How To Set Your Freelance Rates
Setting your freelancing rates can be a daunting and confusing task. This is often the case when you are just starting out.
Experienced freelancers with years under their belt can also feel awkward in deciding their new rates.
Your income will vary based on different factors like your skill level and confidence, geographical location, the market rates, and the perceived value of your work from the clients perspective.
Before going on to discuss ways you can determine your rates, you need to keep a few points in mind:
1 — Decide your expected yearly salary.
How much do I want to earn in one year? Take your time and determine all the overhead costs you would have. Remember you are no longer “covered and safe” like a typical employee so you have to carefully calculate what it would take to keep your business running for an entire year.
Let your income goals drive you and motivate you to keep working towards achieving it.
2 — Know that your rates will go up.
When starting out as a freelancer, you starting rates will most likely be low ( I didn’t mean cheap ). This is not bad in itself. You will grow as a freelancer and your rates will keep going up. Unlike the employee, there’s no cap to your growth ( except you decide so ).
There are many ways to calculate your hourly rate as freelancer. Checking on Google search, you would find a lot of websites giving you “income calculators for freelancers”. These calculators take in your target salary, billable hours, add up your expenses and pump out an hourly wage for you.
On the other hand, you would also find articles describing the use of value-based pricing for your service. Here you set your prices based on the value of the entire project not by the hour.
My recommendation would be to use a mix of both styles. Keep in mind that whatever price you come up with should be your minimum.
When starting out it is fine to use the income calculators with a good buffer ( 10 to 30% ) so in those times you have free schedule you would have money to keep yourself and your business afloat.
As you gain more experience and more clients, you should raise your prices and move towards value-based pricing.
Wishing you happy and successful freelancing!