One of the most difficult parts of a freelancing job is establishing your rates. If you want to win in the freelance industry, full-time or part-time, you need to set a rate per project. It can be a delicate balancing act that can affect how many jobs you can get. If you set your rates too low, you may burn out trying to make enough to pay your bills. On the other hand, if you set your rates too high, you might lose valuable contracts. Whether you are a new or seasoned professional, it takes several ongoing projects to ensure you are paid the equivalent of a full-time salary.
Here, we look at various angles for setting your per project rate based on the type of work involved, education, experience and more.
Avoid Introductory Rates and Freebies
New freelancers often fall into this trap because they want to get work. The problem is, it doesn’t take into calculation the hours it takes to complete a project — you won’t earn a comfortable salary spending your time on low-paying projects. It is also unfair to employers who then come to expect such low rates only to experience sticker shock when you up your fees.
Charge Rates Based on Your Experience
New freelancers often feel the need to compete on price, especially if they only have a little experience. Yet, you want to be careful when it comes to competing on price because there will always be someone out there who can offer a lower rate.
As a baseline, you may want to start at a reasonable beginning wage such as $20 per hour. After two to three years, you will have the insight and experience to increase your rate without much pushback. If you are an experienced writer, the Editorial Freelancers Association suggests rates between $30-$100 per hour.
If you get to where you have five or 10 years of experience, you can charge top rates. You will also attract better-paying clients who will pay more for your experience. They know that you understand how to get things done expediently while meeting deadlines. They don’t want to have to micromanage, and they expect top-notch work.
At this point, you can charge $50 per hour and more, depending on the scope and complexity of the project. Of course, as a freelancer, you need to prove that your experience and background are worth it.
Stay Calm While Talking about Rates
Freelancing is a business that can help you earn a lucrative income. But with each client, you must negotiate your rates. The most important thing to do is to remain self-confident — employers can sense anxiety.
Before negotiations, make sure you understand how much time it will take you to complete the project with a rate in mind. You also must decide if you prefer a fixed rate per project or an hourly fee. If you decide on a fixed rate, multiply your hourly rate by how long completion will take.
When doing this, it is extremely important to look at what you will be working on before any price negotiations. For example, if you were negotiating the rate to format an eBook, you might charge $50 and call it a day. Then, you start working and realize it has taken you 10 hours to complete. So, you realize you have just worked for $5 per hour. Sure, you have $50, but your day is now gone.
When charging a specific rate, make sure your reasons for doing so are clear. And don’t try to be the lowest bidder at your experience level. You will always regret charging less than your work is worth. Remember: You can’t make a comfortable annual salary if you must work 15-hour days just to make your rent.
Set Your Benchmark
Read articles and books related to the industry that contain information about project pricing. Some freelancers talk openly about their online rates, so chatting with them can be a great place to start. Check networking sites and forums in the industry to get some advice on how to set your own benchmark. One good way to start is by calculating your Minimum Acceptable Rate, or MAR.
You can do so by using the following formula: [(business overhead + personal overhead) / hours worked] + tax
To use the above formula, you should determine your annual personal overhead, such as rent/mortgage, food, medical and more. Your business overhead might include the cost for Internet, device expenses, advertising, web hosting for a professional website, etc.
Let’s say your personal overhead is $20,000, and your business overhead is $3,000. Then, you want to work five hours per day for 48 business weeks out of the year, which is 1,200 hours total. Based on your calculations, the MAR will be ($20,000 + $3,000) / 1,200 = $19.17/hour.
The next step is to add in all the taxes you pay. For this instance, let’s set it at 20 percent. So, your MAR will increase to $23 per hour. What’s most important is to always hit your MAR so that you are not in the red. Another option is to also set your desired rate. If you wanted to make an additional $500 annually to save for vacations, then include that in your personal overhead.
Move Up the Pay Scale
If you aren’t comfortable with your current rate, but can’t seem to negotiate for more, a great way to do so is by getting a few certifications. In today’s digital world, there are many online courses you can take, at your convenience, to improve both your skills and your resume. Most can be completed in a few months or even weeks
Not sure where to start? Check out these seven certifications that can significantly and positively impact your earnings potential.
Freelancing can be both financially lucrative and emotionally fulfilling — especially if you pursue your passion. As long as you know how to set your rates, you can certainly make a comfortable annual salary.
Makeda Waterman is a professional writer with an education in Journalism, Mass Communications and Public Relations. She writes for the Huffington Post Canada and Elite Daily on millennial topics with the goal of helping people improve the quality of their lives and career.