Setting your prices as a freelancer can be both exciting and daunting. As a beginner, it’s hard to know what you’re really worth. But even if you’re a seasoned freelancer, setting and adjusting your prices requires a lot of thought to get right.
In this article, I’ll go through some key tips for setting your freelance rates and explain the different ways you can charge for your services. I’ll also compare some common freelancing prices in different industries.
The 4 Ways To Price Your Freelance Services
1. Hourly Rate
One approach to pricing your freelance services is by setting an hourly rate, and this will probably be the most natural option for many freelancers. This method involves calculating the amount you want to earn per hour and using that as the basis for your pricing.
Remember, your hourly rate should reflect not only the work you’re doing but also the value you bring to the table. Consider factors such as your expertise, the complexity of the project, and the market rates in your industry.
Note: A variation of an hourly rate is charging a day rate. This may be more suitable for some forms of freelancing, but charging by the hour allows you to be more accurate with your pricing.
Who Should Use An Hourly Rate?
Hourly rates will work well for things like creative freelancing and jobs where the value proposition is fairly linear. By this I mean your input is fairly proportional to the value your client gets from your output.
Let’s say you are performing the same kinds of tasks each day, and they provide a certain value to the client that depends only on the task being completed, rather than how it is completed (as long as it’s done within their guidelines of course). This means the more hours you work, the more you can do, and the more value you provide for the client. But doing the work ‘better’ won’t yield more value for the client.
Common “by-the-hour” freelancing jobs include:
- Consulting – You can provide more value to the client the longer you work with them
- Data entry – The more work you do, the more value the client gets
- Editing – While some may charge per word, most clients will expect hourly rates here
Where An Hourly Rate Doesn’t Work
This would be in contrast to something like freelance writing, where your expertise, experience, and writing skills might skew the time-to-value ratio.
For example, if you have lots of marketing experience and know what it takes to put together a top-quality sales page, just 600 words might lead to your client making thousands of dollars in sales over that page’s lifetime.
If you charge by the hour, and this project took 1 hour, but a 3,500 word, purely informational blog post you wrote took 3 hours, you’d be getting paid more for the content that actually might provide less value to your client. That’s where project-based pricing comes in.
Note: As I mentioned above, you should be taking things like your expertise into account when setting your hourly rate. But for some roles, such as writing, other pricing methods are simply more effective.
2. Project-Based Pricing
With project-based pricing, you estimate the total scope of the project and offer a fixed fee for the entire job. This method can be attractive to clients as it provides them with a clear cost upfront, but it also works well for freelancers as they can put a certain value on the entire scope of the work no matter how long it takes.
Example: Jake Jorgovan of Career Foundry gives an excellent example of why it’s often the right move to switch from hourly rates to project-based pricing.
Pricing per project is a good way to account for things like the amount of time you expect it to take, the value you can add for the client, and the difficulty of the project. Sometimes difficulty doesn’t correlate to the time it takes, and so project-based pricing accounts for this better than an hourly rate.
When To Use Project-Based Pricing
For example, let’s say you’re a web developer, and you build websites for a variety of clients. Some want fairly simple websites built using a content management system like WordPress, while others prefer websites built from scratch, using code.
One client might need a WordPress website with 15 pages, while another needs a custom site with just 5 pages, but coded from scratch. The WordPress website will be easier to make, even though there are more pages, and it might even take the same amount of time as the 5-page custom site.
But the 5-page site requires more concentration, thought, and is overall more difficult to build. Project-based pricing allows you to account for this added difficulty. If you charged an hourly rate, you’d get paid the same for both sites (if they took the same amount of time to build).
Both sites might provide the same amount of value to each client (roughly speaking), but it was simply a case of one being harder to build than the other. Therefore project-based pricing makes sense here.
But what if one of these sites clearly provided far more value to one client than the other? That’s when we need to consider value-based pricing instead.
