What's the ultimate rate to demand for my freelance expertise?
January 29, 2023
PouyaSadri
Don't be intimidated by pricing - it's just a biz aspect. Check out the two biz models: Market Pricing and Perception Pricing. We'll guide you to pick the one that suits you and your field best.
Tips
Freelancer
Small Business
No need to fear pricing, it's all part of the game. Let's explore two existing biz models: Market and Perception Pricing. We'll take you through both and help choose the one that fits you and your industry like a glove.
Market Pricing
Upwork and other similar sites show that prices vary across regions. Cost of living affects freelancer rates, with a pricey meal in North America equivalent to a week's worth of food in some parts of Europe or Southeast Asia. Market rates can be surprising when compared to international freelancers. However, clients usually prefer services from their region, so you need to understand the local/national market to avoid losing deals due to pricing. If two freelancers have equal skills and experience but one charges $100/hr while the other charges $20/hr, the one with $100/hr rate is unlikely to win the project.
If you're new to freelancing and previously worked in a traditional office, the Market Pricing model may work best for you. It's also a good choice for solo entrepreneurs who mainly focus on producing their work, such as graphic designers or transcriptionists. For this model, you'll need to consider external factors such as location and experience level when setting your rate, not just the cost of goods and target profit margins.
Perception Pricing
Perception Pricing is all about setting a price based on how sick the target audience thinks it is. Like, if you're revamping a website for a high-rolling company, a killer design and flawless execution could mean major returns. And you want to make sure they pay a price that lives up to the awesomeness you're bringing to the table.
The Perception Pricing model is perfect for the cream of the crop in the freelancing world. Show off your top-notch skills and command a premium rate with confidence. Back it up with killer case studies and expert experience. And, if you've got a massive social media presence, you're basically unstoppable - you're not just a freelancer, you're an influencer.
Regardless of the pricing model you choose, there are five key things to keep in mind. Make sure to consider these:
1.DEMAND
Factor in demand and the economy when pricing. Avoid overpricing during low demand or economic downturns.
2.OVERHEAD
Stay ahead of the game by factoring in overhead costs - light the fire under your business. Consider your yearly hot-spots like utilities, internet, heat, housing, marketing, and insurance. Divide these costs by twelve to determine your monthly overhead for a one-month project. Make sure your business is always lit!
3.BILLABLE TIME
Maximize your pricing strategy by understanding the time required for each task. Timing is everything! Create a baseline for your project pricing, whether you bill hourly or not, to ensure you always have a reference point to work from.
4.BILLABLE EXPENSES
Track all the essentials needed to bring your projects to life, like equipment and materials, and don't forget to pass on the cost to your clients. It's their investment, after all, whether it be a domain name, ad space, or photo rights.
5.PROFIT
Setting the right price for your skills and expertise is key. But at the end of the day, your profit is what you charge beyond your expenses. Determine your desired yearly salary and factor in your desired profit margin (usually 10-20% above your salary).
Co Tip:Choose the pricing strategy that fits your style and flair! Experiment with different pricing models to find the one that really showcases your talents and skills. Remember, your pricing should reflect your worth and keep your business thriving. So, don't be afraid to switch things up if your initial strategy doesn't seem to be cutting it. With the right pricing, you'll be raking in the dough and living the freelancing dream!
How to charge your client
Unleash the power of your skills and unleash your inner pricing master with either market or value-based pricing strategies. Choose wisely, as each moment and each task you work on contributes to your bottom line. It's time to rock the world with your unique talent and make sure your pricing reflects your worth. Navigate the two paths, weigh your options, and make a decision that propels your business to new heights!
HOURLY-BASED RATE
Take control of your time with hourly pricing - simple, straightforward, and perfect for short-term projects or ongoing client relationships. Get paid for every second you put in, and use And Co's free time tracker to ensure your hard work is properly compensated. When project goals are hazy, charge hourly to command respect for your time and clarify expectations. Level up your billing game and never miss out on a single penny!
Consider your client's budget before quoting an hourly rate, as it may not be the best option for a demanding project. Be mindful of potential negotiations and potential challenges in adjusting your rate. Pro tip: Be clear with the client about budget expectations before quoting an hourly rate.
Negotiating a higher hourly rate can be a challenge, especially if clients come from referrals or don't fully understand the work you do. Hourly rates also don't account for efficiency, so even if you work quickly, your rates won't reflect that. It's important to discuss budget expectations with clients before quoting an hourly rate and be prepared for possible negotiations.
PER PROJECT RATE
Per-project pricing allows you to personalize your rate to match the project and client, resulting in more predictable income. With this method, you don't need to estimate the time it takes to complete a task. You also gain the advantage of offering various packages for different services, providing the ability to adjust your rate. This approach opens up opportunities to raise your rates and explore your market's willingness to pay more.
Maximize your earning potential by charging per project. This pricing model highlights multiple factors in your pricing, and with fewer limits on how fast you can complete your work, you'll be motivated to work even more efficiently, freeing up time to find new clients and keep the money flowing. The result: a soaring productivity and a profit-packed business.
When pricing per project, it's important to accurately estimate the time and resources required to complete it. Underestimating can lead to lost profits and potentially damaging your reputation. On the other hand, setting the rate too high could deter clients. Consider all the necessary factors, including demand, overhead, billable time, expenses, and desired profit, when determining your project rate. It's also crucial to be confident in your pricing and stand firm against scope creep to ensure fair compensation for your work.
This hybrid approach gives you the best of both worlds, combining the predictability and stability of per project pricing with the flexibility and fairness of hourly pricing. You can set a fair rate for the project based on your experience and knowledge, and then adjust for any extra work that may arise. This way, you ensure that you are fairly compensated for all your efforts and your client is aware of the costs of any additions to the project. This approach can give both you and your client peace of mind, ensuring a successful collaboration and project outcome.
schedule ensures that everyone is on the same page and any deviations from the plan can be addressed in a timely manner. Stick to the agreed upon schedule with your client for a smooth project journey.
Maximize your freelance earnings by setting a rate that gives you the freedom to pursue your passions. Don't let clients push you around or make you work long hours, communicate your boundaries and stand firm on your value. Make sure to define clear feedback loops in your project schedule, and stick to the agreed-upon timeline. With the right rate, you'll be on your way to success as a freelancer!