One of the hardest things to do when starting out as a freelancer is to decide how much to charge for your services. You need to be compensated appropriately for the time and effort you put into your work, as well as for your talent and skill, without pricing yourself out of the market. You should also earn a living. Never forget that charging a customer too little or too much is both equally bad.
This can all get pretty confusing. Our goal here is to help you answer the questions: how much to charge as a freelancer?
Before we start, if you don’t know what freelancing is or you want to learn more about how to become a freelancer, we have many articles and resources here for you to check out.
How Much To Charge As A Freelancer?
Before we can answer the question “how much to charge as a freelancer,” you much know that there are so many different types of freelancing jobs. Your rate to charge will be determined by the industry and the type of jobs you want to do as a freelancer.
One of the best ways is to look around on freelance websites like Upwork and see what other freelancers in that field or industry are charging. Keep in mind their experience, skillset, and other marketing tactics that are used to justify the price.
You Need To Survive
Many freelancers will charge low prices so that they will stand out and get hired. But if you charge too low that you cannot make enough to live on. This is very important when it comes to the question of how much to charge as a freelancer.
What minimal income from freelancing must you earn in order to survive? This covers the amount you pay each month for rent or a mortgage, utilities, food, travel, and other expenses.
Include any additional costs you encounter as a freelancer, such as those for supplies, software, Wi-Fi, insurance, and fees for legal and accounting services.
Fixed Price vs Hourly Rate
As a freelancer, you can charge a fixed price or an hourly rate.
Fixed prices can be used when working on a project. For example, if you are a developer, you can charge your client a fixed price to finish creating an app. Fixed price also means that you get paid that fixed price no matter if you worked 10 hours or 100 hours on that project.
The best way for many freelancers to get paid fairly for their time and to determine how to make their desired income is to charge an hourly rate. This way, a freelancer gets paid for every single hour they worked.
You don’t need to pick one way or another when it comes to how much to charge as a freelancer, we will look at how to determine which one to use.
How To Charge Hourly Rate As A Freelancer?
Add up all the baseline monthly living expenses and business costs necessary for you to make it as a freelancer in order to come up with your hourly rate.
Here’s another quick calculation:
- Let’s say your expenses add up to $5,000 a month, and you’d like to make 25% more for your salary.
- $4,000 a month x 12 months = $60,000.
- 25% of $60,000 = $15,000 for your salary.
- Therefore the amount of money you’d like to earn each year = $60,000 + $16,000 = $75,000.
- Now divide that amount by the number of hours you can work each year: $75,000 divided by 1,326 hours = $56.56 per hour.
This formula is a great way to figure out your hourly rate when it comes to how much to charge as a freelancer.
The Downside To Charging an Hourly Rate
You get faster and more effective at what you do as you progress in your field. You are actually being penalized for all the knowledge and expertise that have allowed you to produce excellent work in a shorter amount of time if you merely charge for the time it took you to complete the task. Your clients might not understand or appreciate having to continually raise your costs in order to ensure that you are paid adequately.
Charging A Daily Rate
Offering a daily charge can help you get paid more of what you are due if your client insists on a time-based rate. Your client will receive a discount and you will be guaranteed a certain amount of money if your daily rate is a little less than what you would typically charge for 7.5 hours, even if you complete the work faster.
How To Charge A Fixed Price As A Freelancer?
With an hourly rate model, you are paid for the number of hours your work on the project. On a fixed price model, you are paid for completing the project no matter how long it takes.
With this approach, you do not need to focus on the number of hours and just focus on the completion of the project or work.
Instead of only considering the number of hours you anticipate it would take to complete the project, try to factor in your experience, dependability, and quickness when determining the project charge. The client is not required to understand how you determined your fee. All they need to know is how much the job will cost to complete.
Downside Of Charging A Fixed Price
One of the biggest downsides of charging a fixed price is that you do not get paid for extra hours. Sometimes a freelancer determines the fixed price but what cannot be predicted is that things can go wrong during the project. Sometimes a freelancer is stuck doing tasks they did not sign up for just so they can finish the project. You are not paid for these extra hours.
Payment Upfront & Retainers
Consider requesting some of the money upfront before beginning a project to ensure that you don’t have to wait around to get paid. Especially if it’s a big project, this is actually confirmation from both parties that the project is moving forward. The client will be aware of your dedication to the task, and you will be able to concentrate on your work knowing that you won’t have to wait months for payment.
How Much To Charge Upfront?
It is very common to ask for half of the payment for the project upfront. But if you are not comfortable with this you can ask for any percentage to get the project started.
If you are charging an hourly fee, there is no reason to charge upfront payment. Instead, you can set up a payment method to get paid at the end of every week or every other week so your money is coming in consistently.
How Do Retainers Work?
You might want to request a retainer fee if a client has committed to giving you a set amount of work over a predetermined period of time. This money in advance serves as a down payment for the future services you will provide to your client.
Generally speaking, retainers work on a weekly or monthly basis. It’s a terrific approach for freelancers to plan their time wisely and anticipate a specific volume of work and cash. Clients can count on you to set aside a specific amount of time each week or month to work on their projects.
Increasing Your Rates But Be Flexible
It’s time to increase your fees if you have gained a lot of expertise, are working more quickly, and provide even better quality work. Otherwise, you will make less money the better at what you do.
In order to accommodate the many client types you work with and the various project types you accept, it is best to make your freelance rates flexible. After all, there is no legal need that you must charge each client the same amount or use the same method.
Wrapping Up
Some clients’ work may be best paid on an hourly basis. An agreed-upon price may be preferable for ongoing projects. Additionally, value-based pricing may be the most sensible way to take a percentage off if what you do directly affects how your client earns revenue.
There are various instances in which you might reduce your project charge to attract a desirable new client or to reward a long-term, devoted client. On the other hand, you might raise your hourly charge for a challenging customer or one whose decisions are likely to change frequently based on past experience. You might be able to handle the mayhem better with a greater price.
Your rates can change. They ought to rise as you get more proficient at what you do and support you in keeping up with the escalating expense of living, like everyone else.
Finally, keep a watch on the offers made by other freelancers. While being competitive is important, you don’t want to be known for producing cheap work.
This article was designed to help you answer the question of how much to charge as a freelancer.