3. Value-Based Pricing
Value-based pricing is a strategy that focuses on the perceived value your freelance services bring to your clients. Instead of basing your prices solely on your time or the project’s complexity, you consider the impact your work will have on your client’s business or personal goals.
Sticking with our website example from above, in this case you’d look at the two websites:
- Fairly simple WordPress website / 15 pages / 50 hours to build
- Complex custom website / 5 pages / 50 hours to build
Note: The numbers here are arbitrary, and the web developers reading this might be recoiling at the 50 hours figure, but I just wanted to use a round number!
On the surface, it looks like the only difference was the complexity, and if we’re using project-based pricing, it means we should charge more for the custom website, right?
But what if the simple 15-page WordPress site is for an ecommerce brand selling hundreds of products at fairly high price points, while the custom site is a personal blog with no immediate revenue source?
Think About The Value The Client Gets
In this case, you can provide a huge amount of value to the ecommerce brand, as they now have a place to sell their products. But while the personal blog might have been more difficult to produce from a technical standpoint, the monetary value to the client is fairly limited, at least until they start getting traffic and monetize their site.
Clearly difficulty and the skill required to produce the work aren’t the only considerations to make, and we also need to consider the value the client gets at the end. This echoes the sentiment from Jake’s article that I linked to above.
To implement value-based pricing, you need to have a thorough understanding of your client’s needs, challenges, and desired outcomes. By aligning your prices with the value you provide, you can create a win-win situation.
Your clients receive tangible benefits, while you’re compensated fairly for the results you deliver. This approach often requires effective communication and a deep understanding of your client’s perspective, and it’s not suitable for all forms of freelancing.
However, even if you are using another pricing method, such as per hour or per project, you can use the value-based method within that as a tool for negotiation. If a client offers a lower than ideal hourly rate but you think you can add a lot of value to their business, you can use that to negotiate a higher hourly rate, even if they’re not keen to price the project in a purely value-driven way.
4. Retainer Pricing
Finally, retainer pricing is an excellent option for freelancers seeking more stable and long-term working relationships with clients. With this approach, you agree on a fixed monthly fee for a specified number of hours or services. This arrangement provides a predictable income stream and it’s very predictable for the client too.
It’s important to clearly define the services included in the retainer and any limitations or exclusions. These will typically be laid out in your freelance contract.
Retainer pricing works best for freelancers offering advisory or consultancy services, or those providing a specific service multiple times over a given time period. Some examples include:
- Freelance consultants
- Virtual assistants
- Social media managers
- Web developers that provide ongoing maintenance and site updates
Note: There are other more specific ways of pricing your freelancing services. For example, freelance writers often charge per word.
How Should You Price Your Freelancing Services?
Now that we’ve gone through each of the most common freelance pricing methods, let’s take a closer look at the pros and cons of each one. This should help you decide which way to price your freelancing services.
|Hourly Rate||Provides transparency for clients regarding the cost of your time Allows you to track your productivity and earnings more easily Can be adjusted as your skills and experience grow||Clients may be wary of unpredictable costs if the project takes longer than expected Focusing on time rather than value may undervalue your expertise|
|Project-Based Pricing||Provides clients with a clear cost upfront Can help you secure larger projects with well-defined scopes Encourages efficiency and effective project management||Difficult to account for unexpected changes or additional work that may arise Requires detailed discussions and negotiations to determine a fair price|
|Value-Based Pricing||Reflects the impact and benefits your work provides Allows for higher prices if you can demonstrate substantial value Fosters stronger client relationships based on shared goals||Requires a deep understanding of your client’s needs and desired outcomes Communication and negotiation skills are essential to justify the value and price|
|Retainer Pricing||Provides a stable income stream and ongoing collaboration Builds a strong relationship with clients based on trust and reliability Can result in predictable workload and better work-life balance||Requires careful estimation of the number of hours or services needed Requires clear expectations and boundaries to avoid scope creep|
Remember, the best pricing strategy for your freelance services depends on various factors, such as:
- Your expertise
- The nature of your work
- Your clients’ preferences
- Their budget level
Consider the advantages and disadvantages of each method and adapt them to suit your unique circumstances.
