10 Factors That Should Go Into Your Pricing As A Freelancer
Pricing your services as a freelancer can be challenging. Freelancing is a new industry for everyone. Freelancers don't know how to price their services well, and clients don't know how to pay freelancers well. As much as I wish there was a magical formula I could share with you today, I don't have that. I am going to break down ten factors you can use to determine your freelance pricing.
Here's the thing, you have so much power over what you charge. It's up to a particular client to figure out if your talents are worth that price to them. You want to keep pricing as consistent as possible for the sake of being honest, but it's okay to vary the cost depending on your skills and what the client needs. Keep working, keep standing in your pricing truth, and I know you will get there.
Let's get started with ten factors that should go into your pricing as a freelancer.
1. Relevant Education And Experience
First and foremost, relevant education and experience is a huge factor that should go into your pricing as a freelancer. For example, a company may be looking for a person with a scientific background. The company specifies they'd love to have someone with a Chemistry background in particular. If you have a Biology background, you can still apply, but someone with a Chemistry background would be more aligned with what they are looking for. That person with a Chemistry background could probably charge higher rates in the process too.
2. Personal Branding
Aside from relevant education and experience, personal branding makes a huge impact. Personal branding is the name you've built for yourself. Let's take our example from above. A freelancer with a Chemistry background is amazing, but what if that person was also a Chemist known all over the world for their work in the field? The personal brand that freelancer has built will make a world of difference because people in her industry trust her. She can command a higher amount from any company she chooses to work with in the field of Chemistry. Personal branding is why picking a niche is so crucial. If you can make a dent in an industry, you can begin to command higher prices for your work.
3. Hours Spent Working On A Project
Depending on your personal preferences you may see this as a discount.
Looking for work as a freelancer is difficult, so many freelancers choose to give volume discounts if they are working with a particular client for a while. You've probably seen volume discounts when it comes to bulk buying physical products. You can use this same strategy as a freelancer, but this may not be something you enjoy offering. You want to provide this for long-term partnerships, not just a random person who ordered five blog posts at once. Be careful when you offer volume-based pricing. Does it benefit you for a long time? I would encourage you to wait until you've established a relationship before offering a discount like this.
Overall, though you want to make sure that you are charging enough to cover all the hours you work and then some. How much are you making when you boil it all down? I don't want to see any freelancer working for under minimum wage in the grand scheme of things. If you calculate your rates correctly, you can stop that from happening.
4. Project Research Requirements
Some work requires a lot more research than other projects. When I sit down to write a blog post, I understand I will have to do some light Googling. I may even have to skim a book or watch a YouTube video. Light research is included in my work as a freelance writer. There is a difference between light work and doing academic paper level research and citing. If any company requires you to do that much research to write, code their website, be their virtual assistant, et cetera, it's time to charge more. Figure out where you draw the line from light research to too much research. If a client will cross or has crossed this line, it's time to consider that in your pricing.
5. Software/Physical Products Required
Do you need special software or physical products to work with a client? You shouldn't be paying for those out of pocket. For example, social media managers often need a social media scheduler like Hootsuite to run their business. If that's the case, your clients should be paying for that software in some way as soon as they can. You might not charge a considerable fee. The fee might be as simple as adding $5 to their monthly invoice. If you need a dedicated software or physical product for them, they should be paying the monthly fees attached to that. For example, if you run Facebook Ads for clients, they should be paying for the Facebook Ads, not you.
6. Industry Standards
Okay, here's the thing with industry standards, you should never use them as your ceiling, but I feel like they should be your floor. You should ground yourself and make sure you aren't stepping on any toes by offering ultra-cheap services. This is challenging because we do live in a global world, but we don't have to compete with global or less than stellar prices. It's all in what a company feels you are worth to them and what they can afford. If they can't afford your rates, they aren't your client.
I am always careful with this though because I know it's hard to turn down income. Who wants to tell a client who is offering you real money no? You may be asking, “Where are all these random clients who are paying more money?” They are out there, I promise. Take what you can and go up from there.
7. Client Friendliness
Okay, I know it's weird to suggest an “asshole” fee, but I think this protects your mental health. Dealing with a less than stellar client is made progressively worse if they are also paying you pennies. At the same time, sometimes you have to completely distance yourself from a client if they are toxic to you. If it's a little bit or arrogance or if they are just a smidge bit annoying, tack on an “asshole” fee. Don't make it a line item on their invoice, of course. You also want them to agree with the rate you set before you invoice them. Overall, you want to make sure you are charging enough to cover your tail if the client is not your ideal client or just someone who works your last nerve.
8. Skill Demand
Some skills are just more in-demand than other skills. If you have an extremely niche talent, you can charge expert rates more quickly.
Related Reading: The Most In-Demand Hard and Soft Skills of 2019 by LinkedIn
Another way this might work is if your multi-skilled. Maybe you're a blog post writer who can do social media management and graphic design. That's going to give you more edge than a person who can only write blog posts.
9. Administration And Life Fees
Next, you want to make sure that your pricing strategy includes enough wiggle room for things like:
- Taxes (Federal and Self-Employment Taxes)
- Invoicing fees
- Time spent promoting your business
- Back and forth via email to communicate on assignments
- Fun activities you want to do
All of those small things you do every day to keep your business and life afloat matter. You want to make sure that when you get paid, those things are accounted for.
10. Your “Way Up” Fee
Last, but not least, I want to call attention to your “way up” fee. I'm honestly not sure what to call this, but I think it's crucial to play with your pricing regularly. I think of it as seeing what it is feasible for me to charge. I don't have the best faith in myself, and I often undercharge for my worth. I'm always trying to see if I can poke the bear a little and get more money. I may charge one client $500 for a project one month and quote another client $525 for the same project a month later. I want to see what I can charge to figure out what feels comfortable for me.
Well, that's all folks! I know that pricing can be scary, but you've got to start somewhere. Your first few clients will probably consist of you saying, “Damn, I didn't think about this when I priced this client.” It's all part of the process. As much as I would love to tell you a price, what I require is going to be different from what you need. Especially if you are starting out with no experience, it's going to take time to build up and command a higher rate. I promise you that you will get better at pricing and figuring out a rate.
My best advice, try to move forward always. If a client brings you down, they aren't worth it. Always search for the next best client. Your job is simple, climb the freelance payment ladder.