This post is by our regular contributor, Erin.
So, you want to start a freelance business.
Have you thought about how you’re going to price your services? Or what types of services you want to offer? Or how much value you can provide? Do you know if there’s demand for the services you’re offering?
Pricing freelance services is one of the trickiest things about being self-employed. Ask any freelancer and they’ll tell you that it can be a total headache.
If you’re just starting out, you’re generally supposed to start low. But you don’t want to price yourself too low, otherwise clients may not take you seriously.
You also want to make sure you’re valuing your time appropriately. If your prices are lower, you’re at risk of being taken advantage of more.
On the other hand, if you price yourself out of the market, no one is going to do business with you. You may scare away potential clients before you even have a chance to show what you can offer.
There’s a lot of thought that must go into how you price your freelance services, and each service is different! Don’t feel overwhelmed. Here are 6 tips for pricing freelance services so you can get your first clients without agonizing over it.
1) Ask Others What They’re Charging
The best way to figure out where to start with pricing is to ask others in your industry what they charged when they started out, and what they think an acceptable rate is.
This is going to vary based on the industry and community you’re in. Within the personal finance freelance writing community, you’ll find that we’re fairly open with how much we charge, how much we started at, and what’s appropriate for different types of clients.
This is a huge relief because you’ll know X person charged Y client $Z; so if you do the same, you should be okay.
You might feel a little weird about this. I wouldn’t recommend emailing people about it randomly, but if you know a few people well, ask them!
Seriously. I’ve had quite a few friends ask me for my opinion on pricing, and I always try and help. If you’re a freelancer, you know how hard it is to figure out what to charge for things, and if you can help others avoid the pain, you will.
That said, experience will matter in most cases, so adjust accordingly. Over the course of a year, I essentially doubled my rates, so where I am now isn’t where I started!
2) Figure Out a Price Structure
Once you’ve got a good idea of what you should be charging, you need to figure out your price structure.
Most freelancers are going to need to do this unless they plan on offering one service that will never vary, but pigeonholing yourself likely isn’t a good move.
Let me give you an example with freelance writing. I charge less for shorter articles, and more for longer articles. So my rate for a post that’s 500-700 words is going to be different than my rate for a post that’s over 1,000 words.
Additionally, if I’m creating images for posts, completing SEO, and adding links within the post, then I price that in as well. If you’re doing more work, you deserve to get paid accordingly!
Some freelancers offer tiers of services, or different package options, depending on what they’re doing. You might have a very basic plan you charge less for, a “middle of the road” plan you charge average for, and an “awesome” plan you charge the most for.
This gives prospective clients choices, and they could be more likely to go with the middle option (if it’s provided) thinking the basic will be too basic, and the “awesome” plan being more than they need.
It’s a good idea to provide at least 3 choices for clients to choose from because that leaves the door open for negotiation. Providing one solid price or package can be good when you have an established client base and are looking to weed out the bad from the good, but when you’re just starting out, you’re probably not looking to have such strict requirements.
3) Are You Going to Charge Any Fees?
This is something most freelancers don’t think about until the issue comes up, but is important nonetheless.
Two common fees to consider are late payment fees and rush fees.
The unfortunate reality of being a freelancer means that some clients will fail to pay you on time (or fail to pay completely). By having a late fee stipulation in your contract, your client agrees to be billed extra if they pay late. This should hopefully provide an incentive for them to pay on time, but if not, you’re covered.
In a similar vein, when you’re a freelancer, you can typically expect to work around the clock…even on holidays. While it’s up to you to set boundaries with clients, there are times when rush fees can work in your favor.
If you’re the type of person to work extra and also don’t mind working under a tight deadline, then why not charge a rush fee? Clients may ask you to prioritize their work, but that means pushing your other work aside. It’s perfectly reasonable to tell them you can get their project done for extra, as that puts additional (and unexpected) strain on your time.
Some additional fees/structures to think about: will you require an upfront deposit? Some freelancers (particularly those in design) ask clients to pay half up front and half when they deliver.
4) Hourly vs. Retainer
There are certain services that are better off being priced hourly, and there are other services that are better off being put on a monthly retainer.
I have to be honest and say flat rates are so much easier to work with. Tracking your time on tasks and invoicing for those hours can be a bit of a hassle. If you’re billing by the package, that’s a lot easier to invoice for.
Another fact to take into consideration is the amount of value you’re providing. If you’re charging hourly for something that doesn’t take a ton of time, but provides your client with a ton of value (i.e. makes them a lot of money), then you should try asking for a monthly retainer. Time taken to complete the task should be irrelevant in some cases.
Maybe your services can’t be priced hourly. Writing, for example, is commonly billed at a flat rate, or per word. However, even though it’s not hourly, you should take your “hourly rate” into consideration.
Let’s say an 800 word post takes you an hour to write, and you charge $50 for it. You just made $50 in one hour. On the other hand, perhaps the topic requires a lot of research, and even though it’s 800 words, it takes you four hours to write it. Then you’re only making $12.50 an hour. Big difference!
That means if you price your services on a monthly retainer, make sure you’re still taking your time into consideration.
5) Diversify and Increase Your Services
Having trouble getting clients? Advice I always give to fellow freelancers is to diversify your services so you can offer more value to your existing clients.
Of course, it depends on if they have a need for what you’re offering, so be smart about the skills you develop.
Here’s a personal example: Images are something a lot of bloggers struggle with. Yet, having pinnable images is a must for most sites. In addition to writing, I offer to create images for posts. I also include SEO, internal linking, and I always make sure to proofread my posts for errors.