Ultimately, your pricing strategy should reflect the value you provide, align with market rates, and foster mutually beneficial relationships with your clients. Now that we know what methods we can use to set our freelancing rates, let’s dive deeper into how to choose the actual numbers!
How To Set Your Prices As A Freelancer
Research The Market
Start by researching the market rates for similar freelance services in your industry. Look at what other freelancers with similar skills and experience are charging. Online platforms, industry associations, and networking groups can provide valuable insights into prevailing rates.
Understanding the market will help you position your prices effectively and avoid over or underpricing your services. Look in forums, on job boards, and check out freelance marketplaces to get an idea of the going rates.
Note that the rates you see on job boards and freelance marketplaces are rates specific to those places. Networking and connecting with clients directly will typically allow you to charge higher rates than the averages in these places. It’s simply because jobs in these places tend to be on the more entry-level end of the spectrum.
Assess Your Experience & Expertise
Consider your level of experience, expertise, and the unique value you bring to clients. If you have specialized skills or a strong track record of successful projects, you can justify higher rates.
Conversely, if you’re just starting or still building your portfolio, you may need to offer more competitive prices to attract clients and gain experience.
Determine Your Desired Income
Decide on your desired income and how much you want to earn per year. Take into account your living expenses, business costs, taxes, and any other financial goals. Calculate how many billable hours you can realistically work in a year, factoring in non-billable time for administrative tasks, marketing, and professional development.
Divide your desired income by the number of billable hours to get a rough hourly rate or income target. This is a good starting point, but remember that it’s really just a target, and you may not be able to justify that rate yet without gaining new skills or more social proof.
Factor In Overhead & Expenses
Consider the costs associated with running your freelance business. This includes expenses such as equipment, software subscriptions, marketing, insurance, and professional development (i.e. learning new freelancing skills).
Determine how much of your income needs to go towards covering these overhead costs. By factoring in these expenses, you ensure that your prices not only cover your time and expertise but also contribute to the sustainability of your freelancing business.
Account For Project Complexity & Scope
The complexity and scope of each project should influence your pricing. Some projects may require more extensive research, specialized skills, or additional resources. Assess the effort and time required for each project and adjust your pricing accordingly.
You also need to be prepared to have a transparent conversation with clients about the factors that influence your pricing decisions.
Consider Client Budgets & Perceived Value
While it’s important to set prices that reflect your worth, it’s also essential to consider your potential clients’ budgets. Some clients may have limited budgets, while others may be willing to invest more for high-quality services.
Adapt your pricing strategy to target different client segments. Sometimes you’ll just need to reduce your prices for a particular client if you believe their long-term business is worth it.
In every case, focus on highlighting the value and benefits you provide to justify your prices and differentiate yourself from competitors.
Review & Adjust Your Prices Regularly
Pricing is not a one-time decision. Continuously review and evaluate your pricing strategy based on market trends, changes in your skills and experience, and feedback from clients. Regularly assess your rates and adjust them as necessary to stay competitive and ensure fair compensation for your freelance services.
Let’s now take a look at some ranges you can expect to work within as a beginner to intermediate level freelancer in various industries.
Freelance Prices By Industry
|Writing/Content Creation*||$25 – $100+|
|Graphic Design||$30 – $100+|
|Web Development||$40 – $150+|
|Digital Marketing||$40 – $150+|
|Photography||$50 – $150+|
|Videography||$60 – $200+|
|Social Media Management||$25 – $75+|
|Translation||$25 – $80+|
|Consulting||$50 – $200+|
|Virtual Assistance||$20 – $50+|
*Freelance writers tend to price their services per word instead of per hour, with entry-level jobs offering pennies per word and more advanced freelance writers earning upwards of $0.20 per word. For more information on freelance writing rates, check out our guide to setting your content writing prices.
