Cash Smarter

January 10, 2017  by: Aaron Crowe

How to Set Rates as a Freelancer

How to Set Rates as a Freelancer

 

One of the more difficult things I did when starting to work as a freelancer was setting the rates I charged clients.

I didn’t want to be too high that they thought I wasn’t worth it, or too low that my time was undervalued. I also had to figure out if an hourly or project rate worked best for my time as a freelancer.

Like many freelance writers starting out, I charged a low rate just to get my foot in the door. After a few months of that, I asked for raises and got it at a few websites that I wrote for, but mostly found that websites were willing to drop you as a writer because they could find other writers elsewhere who would write for low pay.

freelancerYou get what you pay for, and I suspect that many of those people who wrote for low pay either didn’t have the writing and reporting skills that I have or they were so desperate for a paycheck that they’d accept $25 per post.

Before I get too deep into how to set your rates as a freelancer, I want to mention that much of this information is covered in a podcast I did in early January with Liz Theresa on her “Liz on Biz” podcast. Listen to episode 17 for the fun of hearing me in stereo.

freelancerProve you’re worth it

As a beginning freelancer, one of the first things you want to do is aim high and show a potential client why you’re worth more than other freelancers.

You may have expertise in an area they want covered, such as having a degree in economics, or you may have a lot of clips for some excellent sites or publications that prove you know how to cover a topic in-depth.

My website for my freelance writing business, for example, has my portfolio, bio and even a blog to keep people updated on what I’m doing with my business.

My goal is to show potential clients that I’m an experienced journalist with professional training online and at newspapers, and that I can provide unique content by interviewing expert sources. I try to offer a service that not many other freelance writers offer.

Hourly vs. project rate as freelancer

Hourly rates can make sense for many professions, but for freelancers I think that a project rate is best for both sides.

I complete projects quickly and on time. I never miss a deadline. If I were paid hourly, I could earn less money because I’m a fast writer. What might take someone four hours to write can take me two hours. If I charge $50 per hour, I’d earn $100, while the slower write would earn $200 at the same rate.

As I try to explain to my clients, there’s a lot more that goes into freelance writing than the physical writing. There’s time spent on research, editing, rewriting, interviews, story pitches, and talking/emailing the client back and forth about a story.

I factor all of the necessary tasks into a project price quote, basing it on an estimate of how many hours I’ll work — but also of how difficult each task is and for unknown time when I’ll be working on it elsewhere as a freelancer.

Reporting and writing are creative processes, and I may think about how to cover a topic while out walking my dog. I’m not going to charge someone for my time spent on dog walks when I’m thinking about their assignment. But I do throw into the equation that I’ll probably be pondering the topic away from my desk, or may spend 10 minutes here and there responding via email or phone with a source for the story, and I don’t want the hassle of keeping a log of my time. Lawyers do that.

Other factors as a freelancer

If clients ask why my rate is high (which I don’t think it is), I tell them that they’re probably saving money in the long run by hiring a freelance writer. I don’t charge them for my down time, as a full-time employee who isn’t busy at their desk for eight hours a day might do by taking a few too many breaks during the day.

The employer doesn’t have to pay me any benefits, including vacations, sick days, lunch or other breaks, health care or retirement. All of those are a small part of my project rate, and should probably be more of it.

They also don’t have to pay my costs to heat my home office, keep the lights on or buy supplies. I’d gladly take a new laptop computer if an employer offered it.

For all of these reasons, I recommend setting a project rate as a freelancer. Research what other freelancers charge in your specialty, then add in the cost of what you’re adding to each project.

Is your freelancer rate is right?

Setting rates as a freelancer is trial and error. Too low, and you’ll be working like crazy but not seeing much from it in your bank account. Too high, and you’ll only have a few clients.

The sweet spot, I’ve found, is to work within the client’s budget — but only if they can afford what you think you’re worth based on the marketplace and what you offer. In other words, stop working for the low paying clients or the ones who are difficult to work for, and find the ones that will pay you a good and fair rate.

Writing is too often undervalued, I’ve found, and the bar needs to be set higher by all freelancers and other writers.

If a potential client’s first response is that you’re way out of their budget, it probably means they’re cheap and you don’t want to work with them anyway.

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