Recent surveys asking how freelancers feel about their jobs show that a vast majority of them are happy about their decision to work from home. They say that freelancing makes them feel in control, empowered, independent, and productive. Freelancing truly helps people design their lifestyles in a way that benefits them the most.
Freelancing has its own pros and cons. If you’re a seasoned freelancer, the sky is the limit when it comes to earnings. But, let’s be honest: there are also freelancers out there who are unhappy with how much they earn.
It can be because most freelancers are career shifters who are used to getting a fixed salary. But, it can also be because they don’t know how to set a rate for their freelancing services. Freelancers sometimes feel that clients will turn them down if they price their services too high.
Let’s take a look at some freelancing data from Payoneer.
What’s going on in the freelancing world now?
An income survey Payoneer conducted reveals that almost 70% of freelancers wanted to make more money out of their businesses. According to the said survey, the average hourly rate for different freelancers across the globe is $19.
Other findings include the following:
- More than 60% of full-time freelancer respondents had to use their monthly savings every month to cover the total cost of their living expenses.
- 26% of freelancers revealed that the reason behind such an income shortage is that they haven’t accumulated enough number of clients to cover their monthly living cost;
- That 41% of them say that they have just the right volume or number of freelance work to support their needs, and
- 33% asserted that they have more than enough workload than they can manage.
If more than half of the freelancer population is more than capable, then what’s the real problem? How come that 60% of them don’t earn enough to cover their monthly living expenses? Do you need to have more than two or three clients to survive financially?
Well, the best solution to address all these concerns is to know how to charge premium rates for your services. If you charge decently, you can live with just one or two full-time clients. You don’t have to over exhaust yourself to be able to raise enough income to cover all your and your family’s needs.
What you need to know first
There are two common pricing models when it comes to freelancing. The hourly pricing and the project-based (fixed) pricing. While these two are self-explanatory, there’s a much deeper context between these two pricing models if you’re a freelancer.
It is common for beginners to set an hourly rate that they think is acceptable for the type of skills they offer. If you choose this pricing model, you just need to basically know the average rates of freelancers who offer the same services as you do. Lucky for you, there are a lot of guides and surveys about how much you can charge based on your skills.
But, those who’ve been freelancing for a while have a different approach when it comes to hourly pricing. What I do is, I calculate my hourly rate depending on the amount of money that I want to earn and the number of hours I want to work within a month. Let’s say I do web design as a freelancer and I want to be able to earn $6500 per month doing 30 hours of work per week.
Then, the right hourly rate would be $6500 ÷ 120 hours per month or $54.16.
The hourly pricing model works best when you cannot estimate how long a project can take you. As freelancers, we will often meet clients who know what they want but would change their minds later on. Change of plans and revisions would hurt you if you’re on a project-based rate. With an hourly rate, you’d get paid no matter how many revisions you do.
The hourly model has lots of benefits, but it can also be kind of limiting. Because, the longer you do the work, the more efficient you’d be in doing it. What typically takes you 10 hours to design, would take only 5 hours or so as you become more experienced. You’d be able to implement your own tricks and shortcuts, so this could be a disadvantage for you.
Why? Because you produce the same high-quality work, but you get paid way less because it took you fewer hours to do.
Switching to a project-based model will allow you to charge a much higher rate. This model allows you to charge clients based on the value that you provide. For example, you’d run and manage your clients’ ad campaigns for a fixed price of $2500 per month. Running ads that are cost-efficient and have high conversion rates take a lot of experience and know-how. If you’re able to do that for 10 hours in a month or less, then you’d basically take home $2500 regardless of the hours you spent on the campaign.
Most clients look for quality work. If your work provides ROI, it’s not hard to ask for higher rates. The only risk in the project-based model is, sometimes you’d have to cover additional costs if you did not estimate the project’s scope correctly.
Simply put, charging hourly can have lots of benefits, but it’s pricing your services based on a project scope that can help you earn more.
Because you don’t need to exchange time for money. Okay, you’d still do (in reality). But, you will have more freedom to outsource the projects without the client expecting you’d be there for them all throughout the day. As long as you can guarantee results and quality work, this model will work really well for you.
How do you charge premium rates as a freelancer?
- Establish a good reputation
When you’re new at freelancing, you might feel that you can just accept any project regardless of the rate. Let’s say you’re a WordPress developer and you just signed your first project with a client. Getting that first break is hard. But the challenge doesn’t end there. You need to determine how to leverage in order to close more projects. This is why sometimes, it’s acceptable to start with a measly rate.
But you can’t survive if you keep a low rate after your first or second client. Most especially if they refer you to people they know, you have to upgrade your rates. You need to establish your reputation as an amazing developer and not as a good bargain. The referral speaks for itself — your clients were impressed about your service. So, if they were impressed, that’s your go signal to peg a higher rate for your succeeding projects.
- Create something valuable for your clients
Though increasing your rate is beneficial, be modest enough to acknowledge if you deserve it or not. As you already know, your clients are business people and they invest in you because they believe you can help build and grow their business. However, if you can’t offer that advantage to them, rethink if freelancing, or the service you’re offering, is really for you. You need to justify their investment, so you have to put your best foot forward, too.
These are simple recommendations that can help you add value to your client’s business:
- Make every output excellent.
- If your client is reasonably not satisfied with your outputs, go out of your way to find out solutions to remedy the problem.
- Make sure to meet the deadline.
- Keep a positive and open communication with your client, even if you get annoyed by them sometimes.
- Find ways to be more efficient and productive. While automation can boost your client’s profit margin, it can also improve your consistency and quality of work.
- Remember to build and nurture partnerships and relationships. Your clients are also human beings that have the need to interact and build rapport with others. Even if you’re too busy coding or designing your project, make sure to take care of the relational aspect of freelancing, too.
- Invest aggressively in educating yourself
Before you can justify a rate increase, you have to prove your worth. This doesn’t mean you have to go to school again and finish another degree. This only means you have to be proactive in finding the means to educate and improve yourself. And it doesn’t end there, you also have to demonstrate your skills through work-related applications and work samples.
- Develop a specialty.
When you’re freelancing, you have to remember that you won’t earn as much if you take the Jack of all trades but master of none route. Instead of being a generalist, choose a niche or area of specialization and master it.
If you want to be a top-caliber WordPress developer, be aggressive in learning everything you need to know about the job. Hone your skills until you can master everything about the program. If you want to be a highly-paid copywriter, master topics like SEO, digital marketing, social media, and so on. All these can help you be a well-versed copywriter ready to upgrade your clients’ businesses.
Clients are willing to pay for experts. But, when you do too many things at the same time, your reputation as a subject matter expert can be compromised. This can also compromise your chances of pegging higher rates.
- Publish your rates on your website
Experts suggest that you can successfully increase your rate if you include a pricing page on your website. You need to get paid for what you’re worth. If you publish your freelance rate on your website, it’s easy to set the right precedent and persuade the right clients to partner with you.
It would be best if you can create an official pricing sheet including the following:
- Rush project rates
- Cross-sell or upsell services
- Hourly update or maintenance work
- Industry-specific rate
- Per project rate
When you set the price for your service, you eliminate clients who can’t afford your rate. Those who can afford to pay you will also be able to set their budgets from the get-go. It’s a win-win for you and the client.
While knowing and implementing these things can be confusing and challenging, one thing is for sure. Freelancing may not be for everyone, but if you’re willing to learn the trade and improve yourself, you can successfully make it in this industry.