How to Set Your Freelance Rates Without Going Broke

The one question that plagues freelancers the most is, “How do I set my freelance rates without going broke?“

Pricing your freelance rates is not an exact science. In fact, learning this skill is important so you can make good money without having to risk living off a cash advance and credit cards.

You have to factor in what prices the freelance market will bear–including your skillset, years of experience, uniqueness, location, professional reputation–and how fast you can deliver your product or service.

It takes even the most profitable freelancers a few months or even years to get into the rhythm of setting their prices properly. Here are three distinct ways you can set your freelance rates without going to the poorhouse.

Research the Current Freelance Market Rates in Your Niche

The first law of pricing requires a detailed analysis of your competitors and what prices the freelance marketplace will bear. Need a few freelance rate pointers?

Talk to seasoned freelancers in your industry. Read books on pricing services. Scour the websites of other freelancers with similar experiences to determine their pricing model.

If you are new to the freelance world, spend a minimum of one month researching your industry and what the top and the bottom freelancers are charging their clients.

Consider the following factors when setting your freelance rates:

Where do you live? Freelance Rates in New York and Los Angeles are not comparable to freelance prices in smaller cities and towns.

What is your overhead? Knowing how much it costs to do business can affect your freelance rates considerably. You must factor in your overhead into each hour billed or project fee to meet your revenue goals, and successfully turn a profit.

What is your experience? Specialist or generalist? 20-year veteran or 1-year newbie? Consider your freelance experience when calculating your rates. A freelance writer fresh from j school or a new freelance writer with a minimum of 2 years of writing experience should charge between $15-25 dollars an hour for simple quick how-tos and stringer work with little research.

If you are a specialist in your field and are charging by the word, the standard range is 50 cents to 2 dollars per word.  An SEO content writer, PR writer, or copywriter with a minimum of 5 years of experience shouldn’t take a freelance gig below $100 to $150 an hour. Knowledge of an obscure niche with few freelance experts will increase your rates considerably.

What is the lowest price you’ll take to do a gig?

If your breakeven point is $25 dollars an hour, don’t take $15 or $5 work; it’s not worth it. Calculate your absolute lowest price for freelancing and stick to it.

What are your rush, cancellation, and kill fees?

Determine the percentage you will charge for meeting a tight and unexpected deadline, or stopping a project already in progress.

What are your yearly revenue goals?

Determine how much you want to charge for gross and net revenue. Want to calculate your freelance salary? Freelance Switch has an awesome rate calculator to help you determine your freelance salary.

Consider Hourly Freelance Rates vs. Project Freelance Rates

Project Rate is always easier to sell than hourly.

But project rates usually benefit the client.  Because changes occur more often than not in the freelance world, beware when quoting project rates.

When quoting project freelance fees, factor in enough time and money for scope creep. Multiply the number of hours it takes to complete the task times your hourly rate. Factor an extra 20% into your fee for additional research, revisions and changes.

Hourly rates benefit the freelancer.

Thinking about setting an hourly rate as a freelance writer? Clients want to know how long it takes to complete a task when quoting the freelance price of $150 an hour. To prepare for your client’s questions, have a detailed breakdown (written down), of the average amount of time it takes to complete a task.

While you can adjust your rate for revisions and changes easily using the hourly system, the project rate does not allow for this flexibility.

Consider Murphy’s Law before you quote a price.

Clients don’t like unexpected surprises and rate hikes. Two identical projects may have the same parameters but vary widely in scope and requirements.

Freelancers should offer both, hourly and project rates to allow flexibility during negotiations.

Consider the Marketing, Personal Reputation, and Customer Service Effect

As a marketer, I would be remiss if I did not discuss the effect that the two factors above have on setting your freelance rates.

If your marketing looks phenomenal, your freelance reputation is stellar and your testimonials are outstanding, factor the following intangibles into your freelance rates.

• A diamond purchased at Tiffany’s costs more than one on display at Costco’s price-saving warehouse. If you have a professionally designed website, in comparison to a one-page blog post, you can charge more.
• Did you apprentice under Bob Bly or David Ogilvy as a freelance copywriter?  No one will flinch at your high freelance rates. They’ll expect it.
• Are your happy customers singing your praises? Your hands-on approach to customer service and niceties cost more money.

Don’t forget a great marketing presence and a stellar freelance reputation adds value to your client’s bottom line…and more money in your pocket.

Above all, don’t be afraid to make a few mistakes when you begin pricing your first few freelance gigs.

Trial and error are usually the best methods to determine how to set your freelance rates properly. But with these tips above you can tailor your own freelance rates to fit your experience, enthusiasm, and ambition.