Four steps to calculating your hourly rate as a freelancer
Knowing your worth as a freelancer is an aspect that many freelancers struggle with -- I know this, because I am one and I have done, writes freelance marketing guru Emilie Heaney, founder of Start Up Marketer.
In particular, deciding what to charge new clients and negotiating rates for your services with such customers can be daunting. However, by clearly deciding on your value and your limits, you can approach any negotiation with confidence.
Over many years working as a freelance digital marketing expert and building my business, I have learnt the right and the wrong way to price your freelance services. Here, exclusively for FreelanceUK, these are my four fundamental rules to help you know your worth as a freelancer, regardless of the industry you’re working in, and how to ask your clients to pay it.
1. Take a realistic look at what you can offer clients
If you’re just starting out as a freelancer, you need to do a thorough analysis of what you can offer your clients and your experience so far. Take into account transferable skills from other roles you have worked in before, which don’t necessarily need to be directly related to the industry you’re freelancing in. This is the first step to understanding, measuring and calculating your worth as a freelancer.
2. Learn from other freelancers
To gauge roughly how much you should be charging your clients, in terms of pound sterling or Euros, you can look to others in the industry as a guide. Many freelance networks publish rates online and you can also ask any contacts you have in the industry for an approximate figure.
Part of establishing fair rates for freelancers is about working together, including being transparent about rates. If you’re undervaluing your services, you are also lowering the expectations of clients, which can have a knock-on effect for freelance incomes across the board! While you may win the job by undercutting a competitor, you could also be shooting yourself in the foot long-term, notably when the next client approaches you and expects you to work at that same lower-than-market rate.
3. Experience is important but not everything
Many freelancers just starting out often undervalue their services because they lack confidence. While this can be built up as you become more experienced as a self-employed business or freelance consultant, it can cause pricing difficulties further down the line, when existing clients are unwilling to pay more, even when you have proven your abilities.
If you’re undervaluing your services to your clients, you’re also undervaluing yourself. If you don’t believe that your time is worth more, then this mindset can have a negative impact on how you approach clients and even the service you provide. There is always a risk that you continue to think of yourself as a novice long after you have gained experience in the industry. Part of succeeding as a freelancer is about believing in yourself and your abilities, and that includes having the courage to ask for a fair pay rate.
4. Decide on your rates
The above being said, your rate may vary from client to client, depending on the complexity of the work and whether or not it’s a long-term client or just a one-off job. Similarly, different clients prefer to pay in different ways such as by the hour, by the project or by retainer.
With this in mind, it’s a great idea to have your rates in mind for each of these payment methods. Deciding on a ‘per hour rate’ is a good place to start as this can help you to provide a figure for projects by estimating how many hours you expect to spend on it. When working out your rates, you also need to be clear on your preferred range - what is your ideal rate? What is the lowest rate you’re willing to work for? This is the best and worst-case scenario.
Understanding your worth so you know how much to charge and then, if necessary, negotiating that pay are vital aspects of successful freelancing. This negotiation can be helped along immensely by a trio of ‘props’ which I’ll reveal to FreelanceUK readers very shortly in a future article.
For now, remember that when it comes to setting your hourly rate as a freelancer, we don’t all get it right, all of the time! There is some trial and error involved. But with these four fundamentals kept at the forefront of your mind, you can now work towards a freelance career that is as fulfilling as it is well-paid!