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Like many freelancers, you’re probably insecure about your pricing.
How do you accurately price non-commodity work?
How do you compare one professional’s work to another?
How do you determine what’s fair to charge when you’re dealing with abstract concepts like the effectiveness of writing, the cleanliness of code, or the beauty of a design?
Truthfully, those are tough questions.
Pricing your freelance work is an endless game of trial and error … it’s not something that’s decided once.
Good pricing is refined over time.
Price isn’t everything, but there’s no doubt that it plays a big part in a client’s decision to hire you.
If you want to attract more work, you have to take pricing seriously.
Unsure if you should raise your prices?
Use this guide to find out.
Good Pricing Emphasizes Value
There’s a misconception that clients are solely concerned about price.
In fact, there’s an overemphasis on pricing in a lot of industries.
People care about margins, not the final price.
They care about how much value they’ll get out of the project.
In most cases, they’ll be happy to pay more if you can demonstrate that they’ll receive additional value.
Let’s use an example:
A client asks you to make a simple five-page website.
Now, you could build a lightweight HTML site with his five pages for $1,000.
But instead, you offer to build the website on WordPress for $2,000.
This gives the client the ability to create their own pages in the future or manage a blog without the help of a web developer.
In this example, you’ve given the client exceptional value.
In the long run, they’ll save money by not hiring a web developer over and over again.
That type of value is worth paying for, even though the total cost is higher.
Of course, if you focus on value, you have to communicate it.
Don’t expect your clients to see the value in your work on their own.
Explain it to them honestly.
Stop Charging Hourly Rates
A lot of new freelancers start by charging hourly rates.
Once they learn about the project from a new client, they estimate the number of hours it will take, multiply by their rate, add a few hours for good measure (if they’re smart), and then deliver the quote.
The client agrees and off they go.
It’s not a bad way to price:
If the work takes longer than you expect or the client increases the scope, you get to expand the fee.
As long as your rate accounts for all the non-project time you spend working (invoicing, pitching, creating proposals, etc.), you can make a living like this.
But you won’t ever be really successful.
Here’s the thing:
Your clients don’t care how long you work on their project.
They only care about the value they get out of the deal.
What does the client care if a project took 20 minutes or 20 hours?
If you charge by the hour but manage to deliver tremendous value quickly, you’ll actually short yourself.
Instead, it’s smarter to price by the project.
Here’s why:
Clients like project prices better than hourly rates because it guarantees their cost.
They know for sure that you’ll charge $500, which helps them budget.
There’s no fear that “unexpected problems” will inflate the bill.
There is a downside, but it’s manageable:
If the project does take longer (or cost more) than you expect, you’re either stuck eating the cost, or you have to awkwardly ask for more money.
Either option will make someone feel ripped off.
So, it’s important that you make your best effort to quote accurately.
Lowering Your Prices Is Not A Long-Term Strategy
Sometimes it’s tempting to lower your prices.
Your pitches are being ignored, no one is responding to your ads, and your entire network is saying:
“Sorry, nothing right now.”
Or, maybe you’re just starting out.
You know what your skills are worth, but you need to build a reputation.
You might think:
“I’ll work for cheap for a while and raise my prices later.”
Or, maybe you’re in a slow spot.
You’ve got rent to pay, but nothing in the queue, so you’re willing to work for peanuts so that you don’t need to have an awkward conversation with your landlord.
Lowering your prices can bring more clients to do your door, but not the ones you want to work with.
These are the types of clients who …
- … are in financial trouble and struggling
- … have outrageous demands of your time
- … will drop you in a moment to save $10
- … have burned relationships with other freelancers
- … don’t respect your skills and abilities
- … don’t plan to pay at all
There’s no long-term relationship with clients like that.
You might be attracting more work, but it’s not the right kind of work.
You aren’t creating anything valuable or moving your career upwards.
Look:
Sometimes you need to make some quick money.
Every freelancer understands what that’s like.
So at some point, you’ll drop your price to secure a job.
But don’t let that become a long-term strategy.
If you don’t value your time, no one else will.
What Your Prices Say About You
Setting your prices too low can actually be damaging.
Clients have some idea of what their requests are worth:
- They know that the website they need should cost around $2,000.
- They know their design branding project should run $10,000.
- They know that the articles they want to buy should cost around $200 each.
When they come across a freelancer who requests less than they expect, the first thing they wonder is:
“Why is that person so cheap?”
Inevitably, they assume that the freelancer doesn’t have much to offer.
Perhaps the freelancer’s skills are poor or they don’t intend to devote much time to the project.
Conventional wisdom says lower priced things are less valuable than higher priced things.
This isn’t always true … but it’s true in a lot of places, so clients expect it to be true with freelance work.
Plus:
Working for low wages probably isn’t why you decided to become a freelancer.
What’s the point of running your own business if you’re taking home the same pay as the guy who works for someone else and doesn’t carry all of that extra stress?
That isn’t to say, however, that you should inflate your prices arbitrarily.
Abnormally high pricing makes you look arrogant.
Clients will expect that you’re hard to work with, can’t take direction, and are unwilling to accommodate their process or workflow.
It also makes you look inexperienced because you don’t understand the market’s rate for your own work.
So, you can capture more clients by not being the most expensive or the least expensive option.
Neither of those positions are attractive.
You Get What You Negotiate
There’s an axiom that every freelancer should have on their wall:
“You don’t get what you deserve. You get what you negotiate.”
Freelancers love doing and creating.
You like completing new projects and honing your craft.
“This is why most new freelancers are terrible negotiators,” says Lindsay Van Thoen at Freelancer’s Union, “You want to get the money part done as quickly as possible to get to the doing part.”
The goal of a negotiation is to find a common ground between you and a client.
No party is supposed to be the winner, but your goal is to get as much as you can for your labor.
If a client agrees to pay $800 for a job you typically charge $500 for, the arrangement is still fair.
I’m suggesting that you try to squeeze every penny out of your clients …
I’m saying you should focus less on the dollar amount and more on the fairness of the deal.
To determine fairness, you have to consider value.
What does the client get out of the arrangement?
How will their life and business be improved?
If your work creates $50,000 in value for your client, you aren’t being fair to yourself by charging $300.
On the other hand, if the client only receives $500 worth of value, charging $10,000 isn’t fair to them.
Freelancing coach Jake Jorgovan makes a great case for pricing by value:
“The great thing about value-based pricing is that it doesn’t take time into account. If you can make a change to someone’s business in an hour and it provides significant value to them, then you can be paid a large amount for it.”
Over time, your goal should be to raise your prices by raising the value of what you provide.
If you can deliver twice the value this year, then you charge twice as much because that’s fair.
So how do fair prices keep work coming in the door?
Your clients will be much happier paying fair prices for dependable work than constantly shopping for the cheapest deal.
Instead of soliciting quotes from other providers, they’ll come right to you because “Bob’s work is always worth the money.”
(That’s something they tell their friends, too.)
By focusing on fairness in pricing, you’ll build long-term relationships that keep your schedule full.
How to win freelance work? Always Be Climbing
The last piece of advice I’ll give is this:
You should always be climbing upward.
Every year, your prices should become more expensive because the value you provide should be greater.
Don’t charge more “just because.”
Charge more because you’re worth more.
If your clients are growing, they’ll understand when you grow too.
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