I’m also a Virtual Assistant, and I’ve developed several online marketing skills from doing unexpected tasks for clients. I know how to increase social media reach, I’m familiar with ConvertKit and MailChimp for newsletters, and I know WordPress enough to offer blog management.
As you can tell, all of these skills are related to online marketing. Since I mostly write for blogs, I can offer my writing skills and my virtual assistant skills to almost all of my clients, and it makes sense for their business. It’s a win for everyone, especially because VA work breaks up the time I spend writing.
6) Focus on What is Scalable
Last, but certainly not least, you want to think of your freelance services as a business. Even if you’re self-employed or side hustling, taking a business approach to everything will help your bottom line.
My last piece of advice is to focus on services that you can scale. I know many people who enjoy one-on-one coaching or consulting, but if you and your brain are required for a project, the amount of time you have to dedicate to other efforts decreases.
One-on-one anything isn’t exactly scalable. So what’s the solution? Create a product (course or ebook, for example) that contains your wisdom instead. Clients still get the benefit of your knowledge, it’s just not super personalized. It also frees up your time to focus on other income generating endeavors, and you gain another income stream.
You can also think about outsourcing. Are your skills super specialized, or could you hire on or train someone to help you? You can earn more if you have a team under you.
_______________
Pricing your freelance services can be a pain, but it’s something you need to think about before starting to search for clients. These tips should get you on the right track so you can start earning more!
Still trying to decide what freelance service to start? Check out DC’s book Hustle Away Debt for ideas.
If you’re a freelancer, how did you figure out how to price your services? What’s one tip you’d give to other freelancers who aren’t sure how to value their services?
Check out some of our favorite personal finance resources:
Are you getting the best credit card rewards? Check out the top cash back credit card offers (updated daily)
Make extra money: 15 ways to make money from your computer
Get the First Chapter Free!
Join our online community and get the first chapter of the book Student Loan Solution absolutely FREE!
I’m just getting started with freelance writing, so this post is helpful. I have a price structure based on 500 words. I don’t think I’ll ever charge hourly because I break up my time so much that keeping track of the hours per project would be difficult.
I find that if people are reaching out to me, they often pay WAY under market. I’ll have people offer $20 for an article. If you aren’t desperate and have other income sources, you can wait for the right opportunities and get paid 10x that.
I charge per piece when it comes to pieces I write, but I do some hourly work for several clients. My hourly rate is high! =)
I feel like I charge as much as I can get away with.
Great topic to cover. It really is difficult to price as a freelancer! I have emailed others I know in the business to get an idea of what’s appropriate before.
I used to try to shy away from asking other people their advice on what to charge but since I’ve developed a closer relationship with people in the personal finance freelance writing community, I realize that most people are super open and willing to help others out so I often ask others for advice in this area or quote a rate that is higher than I feel comfortable with just to see what the potential client will say. I also have jobs that pay me per post and per word and I like it that way because some assignments are easier than others.
It’s so nice to have other freelancing friends where we can get advice from each other about potential job offers (as well as things like spons. posts, etc.) or be able to refer each other to a new job. Developing friendships has really helped my business grow and find opportunities that I didn’t even know existed.
Aliyyah It can be hard to charge hourly! It’s good that you already know that, though, as many clients will ask you how you charge. =)
Financegirl Yes, I’ve seen that happen as well. The biggest thing for all freelancers to remember is to not weigh everyone down. I don’t mean that as a bad thing, but if there are people willing to work for rock bottom prices, then the industry as a whole will be held down by that. We all deserve to get paid well!
holly@clubthrifty.com Nice! It’s great when you get to the point where people will pay because they know you can deliver.
Pretend to Be Poor Awesome, I’m glad you’ve reached out to others! Personalized advice from other freelancers has been really helpful for me.
Chonce Yes, assignments can definitely vary based on client and project, so it’s good to have different price structures in place for when that happens. I like your point of giving a higher quote just in case. You really never know what someone will say! Either it’s too high and they’re willing to negotiate, or they say no, and provided you didn’t seriously need the money, you save yourself the trouble of working with someone who doesn’t have the budget you’re looking for.
believeinabudget Totally agree with this! Most of my freelance jobs have been found through recommendations and networking. I wouldn’t be where I am today without the friends I made in this community.
Some great suggestions, particularly ‘Diversify and Increase Your Services.’ In a hyper-competitive, rapidly evolving environment, a diversified skill set will serve an individual well.
Love the last point about making things scaleable. Once you can get the business up and running and make your mistakes early on, then you can simply ramp up and work as hard as you please.
RetirementSavvy Thanks, James! I had to throw that one in there. You’re very right!
thebrokeprof Yep. There will always be learning curves, especially as you grow and bring people on, but ultimately if you want to own a business to generate passive income, you have to scale it and structure it in a way that doesn’t require your full attention.
jdonovanart That’s great to hear! I love it when people are more open and willing to share opportunities. It doesn’t do anyone any good to try and “hog” all the gigs out there. We can’t possibly take on all the work ourselves!
This is SUPER helpful! Especially so for moms who are at home with kids, or moms who are entering back into the freelance world and need a little help. If you’re familiar with CentSai’s content we have a new post that kind of addresses the taking a break to raise a family point. If you don’t mind me sharing it here: http://bit.ly/1nOV6We. I also really loved your point about creating a scalable business. I know with my brain and stretching it towards five other projects is plain old impossible. Creating something that really has my wisdom within it is perfect advice.