three-And-A-Half: Getting Clients To Find You

Another way to make sure that people request your work as a freelancer is to make them come to you!

Having an online portfolio is a great way to show off your work to date, give prospective customers an insight into your working ethic and personality, and also show that you know what’s what in your industry.

Your portfolio doesn’t need to be fancy or expensive. You might want to pay for your own web domain (which costs very little per year with hosts such as Blue Host or Wordpress.com), but it’s not essential when you’re starting out.

Make sure to have a portfolio page with samples of your previous work and if you don’t yet have samples, create some! Imagine your perfect type of client and create something for them for your portfolio. Try to avoid creating something for a specific company, even if they would be your perfect client, as this could land you in hot water (it may seem like you’re trying to pass off your sample as actual paid work from that company).

It’s also a good idea to include a blog page on your portfolio site, too. This will help demonstrate your industry knowledge, and help search engines find you.

The more regularly you update your content, the more likely it is your website will come up in local Google searches. That’s why it’s important to try to optimise your blog with SEO phrases – just try not to stuff it with keywords as this goes against positive search engine algorithms.

Step Four: Working Out The Value Of Your Work

Most freelancers will quote their client based on the time, skills, and complexity of a project. They often won’t consider how their work will improve the revenue of their client – and this is where many are missing a trick.

If your work is going to – realistically – bring huge results to a company, you need to price accordingly. For example, if you’re a copywriter creating an SEO-friendly website for a company, that website could make them hundreds of thousands of pounds over time.

So even though you only spent the time to write the pages just once, your work has the potential to generate a lot of money for the business.

With this in mind, understanding the potential of your work for the client is important to making sure you’re not under-pricing yourself. Be realistic, but not arrogant, and if clients ask you to reason your rates then you can use this reasoning to explain why you might not be the cheapest out there.

You’ll deliver high quality work, which will bring greater long-term returns – so the initial investment is significantly outweighed by the long-term benefits!

Step Five: Providing A Quote – By Project Or By Hour?

A frequent dilemma for any freelancer is whether to quote a client based on the project as a whole, or by the number of hours it’ll take to complete. A general rule is to try and quote based on the project rather than the hours, however, because:

  1. An hourly rate could lead to ‘payment creep’ if a project takes longer (and this could sour the relationship with the client);
  2. An hourly rate doesn’t often account for any research time before you start a project;
  3. While an hourly rate can look cheaper, that risks you looking like you’re devaluing your work.

If a project really will only take a couple of hours then, by all means, give a per-hour quote.

If it’s going to take anything over half a day, however, always try to go for a project-based quote. To do this, work out how many hours it’s going to take you, and add 25% to allow for ‘scope creep’ (the dreaded ‘can you just also do this…’ from clients is the biggest culprit).

A project-based fee will also help the client account for your work, and there’ll be no big surprises when the invoice arrives.

Step Six: Agree On A Contract

Make sure your freelance contract includes essential information when it comes to money.

  1. Do you need any percentage of the final amount paid upfront prior to you starting work? (This is very common – and recommended – for freelancers to do).
  2. When are other amounts due?
  3. What are the payment terms for the final amount?
  4. What financial penalties occur if the client is late in paying the invoice?
  5. If the project is delayed on the client side, how will that affect your payment?
  6. Are any fees incurred for late feedback from the client, or for late delivery from the freelancer?
  7. How many sets of project revisions are included in the quoted rate? What will additional sets of revisions cost?

All of these are absolutely vital to include in your freelance contract, to avoid any quarrels further down the line.

Step Seven: Ask For Referrals

Once you’ve completed your project, it’s time to ask your clients for more work! If they’re happy with what you’ve done, find out if there are any other projects they’d like you to work on – or if they’d be happy to provide a testimonial for your website and your marketing materials.

The power of the word-of-mouth referral is impressive, too, so consider printing up some incentive cards that will entitle them to a discount on their next project with you should someone they recommend also use your services.

That’s it! You’re a fully-fledged freelancer. Go forth and build your freelance empire!

 

Laura Mucklow

About the Author

Hi! I’m Laura and I’m instantprint’s Brand Manager. I’m dedicated to making it as easy as possible for customers to create amazing print.