Putting a price on your skills isn’t always easy. For freelancers, finding the right price is an art. With our suggestions, you can set rates that are competitive and profitable. 

As a freelancer, setting your rate requires the weighing up of so many variables. Your level of experience is only the starting point. 

You need to look at your industry, the current market and your place inside that market. Then you need to consider the industry you’re pitching to, the type of clients you’re pitching to, and your potential competitors. You also need to decide if you should charge per hour, per project, or per element of the work.

A common theme in freelancing is that the experts undervalue themselves. 

They don’t want to charge too much for fear of losing clients and they don’t feel confident that they are worth a certain amount. Even if they’re worth more. 

Many clients also don’t know how much they should pay for the service and often want to push the figure down as much as possible.

So, how do you earn what you’re worth and keep your clients happy?

  • Start With Your Expenses

It’s always important to know how much you spend so that you can work out how much you need to earn. To begin with, look at your fixed expenses, such as:

  • Rent
  • Insurance
  • Utilities
  • Car repayments, 
  • Internet connection
  • Software subscriptions 
  • Tax and accounting fees
  • Office equipment and work tools

These are all work-related expenses and your main living expenses you cannot do without.

Next, include costs like your monthly grocery bill, transportation expenses, and anything else that’s a non-negotiable. 

Finally, you need to also include your entertainment budget, including eating out, your Netflix subscription and any getaways or road trips you plan on taking. These are all expenses that add to your quality of life and standard of living.

They also need to be covered.

All of this will show you what expenses you need to cover and what your ideal income is.

  • Assess Your Availability 

The next step is to look at how much time you have available for work and how you’ll manage that time. 

Freelancing is like any other job. You should not expect to work through weekends and every night just to stay on track. You can’t use all 365 days of the year as potential days when you could earn money—this isn’t a healthy or sustainable attitude.

It’s important to remove national and major holidays, weekends, average sick leave of 10 days a year, and around three weeks of vacation time. That generally leaves you with around 220 working days, and those working days include 8 hours of on-the-job time.

  • Determine Your Minimum Rate 

Now you can calculate how much you need to earn per hour in a year to cover your monthly expenses. 

Take your expenses and multiply them by 12. Then take your 1760 available hours (220 days x 8 hours per day) and divide your expenses by those hours. This will give you the absolute minimum that you need to earn per hour to keep up your lifestyle.

Of course, this is basically living hand to mouth and gives you absolutely no wiggle room. 

In freelancing, there will always be lean times and highly profitable times. You need to make sure that you have enough of a buffer in savings to cover those lean times. Plus, you’ll want to save money for the future, holidays and other important things too.

However, having that minimum rate gives you a solid baseline to work from.

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  • Study Your Competition

It’s now time to start looking at what kind of money you should be making according to your industry. 

You can do this by looking at what your competition—other freelancers—are charging. 

It’s often easy to find this information by looking at freelance job sites and sometimes even on the freelancers’ individual websites. You could also just ask. Most freelancers like to help each other out to ensure that there’s fair competition in the market and no one is undercut by a competitor.

When looking at other freelancers in your market, it’s important to take into account their skill and experience level in comparison to yours. It’s also important to look at the type of work or projects that they take on. If they’re doing work, that is very niche, they may charge higher rates for a project than a freelancer in a more general market.

Another place to look is at regular 9-5 jobs. You can see how much an employee at your level would make monthly or yearly and then interpret that into an hourly rate. 

A freelancer will generally get a higher rate for project work because the work isn’t consistent. However, this could be a good baseline for a retainer contract.

  • Build Your Preferred Rates 

Finally, you should have enough information to help you to build a rate card. This is an important document because it gives you a baseline for what you want to earn and what you should earn based on the market. 

You can confidently tell a client that this is what you charge because you know that you have done the research. Having a set rate also makes invoicing easier, as you can use free invoice templates that simply need filling in when a job is complete. 

When creating your rate card, try to think of a range of different scenarios so that you can easily give a client a rate based on their specific request. 

For example, a writer can have a rate per article based on the word count, as well as a rate per hour to work on a ghostwriting project. These rates can also be higher for once-off projects and lower for ongoing retainer work.

It’s also important to be flexible in your rates. 

Knowing what you are worth is one thing. But sometimes, you may feel that you really want to work with a client and they can’t afford your usual rate. Work may also become scarce at times and you may need to accept a lower rate interim. 

There’s nothing wrong with this from time to time—but it’s another great reason to ensure you’ve built up a savings buffer.

Wrapping It Up

Finding the sweet spot for your rates may take some time and effort, but it will pay off. Clients trust freelancers that are transparent about their costs and can provide a clear and easy to understand rate card.

The underlying thread is to know how much you need to earn and how to ensure you remain competitive in the market. If you find this balance, you’ll set yourself on the path to success.