How much should I charge as a freelancer?
The prevalence of this question is only increasing as we transition towards a “gig economy” with self-employment and part-time work on the rise.
Freelancers face a lot of challenges. How to find and win clients… How to manage deadlines and juggle projects… From personal experience, however, the thing I have struggled with the most is answering “How much should I charge?”.
There’s a lot more to this issue than simply money.
It has obvious implications like determining the nature of your clientele and their expectations. (Not to mention whether you actually secure any projects.)
But it also translates to “How much do I value my time?”. This is actually a profound question and there are countless ways you can approach it.
How to calculate your freelance rate
Last time I tried to arrive at an answer, I took a calculated strategy.
If you work full-time and freelancing is your side-hustle, you can always take your salary and deduce an hourly rate. This is at least a starting point.
Of course, this only works if your full-time job (assuming you have one) is related to your freelancing. If you are an accountant for a living but want to cut lawns for whatever reason in the evening, you might struggle to match your hourly fee.
In my case, I’ve freelanced as a web developer in the past and currently as an SEO. I’m a digital marketer by day (albeit early in my career) so they overlap but simply applying my salaried rate to gigs doesn’t always add up.
The appeal of a full-time job is the security that comes with a fixed salary and continuous work. It’s like selling in bulk—you are prepared to work for less. But if I’m trading my free time in the evening or on the weekend, I’m looking for a better trade-off or I may as well just clock overtime.
Time is the ultimate currency.
Your answer to the question “How much do I value my time?” relates to what you could be spending it on instead. If someone wants to hire you to work when you usually take your son to football practice, that will influence your price.
Yet it would be a pointless and self-serving exercise to think of all the things you could be doing instead. What are you actually doing? If you need the money, how can you complain that working for less than £10/hour is beneath you? Binge-watching Netflix in some kind of protest isn’t exactly a great use of your time.
While often framed in a negative way, asking “What would I get out of bed for in the morning?” can actually be a useful question. Because it relates to motivation.
When you under-value yourself, you undermine the work you are doing and consequently starve yourself of motivation.
I have learned this from experience. “Why should I bother?” is a dangerous mindset that needs to be dispelled at every doubt. You will never achieve anything otherwise.
An even better question than what would you get up for would be:
“What is the minimum I would be happy to work for?”
If you can come up with a figure for this, a lot of the anxiety that surrounds the dilemma of how much to charge can be alleviated.
No matter how high you go, there will always be that feeling that you could have charged more. That you have left money on the table. The important thing is to ensure you feel valued in yourself. The money becomes secondary.
TOP TIP: Don’t pitch at your minimum but have a number in mind that you can negotiate down to, without feeling short-changed. As you build more experience, a reputation and confidence, gradually increase your asking price.
Why You Should Avoid Charging Hourly
It can be tempting to charge hourly because it gives your price some kind of tangible grounding. It forces your clients to explicitly value your time.
But there are a number of problems with this approach.
Most fundamentally, it limits your earning potential to the hours in a week, and arbitrarily equates time-consuming work with valuable work. The warped logic behind hourly pay directly opposes productivity.
As an hourly, it is not in your financial interest to work efficiently. Why work twice as hard, or twice as smart, to finish in half the time, and earn half as much?
The other problem with charging hourly for your services is the inclination we all have to under-estimate how long things take.
It is rare that a client would hire on an hourly rate without expecting a timeframe. This means you have to commit to an approximation upfront—which is really a guess, as you cannot possibly predict future circumstances.
If you end up working less hours than you quoted for and still deliver, then great result. But if you end up working for longer (more likely) then it is extremely difficult to go back and ask for more, after agreeing a fee.
When estimating how long a project might take, it’s easy to forget all the collateral work that gets created. All the hours you spend emailing your clients, doing research or carrying out revisions can often go unpaid.
It is better to charge for the perceived value you create.
Perceived is an important word here because ultimately your client foots the bill. It is your job to communicate clearly the value you bring.
From my own experience, I have found equating my charge to an investment in terms of their future sales highly effective.
When I built a website for my driving instructor, I pitched the cost in terms of the number of lessons the site would have to generate to see a profitable return on his investment. When I broke it down like this, it seemed a safe bet.
I’m currently doing SEO for an eCommerce gaming site where I’ve alluded to the number of consoles we would need to sell to make the money back. Often these equations become no-brainers if the client believes you can deliver.
TOP TIP: In instances where a client is delegating work to you to clear their own plate, you can justify a project’s cost in terms of the time you are saving them. The chances are they value their own time more than yours…
How Much Should I Charge For My Time?
At the end of the day, only you can answer this. It partly comes down to your motivations for freelancing which I’ll address in a future post. If you are new to the game like me, I would seek to under charge and over deliver.
No matter how much you end up making, the most important thing is you are making—by which I mean productively spending your time.