It Varies A Lot
Setting prices as a freelancer varies across industries due to countless factors, such as market demand, skill requirements, and project complexity. While the rates in the table above are general estimates and can vary based on your experience and location, they provide a broad overview of freelance prices by industry.
5 Things To Consider When Setting Your Freelance Prices
1. Market Rates
Research the market rates and industry standards for freelance services in your specific field. Understanding the typical pricing range will give you a benchmark to work with. Look at online platforms, industry associations, and networking groups to gather insights and ensure that your rates are in line with what clients expect to pay.
2. Your Skills, Expertise, & Experience
Consider your skills, expertise, and level of experience in your chosen field. Clients are often willing to pay more for freelancers who have specialized knowledge, a proven track record, and a strong portfolio.
3. Project Scope & Complexity
Take into account the scope and complexity of each project. Some projects may require more time, effort, or specialized skills. If a project involves additional research, customization, or extensive revisions, it’s reasonable to charge higher rates. You should assess the specific requirements of each project and adjust your prices accordingly.
4. Your Desired Income & Business Expenses
You also need to consider your desired income and the expenses associated with running your freelance business. Determine how much you need to earn to cover your living expenses, business costs, taxes, and savings goals.
5. Client Budgets & Value Proposition
Finally, you must have an understanding of your target clients and their budget limitations. Some clients may have specific budget constraints, while others may be willing to invest more for high-quality services. Don’t be afraid to adapt your pricing strategy to align with different client segments.
How To Increase Your Freelancing Rates
As a freelancer, increasing your rates is a natural progression as you gain experience, expertise, and confidence in your abilities. However, raising your prices can be a delicate process. To close off this article, let’s consider how you can raise your freelancing prices over time.
Assess Your Value & Expertise
Evaluate your skills, experience, and the value you provide to clients. Consider the growth and development you have achieved since you last set your rates.
Have you acquired new certifications, completed challenging projects, or gained specialized knowledge?
Recognizing your increased value and expertise will give you the confidence to justify higher rates.
Research Market Trends
Stay informed about current market trends and industry standards in your field. Research what other freelancers with similar skill sets and experience are charging. This will help you understand the competitive landscape and ensure that your rate increase is in line with market expectations.
This ensures you are always aware of any changes in demand or industry dynamics that may affect your pricing.
Communicate With Existing Clients
Before implementing rate increases, have open and transparent conversations with your existing clients. Notify them of your intention to raise your rates and explain the reasons behind it, such as increased experience or improved services.
Emphasize the value you provide and how the rate increase will result in even better outcomes for them. Give them ample notice and offer the opportunity to discuss any concerns or negotiate alternative arrangements if necessary.
In some cases, it may be a good idea to not implement rate changes for existing clients. If you tell clients that you’re raising your rates, but they won’t be affected by this, you are rewarding them for their loyalty. You’ll need to weigh up whether this is sustainable for you, but it can be a good way to improve already-solid client relationships!
Offer Additional Value & Services
To support your rate increase, consider adding more to what you offer or providing additional value to clients. This could include using new skills, providing more comprehensive services, or offering additional support or resources after you deliver a project.
By expanding your services, you provide clients with added incentives to choose you over competitors, justifying the higher rates.
Gradually Increase Rates
If you are concerned about the impact of a sudden significant rate increase, consider implementing a phased approach. Gradually increase your rates over time, either with existing clients or for new projects.
This allows clients to adjust to the change gradually and it minimizes potential resistance.
Setting Your Freelancing Prices Is All About Value
As long as you provide enough value and you are compensated in proportion to that value, setting your prices as a freelancer is fairly straightforward. Hopefully the tips above help you set your freelancing rates with more ease!
For more guidance, check out our article on how much you can earn as a freelancer.