Pricing is a big issue for freelancers. The question “what should I charge?” has stopped more freelancers in their tracks as they struggle to get started.
What Should I Charge?
It is an important question, but it doesn’t need to be debilitating. Let’s explore five big picture ideas about freelance pricing that can help you put it all into perspective.
“What do I charge?” is actually the wrong question. You should be asking “what am I worth?” What’s the value of the product you’re delivering? And not the value to you—the value to your client. Fixing their website may be an hour of your time, but if it brings in $50,000 for the client, that’s worth a lot more than $100.
The price you charge you should be based on the value you offer to clients.
2. Hourly Rates vs. Per Project
Many freelancers start out charging by the hour. It’s a fine way to start, and it can often be easier to gauge cost and income when you make a set amount per hour.
But charging by the hour comes with two big downsides:
- You can only work so many hours per day, so there’s a limit to how much money you can make.
- There’s no incentive to work faster or more efficiently.
If you want to get away from being tied to the clock, you need to start charging per project. The client doesn’t care if it took you 10 hours or one. They want the job done. The job has value to them no matter how long it took you to do it, so you should get paid accordingly.
We go into more detail in this in our book, The Ultimate Guide to Starting a Freelance Web Design Business.
Pitch a process that protects you from flaky clients:
- No work should start until you get paid a portion of the project (usually half).
- A site shouldn’t go live until you’ve been paid in full.
- Protect yourself from scope creep: Stipulate how many changes and edits you’re willing to make. There should be a point when additional changes cost the client more.
- What happens when clients take three months to deliver content? You should have clear guidelines about timelines and penalties when projects go dormant.
A good contract should spell out and enforce all of this. It’s all part of having a solid freelance system. This whole process discussion might seem removed from price. But having a solid process lays the foundation for how that price translates to money in your pocket.
Having a process sets you up as the valuable professional and helps justify your price tag. It can also save your bacon when things go bad.
4. Recurring Revenue
It’s a lot of work to connect with a client, get a proposal approved, and complete a project.
Why go through all that work just to get paid once? You should be working to put every client on some kind of recurring revenue.
Maybe you sell web hosting, ongoing website maintenance services or on-call support (or all three). Whatever it is, recurring income gets you the most out of each client. (And honestly, your clients are better served by these ongoing services.)
5. Price for Profit
The truth is you probably need to raise your prices. A common problem for freelancers is that they’re simply not charging enough. It might be a crisis of confidence or a value issue that needs to be learned, but whatever it is, you need to charge more.
Remember, even if you’ve done the math on what you need to survive, that’s not enough to thrive as a freelancer (never mind that it misses out on the value issue above).
You need to be pricing for profit.
Even if you’re outsourcing something and have a fixed cost, you should be making a profit on it.
It’s a common problem for freelancers to feel guilty for charging more or making a profit. But it’s OK to make money. One of the dangers of not charging enough is that you’ll slip into feeling resentment. That’s not a good place to be—it can undermine your business.