Deciding how much to charge is an ongoing challenge for freelancers and independent consultants. In a previous post, we examined the process for calculating the minimum amount of money you should charge for a freelancing job. In this post, we’ll examine the process for determining how far above your minimum rate you can go. This is important because everything you earn above your minimum pay rate will be profit that you can reinvest in either yourself or your business.
Supply And Demand
The law of supply and demand states that, within every marketplace, there is an optimal price point that is determined by the relationship between how many people want to consume a good/service and by how many people can produce that good/service. This holds true for the freelancing world. If you set your price too high above the market rate, you will most likely have problems winning jobs. For example, if everyone in your peer group is charging $50/hour and your rate is $150/hour, you will be a less attractive candidate in the eyes of many clients.
Similarly If you set your rate too far below the market rate, you may be leaving money on the table. For example, if your peers are charging $50/hour and you’re charging $25/hour, you’ll probably win more clients, since your hourly rates are 50% cheaper than your peers. However, you’ll have to work twice as many jobs in order to earn the same amount that your peers earn for a single job.
Meet The Competition
In order to be competitive, you need to understand what other freelance consultants are charging for similar services. There are a number of ways that you can obtain this information, among which are:
- Reach Out to Friends – If you know other freelancers, ask them about their rates range.
- Networking Events – If you don’t currently know any freelancers, you should check sites like Meetup, the Freelancers Union, your local chapter of AIGA, etc to see if there are any events taking place in your city.
- Online Communities –Sites like Linkedin, Reddit and Quora have freelancing specific groups and subgroups. You can very easily post a question and receive a response in a matter of moments.
- Freelance Websites – A lot of freelance consultants advertise their services via personal websites. You should be able to locate some via a simple Google search. It’s not uncommon for people to list rates on their sites.
Average Design Rates By Industry
Freelance rates will vary by industry. Several studies have been commission over the years listing the average freelance rates for a variety of positions. Among the more recent report are:
- AIGA|Aquent: Survey of Design Salaries
- Bureau of Labor Statistics – Various Reports
- Editorial Freelancer’s Union- Editorial Rates
- Elance – Talent Trends Report
- Forbes – Best Paying Freelance Careers Report
- International Freelancers Union: Data and Analysis of Freelancer Demographics, Earnings, Habits and Attitudes
- Moz – SEO Pricing Guide
- NJ Creative Network – How Much Should I Charge Report
What Are You Really Worth?
After you’re done researching freelancer bids, you’ll need to figure out how you fit into the price spectrum. In order to do this, you should consider your education level, your work history, your professional experience, and your skill level. These factors will determine whether your daily rate should be at the low end of the bid prices, the high end or somewhere in the middle.
For instance, a person fresh out of school with zero experience should probably not charge as high of a rate as a person with years and years of freelancing experience and a long roster of client references. Similarly, if you’re a web developer and your skills are at an expert level, you should probably charge more than a colleague whose skills are at an intermediate level.
How Can I Get The Best Price?
Just because you believe that your freelance services are worth a certain price doesn’t mean that a prospective employer will feel the same way. In the third and final section of this series, we’ll explore negotiation tactics and how to best convey what your skills are worth when bidding for a job.