You’ve decided to make a go of it as a freelancer. You’ve polished your portfolio, you’ve set up your workspace, and you’ve created an online presence for yourself, including a professional website. Now, the only thing left is to decide what your freelance rate will be.
Figuring out how to set a freelance rate takes a lot of forethought. Price yourself too high, and you might turn off potential clients; price your work too low, and you may miss out on well-deserved income. You also have to figure out how you want to be paid (by the hour or by the project). And, what do other freelancers in your field charge? What is the average range for your services, given your location, experience, and market?
Luckily, we’ve got plenty of advice for setting your freelance rates and tips for making sure you get it what you ask for.
Research Freelance Rates
Before you set your rate or get your heart set on a dollar figure, do your homework to determine if your desired freelancer rate is reasonable for your field.
Ask Your “Coworkers”
One of the best ways to set your freelance rate is by contacting your network. Talk to other freelancers in your field to get a sense of what the going rate is in your industry. Ask them what additional costs come into play so you can include those in your calculations. By doing so, you’ll ensure that your rate is competitive and reasonable.
Talk to People Who’ve Hired Freelancers
Have your friends, family, or professional network ever paid someone else for the freelance services that you wish to provide? If so, how much did they pay? What were the terms? Were they satisfied with the price, or did they think it was too high (or too low)?
Even if they haven’t hired someone in your field, there’s a chance they’ve hired freelancers in other fields. Ask the same questions to get a general idea of what someone is willing to pay for an expert in a field.
What Are Freelancers in Your Field Charging?
What are other freelancers in your field charging for similar work? What rates are employers offering on reputable job sites? Search the internet and check out job listings geared toward freelancers or job sites that connect freelancers with employers to see if you can get an idea of what you should and could charge.
How to Set Your Freelance Rate
Once you’ve got a general idea of what freelancers in your field charge, you can set your freelance rate.
Determine Your Annual Base Income
What is your ideal annual income? Do some research using Glassdoor or PayScale to determine the typical salary range for your career area to pinpoint a realistic income level.
Using a salary calculator can also help you set a reasonable rate for where you live. Enter your job title, plus the city and state you work in, to get an idea of how much you can possibly make each year if you were a salaried employee.
Determine Your Baseline Freelance Rate
Once you have an idea of how much you want to make per year, you have to figure out what it takes to earn that. Start by dividing your desired annual salary by 52 (for a start). That gives you the dollar amount you need to earn per week. Then, take that amount and divide it by 40. That gives you the hourly rate you need to charge clients.
However, that is not the final amount you should charge clients. This is only your starting figure.
Add the “Extras”
When you’re a freelancer, you’re the boss! It’s very exciting, but it also comes with other responsibilities that you won’t want to overlook. For example, when you’re a salaried employee, you know that taxes are taken out of your paycheck. However, your employer also has a share of taxes they have to pay on your behalf that is not taken out of your paycheck. As a newly minted employer, you are now responsible for both parts of those taxes.
You also should consider that as a freelancer, you’ll have to pay for health insurance, life insurance, and disability insurance to name a few. Plus, you need to save for retirement and won’t have access to an employer-sponsored retirement savings account—with employer matches.
And, you’re probably not working all 52 weeks out of the year. Vacations are essential to mental health, so you need to factor in a few weeks of paid vacation every year.
Lastly, you should consider the “famine” side of freelancing. You won’t necessarily work 40 hours a week every week, which means your income will likely ebb and flow.
That’s a lot to consider, but you need to calculate hidden expenses and factor them into your rate. This will ensure that you’re set up for success.
How Will You Charge?
Some freelancers like to be paid by the hour, while others prefer one lump sum per project, a recurring retainer, revenue sharing, and other options. There is no right or wrong answer here. Figure out which one you prefer, and what’s common in your field, then go for it. However, be open to the other payment method if your client is insistent.
How to Get Your Desired Freelance Rate
With your rate set, you can start connecting with clients. However, some clients may not want to pay your rate. So, what can you do to make sure you get it?
Polish Your Negotiation Skills
You might find that most potential clients will try to negotiate with you once you present your price–just like in a traditional job offer. So, if a potential employer balks at your rate, don’t assume your only two choices are to lower your rates or lose out on the job.
Yes, you want to stand by your number, but consider the specifics of the situation: Is this a brand that can open a lot of other doors for you? Is this a smaller company? Is the project easier than most? Think about what’s fair and what other perks you might get out of the gig, and go from there. Furthermore, if this will be long-term, ongoing freelance work, that is also something to consider.
As you’re negotiating, consider what you offer the client to help justify your rate. Perhaps you have more education than others in your field or have an extremely impressive portfolio. Go over the scope of the project together. If there’s pushback, it’s possible the client doesn’t realize the time and effort it will take to achieve the results they desire. Furthermore, you’ll want to mention any programs or tools that are needed for you to do your job and mention those expenses.
Get It in Writing
Although most employers shouldn’t have any issue with signing a contract to solidify your rate, you might come across one who isn’t keen on that concept. If that happens, you should still ask for a contract. This may be a reason for you to rethink working with the prospective client, too. Always get a contract for your freelance work that outlines the work scope and rate you’ll earn.
You’re Worth It
Getting paid what you’re worth is important no matter where you work or what your employment situation is. As a freelancer, you’ve got the ability to set your rates. The trick is making sure that you’re thinking about everything that’s included in that price and communicating that information.
We’ve got more advice on the pros and cons of freelancing and how to handle your finances when you’re a freelancer.
