What You Need To Know About Value-Based Pricing As A Freelancer
Pricing is a tough debate when you are a beginner freelancer. How much do you charge for the work that you do? What will someone be willing to pay? It can be very daunting because there is no standard in this industry. Everyone has a rate that they hold near and dear. My rate fluctuates between .10 and .20 cents per word depending on the client. I am always trying to find ways to charge more in hopes that I will get a yes and be able to charge higher rates. I've dealt with low-paying clients in the past, but I am all about focusing on higher paying clients now.
Today, I wanted to talk about value-based pricing. We don't think about this way of pricing our services much. Most of us have been raised to think about work in an hourly fashion. I work 40 hours per week and I make a certain number per hour, right? This kind of thinking won't help you much when it comes to freelancing. Instead, you should be charging based on the value that you provide your clients. While an hour of your time might be worth $50, the work you are doing is worth much more for the client!
Related Reading: How To Become A Freelancer: What You Need To Succeed & Make Your Own $$$
Consider These Scenarios:
You are a fast, accurate typer. It takes you two hours to produce a blog post that converts well on Google and gets a ton of social shares. You charge a client $100 because it took you two hours to write and your hourly rate is $50. Due to your hard work, the client gets hundreds of shares on social media plus they acquire five new customers that invest $500 each in the brand. That means they made $2,500 on that post while you only made $100. That means you only charged 4% of what the post was worth.
Another scenario: you are a web designer. You've gotten pretty great at coding, so a website only takes you 40 hours to code from start to finish. You charge $50 per hour because that's what you think an hour of your time is worth. You got a nice paycheck of $2,000 for this website design. Pretty awesome, right? Well, let's think about this from the client side. If your clients have a seriously great product that they sell on their website, this website could make them well over $2,000. They could make that in one week because of your impressive web design skills. This website is something that will continue to boost their credibility and make them look amazing online. You only got to see $2,000 of this money, though because your focus was on an hourly rate.
Let's be honest with ourselves. Hourly rates just don't cut the mustard. Even per word rates can be bad at conveying value. Project-based pricing is a fantastic way to go, but many people still have a hard time charging what they are worth. Let's chat a little more about why value-based pricing is so imperative.
You Provide More Than Just Your Service
As you can tell by the scenarios above, you are more than just your service. Yes, you may be a freelance web designer who creates websites, but your product is not only the digital website. Instead, your product is how that website positions your clients as an expert and helps them sell products online. Your product goes deeper than the thing you do. If you think of it like that, you will begin to see why value-based pricing is the way to go.
Now, let's chat about some ways to get to that value-based pricing through building a fantastic freelance business.
Get Social Proof
Social proof is key. How else can you convince clients that you know what you are doing? If you are asking for higher rates, you've got to back up what you are asking with action. It can be challenging to do this at first, but over time you should be looking for as much social proof as you can.
Ask clients to provide testimonials wherever possible. One thing I love about working on Upwork is that clients can give public comments after they finish working with you. I use some of those testimonials on my freelance website today.
Do you have any blog posts that have gotten a high number of shares or done well on search engines? Mention that as social proof, especially if you have a post that ranks well on Google (on the first page or the first result.) This is specific to blogging, but this will help you stand out as a freelancer.
Leads/Customers You've Driven
Businesses want sales or leads more than anything else. Visitors to a website are great and all, but it's usually about the money or the email addresses. You have to keep that in mind when you are going for value-based pricing. Have your past clients been able to get more sales because of your content?
Last, but not least, you also want bylined articles as a way to build credibility. I know it can be hard to get bylined articles these days because so much work is ghostwritten. Use sites like LinkedIn, Medium, your website, and guest posting on other blogs to build those bylined pieces.
Offer More Services If You Can
I think that you should niche down as much as possible, but don't be afraid to offer different services to your clients as needed. I mostly write blog posts for my freelance clients in the HR tech space, but some of them also wanted me to write social media updates, load my content into the backend of their site, and even create newsletters. Some of these services took some learning on my end, but I can do them confidently now. I don't advertise these services on my freelance website, but I am always willing to work with clients if I feel like I can learn a task they want me to offer.
Build Your Own Worth Through Personal Branding
Did you know that your name can bring further credibility to your clients? If you are a well-known graphic designer for YouTubers, you will be able to charge higher rates. Other YouTubers will come to you looking for graphic design, and they will be willing to pay more because of your reputation. While you are working with your current clients, try to build your brand as much as possible.
Lately, I've been building my brand through short social media videos, blog posts, and other social updates. Creating a personal brand takes persistence, but it's all worth it in the end. You will get more clients because of your branding and be able to charge them more in the process.
Go After Clients With An Actual Business Model
A few months ago I was listening to the High Income Business Writing Podcast. Specifically, I was listening to Episode #158: A Quick Peek at What Six-Figure Writers Do Differently, and the advice in that episode changed the way that I thought about the clients I was targeting. The advice in the podcast? Six-figure writers go after clients that solve expensive problems.
I've worked for bloggers who make good money, but they don't make fantastic money. Not enough money to let go of their wallets and genuinely invest in a highly paid freelancer. Instead, some of the clients I used to work for wanted to work with lower paid writers instead because they were insecure about what the point of hiring a writer was or if they'd get their money back.
When you work with businesses who are solving expensive problems and have an actual business model, that's where the magic happens. I'm not saying these clients are a walk in the park, either though. Clients who solve these expensive problems can be rather busy, and your writing has more hoops to jump through. For the most part, though, these clients are a lot less nitpicky about the writing I share with them.
If you are a writer and you want to think about it differently, I encourage you to listen to that podcast. Even if you aren't a writer, and you want to charge more, still listen to that podcast episode.
Value-based pricing is everything. We live in a world where the stuff we produce has the power to convert audiences across the country and the world. We shouldn't deny our gifts by slapping a cheap price tag on it. Charging what your worth is going to hurt at first, you may even get a few rejections from people not ready to meet your rate. Start slow and always experiment with higher prices. Work your way up until you get to where you want to be with your compensation.
Nicole of NLLMag
This is an awesome post. I believe whole heartedly in value-based pricing, and set my rates accordingly.