One of the most common doubts of a freelancejobopenings.com that is launched into the labor market is knowing how much to charge.
Always the eternal problem. You don't want to be expensive because that would mean losing customers, but you also don't want to go cheap and give away your work.
Where is the intermediate point? Is there an exact answer to this question?
Unfortunately, there is no magic formula for knowing the exact price you should apply, but there are 3 ways to calculate the rate of a freelance. Very different formulas but that will give you the necessary bases so you can set your prices with discretion.
Do you want to know the exact rate according to your moment and learn to revalue your brand and your prices?
How to calculate my freelance rate?
The first thing to be clear is that there is no infallible formula and that you will find rates that are based on beliefs of the most varied. Look at some of the profiles that I have identified:
The beginner: for fear of the client's refusal, he condemns himself by putting very low prices. Very common when you start selling services.
I don't care about everything: "I have my rate and I don't care if I haven't changed it in years or whatever the market says." It is understood, right?
I do not raise a penny: you already have customers who pay you "x" money and do not know how to charge more.
As you have imagined, although these 3 situations are very common, none of these profiles is correct.
What to do then to know what rate to apply?
The first step is to see traditional pricing methods.
# 1 Depending on the market
The first way to establish your freelance rate is to rely on normal practices and rate averages for your industry.
Thus, a sure way to establish your rate is to start with the average market price based on your experience. As soon as they start hiring you can validate if the market is in accordance with the rate you have set.
However, when setting your rate in this way you will always have the doubt to know if you could have billed something else. So keep reading.
# 2 Depending on your needs or lifestyle
The second way of doing the calculation is the other way around. Instead of thinking about what the market can pay you, you set your rate according to what you need to earn in order to have the lifestyle you want.
Imagine you do the calculation and you know that you need about 3,000 euros a month. That figure should be divided by the number of hours you want to do per week.
Maybe you are willing to work many hours a week, for example, 50 hours. However, others will prefer to enjoy the family a little more and may spend 30 hours.
We divide than to see what would be the rate you should charge:
$ 15 / hour
$ 25 / hour
Keep in mind that in this approach I have not included the taxes that you would have to pay, but do not forget them since they will be a good bite to these initial calculations.
If you are not one of those who like to make numbers, I recommend you visit Laura Lopez's freelance calculator.
With this application, you can see in a real way the income you need to generate in order to have the lifestyle you dream of. You just have to enter the data (it gives you references) and the calculator will tell you how much you should charge per hour.
# 3 That compete for you
The third way to calculate your freelance rate is not based on what the market is used to paying, or what your monthly expenses are.
This can be applied when you have already won a place in the market and have managed to position your brand as a benchmark in your sector. Although this usually happens over time, it does not hurt that you are aware.
After a few years of working as a freelance and having an unblemished reputation, chances are that there are many customers competing to hire you. But as I always say, the great curse of the sale of services is that it is not a scalable business.
The day has only 24 hours and you need to sleep, eat, have life, etc.
This case is the typical example of how prices rise when there is more demand than supply. But as in everything, there is always a roof.
However, it is not uncommon to run into people who bill 150, 200 and up to 500 euros per hour. But do not rub your hands too early, this always depends on how you have positioned your brand, the sector in which you move and the client portfolio you have.
And then, what rate should I set?
If you are starting in your activity, it is best to start with a slightly lower rate than the market. This way you will be able to attract customers even if you don't have a name yet.
Be careful, a little lower, it is a LITTLE lower. Do not throw your prices for the floors since that is not advantageous in any way:
• You are damaging the market since you are devaluing prices.
• A very low price will be perceived as a symptom of poor quality.
• You can position your brand as "cheap" which will mean that later it will cost you a lot to raise prices.
• If you intend to eat every day you have a problem.
• When you start working, with each new project, increase your rate between 5% and 10%. With this dynamic, you will reach a point that can be called "resistance zone".
• By throwing your prices on the floor you can only devalue the market Click to tweet
This means that you will have reached a rate in which your customers begin to reject your proposals.
This point is a stable area where it might be better to stop raising rates. It is even convenient that you lower them by 5% to gain stability and stay at this level for a season.
And how do you calculate your rates?
In this post, I have turned over the 3 most common ways that are usually used to set prices, but that does not mean they are the only ones. There are freelances that use other strategies like these:
A base price that can be added extras.
Different prices depending on whether the client is going to offer a regular or punctual job.
There are many ways to assign prices, so I would like you to share in the comments about how you do it.
Tell me about the mistakes you have made if you have had clients who have rejected you for thinking that your rates were expensive or if you had the feeling that you were asking for much less than you should.