There is a myth that freelancers should be able to charge what they want. They should be able to set their own rates and price their services accordingly.
But the reality is, the more you charge for your services, the less likely people are going to hire you. And if someone does hire you, it will be harder for them to justify spending money on your work when there are other freelancers who do similar work for cheaper.
You need to know how much of an impact your work has on a client before charging them. But don’t worry, I have some tips that will help ensure that your pricing strategy is effective. Read on to learn about how much money you should be charging for your services!
The Price Myth in Freelancing
You’ve put in the work and you deserve to be paid for your time and services. But before you charge more than your fair market value, consider these tips that will help make sure your pricing strategy is effective.
Determine the break-even point
The first step in any successful pricing strategy is figuring out how much it costs you to provide your services. You need to know how many hours you spend on a project, what hourly rate you should be charging, and what your company's overhead would cost. Once you have this information, it's time to determine where to set the price point of your services—that is, if they're in demand at all.
Understand what your client wants and needs
The next step in your pricing strategy is understanding what your client wants and needs.
- What problems do they need you to solve?
- What type of work are you doing for them?
- Is it a quick project or one that will take years to complete?
After you understand the scope of the work, then size up their budget and decide how much you can charge for your services.
Determine how much value you provide to them
The next step in your pricing strategy is one of the most crucial steps—determining if they'll even need what you're selling. In some cases, clients might not think that your services are worth the money. And it's perfectly okay! You have to understand how much value you provide for your client.
Size up your competition
The next step in your pricing strategy is a pretty straightforward one: size up the competition. Find out what other freelancers are charging for similar services and then decide if you're giving clients enough value to justify charging more. If their prices are lower, then you might have to reconsider your prices, too.
Determine what makes your client valuable
The next step in your pricing strategy is a little more complex and requires a bit of research. You need to figure out why a client would choose you over others. Do they know that you're better than the competition? Is there something about your company that sets you apart from the others? After you figure out what makes you special, then determine if it's worth charging more for.
A/B test your prices
The next step in your pricing strategy is to A/B test different price points and see which one performs better. Maybe a higher price will make clients more interested in what you have to offer or maybe a lower price attracts more clients. You can't know until you try!
Start with your time
The first step in figuring out how much you should charge for your services is to calculate the time you spend on a job. Now, you don’t need to be an expert at this, but I recommend using one of these two formulas:
- 1/3 of the total hours needed: it's simple, if your job will take four hours, then you should charge $8 per hour.
- 1/2 the total hours needed: the more accurate formula is if your job will take six hours and costs $16 per hour.
After you have this information, it's time to figure out your overhead costs. Does your company have rent to pay? What about the cost of running the business? You want to be able to calculate all of these costs so that you can make a profit and stay afloat as a freelancer.
If you don't know how much overhead costs you'll have, use this formula: Total Project Cost + 20%
For example, if a project costs $1,500 then you should charge our overhead price of $300. It's fairly straightforward and it ensures that your business will be able to thrive without any issues.
In order to perform well in the real world, you have to calculate how much money you're going to make from a project before you even get started. Figure out if the client is worth your time and then calculate how much money you'll be making after taxes, overhead costs, etc.
If all that information adds up to less than $10 per hour (or whatever your hourly rate is), then I recommend finding a new project because you most likely won't be able to survive.
Charge based on skills
There are certain skills or expertise you have that will help set your rates. For example, if you're a good writer and you can write articles quickly and well, your rates should reflect this. If you're an expert in finance, there's a good chance that your rates should be higher than someone who is an expert in marketing.
But don't just charge based on these skills. Charging based on these skill sets might not attract clients because it won't speak to what the client wants specifically. There's a way to charge for your work that does both: It targets those who need your services while also coming in at a price point that makes it attractive to potential clients.
Use keywords or phrases related to your work when setting your prices. This will make it easier for prospective clients to find what they're looking for while also being competitively priced.
Reess suggested that you create a spreadsheet with all of your prices listed. This will allow you to easily see what price makes it attractive for clients and which options are best suited for certain projects. The next time someone asks, "How much does this cost?" all you'll have to do is pull out the sheet (or open up an online document), and you'll be able to come up with a number in seconds.
You have the numbers, now all you have to do is put it into practice. You can't just say you're going to charge $50 an hour for your services and then only work on projects that pay that amount. If you want to get paid what your time is worth you have to start charging for your services.
If you don't do it now then when? You can't jump into the freelancing pool with just one leg in the water. So, take the plunge and start working toward being a successful freelancer.
Charge by the project
One of the easiest ways to charge for your work is to do so by the project. You should start by figuring out what price point you think your services are worth. You can use a freelancing app like Fiverr or UpWork to find out how much other people are charging for similar work.
Once you have an idea of what your standard rate is, you can figure out how many hours it will take to complete a project. Then, say that client will hire you for $100 an hour plus a 15 percent markup on top of that rate. This will help them know they're getting their money's worth and will be more likely to hire you in the future.
Before accepting any jobs, make sure that your rates are competitive with other freelancers in your field and set up pricing accordingly. If you have a unique skill set or use advanced technology or software, let potential clients know about it on your profile and create a custom package for them if they want something special from you!
Charge for your results.
In order to charge for your services, you need to figure out what it is that you are bringing to the table. What is the value of your work?
Work in general has a value. There is a time and a place for the work that you do. If someone hires you, they are buying more than just your time–they're hiring one of your skills. For example, if someone hired someone to write an article on their website, then they would be paying for the skill of writing. If someone hires you to design a PowerPoint presentation, or edit an essay, then they would be paying for that skill as well.
Every skill has its own value; so before deciding how much money people should pay you, think about what it is that they're getting from your service. You will be able to charge them appropriately if you know how much they are willing and able to pay for what they want.
An Example of this strategy
I googled how much people charge to edit an essay and found that the average is $100/page. Great, so now I know what the person's skill level is. Next, according to my website, it takes me about 5 hours to complete a 10 page paper. A math equation will help with this: $100 x 5 = $500. This is the number that I would charge someone to edit a 10 page paper for them, and maybe I could even charge them more because my service is of better quality than average.
Figuring out how much to charge for your services is one of the hardest things about freelancing. It takes time, research, and trial and error, but once you've got it down, you'll be making tons of cash playing video games in an expensive cat costume.