Talking to freelancers about how to set a decent rate is like the ideal opening to start a debate. Do you charge by the hour, by day or per project? And how do you define the rate? When you charge by day, do you multiply your hourly rate times the hours you work in a day? Or per project, do you start estimating the total time needed and multiply that by your hourly or day rate?
It still boils down to one thing: how do you define the base rate? Some factors you traditionally would take into account are:
- the industry: financial services, advertising, chemical, …
- geography: depending on the country
- market: what do competitors charge
As you might notice, I said traditionally. Although you should take them into account, they should not weigh trough in your final decision.
If you follow traditional market pricing, then you are in a race to the bottom. Competitors trying to lower their prices just to snoop away clients and prospects from each other. Perhaps driven by fear because they haven’t landed any new projects in a while.
Instead of running your business by fear, start thinking about the value you can add to your current and potential customers. It doesn’t matter who you are or what technology you use. The only thing the client wants to know is: “what’s in it for me?” Start focussing on their pains and how you can relieve them from it.
As you progress in your freelance career, you are bound to become better at what you do. You learn from previous mistakes, get faster in solving certain problems and become more productive.
For example, at the beginning of your freelancing career, finishing a certain project would take you two weeks. Over time, you got more experienced today, you can finish a similar project with a better end result and less time.
So you work much faster and deliver better results, does that mean you start charging less for what you do? No, if anything, you should charge even more when your experience adds extra value to the client.
Rule of thumb
Nobody can help you make the final decision on the rates you apply. Just take a moment, reflect upon yourself and your business and ask yourself: what value do I really ad?