How To Price Your Freelancing Services
In the beginning, one of the biggest questions you’ll have is how to price your freelancing services – how much to charge your clients. The questions around this will continue, as you continue in the business and have to navigate when and how to increase your rates, if you should give discounts, etc.
In this article, we will discuss how to determine your initial pricing structure.
How Should I charge? Hourly, Project-based, Commission-Based?
It is most common in the freelancing space to charge an hourly or project-based fee. Depending on the client and what makes sense for that particular project, you will likely use a variety of these pricing strategies. However, even if you go 100% project-based, you’ll still need to figure out your “hourly rate” as a starting point to decide how much to charge.
I have a spreadsheet that you can use to help yourself figure out what a reasonable fee would be (and a video that walks through how to use it is coming soon).
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Instructions for Using the Rate Spreadsheet/Getting Your billable Rate
Note: Don’t change the grey boxes – doing so will remove the calculations. Those will auto-populate.
- Line 4: How many weeks per year will you work? Make sure to take vacation/time off, holidays and sick days into consideration.
- Line 5: How many hours per week do you want to work?
- Line 6: Number of hours per year you will work | THIS WILL AUTO-POPULATE
- Line 7: What % of time is NOT billable to a client/event? (Looking for clients, working on new client contracts, networking, website, financials, invoicing, etc)? Enter a % here. I like to use 15%. The rate for non-billable freelance work tends to be much higher than this in general, but I have found this feels tends to
- Line 8: How many NON-Billable hours is that per year? THIS WILL AUTO-POPULATE
- Line 9: How many BILLABLE hours per year does that leave you? | THIS WILL AUTO-POPULATE
- Line 10: Enter how much you want your salary to be (per year)
- Line 11: Cost of Job benefits (health insurance, 401K, etc.)
- Line 12: Your yearly business expenses
- Line 13: Total of Salary + Job benefits + Business expenses |THIS WILL AUTO-POPULATE
- Line 14: Your hourly billable rate is . . .
Now you have your hourly billable rate calculation. A few things to keep in mind:
This is where you should price your services if you want to work the number of hours specified and make the salary that you specified. However, depending on the variables used, you may need to charge less or more.
Remember, your calculation rate is a starting point from which you can start thinking about how to price your services.
Check Yourself Salary Equivalent Hourly Rate
If your brain works like mine, you’ll likely be wondering what the yearly salary equivalent of your hourly rate is.
Take a look at the tab in the spreadsheet in order to get an idea of the equivalency. Remember, as an independent contractor, you’re not getting paid a lot of benefits that you would as an employee, so your salary equivalent should be higher than what you’d make doing the same job working full time.
This method of charging for your services is the most cut and dry. You log your hours, and every month (or whatever is agreed upon), you will invoice your client for the number of hours worked.
Charging A Project Fee
Many times, you’ll be charging a project fee.
How to figure out how much to charge for this?
You will want to take the hourly billable rate that you’ve determined for yourself and multiply it by the anticipated hours that you’ll be working.
For this pricing model, be aware of scope creep. If what you’re being asked to do is outside of the scope of the contract, you should communicate that and ensure that what you’re being asked to do either 1. stays within the scope of the contract or 2. that you renegotiate and get paid more.
It’s important to keep track of your hours even if you’re working on a per-project basis. This will help you
Keep track of your hours. I love using toggl.
How Much Are Freelancers Charging
I know what you’re thinking right now, because it’s what I was thinking when I was starting my business and trying to come up with pricing. “But can’t you tell me what a typical hourly billing rate is?”. Well, I can tell you that, of course, it varies depending on location, (even though this isn’t as important these days), experience, and the types of companies you are working with.
If you’re in the event industry, Northstar Meetings and Event Leadership Institute recently conducted a survey and found that for example:
Of those who have been in business 0-3 years , 44% charge between $50-99 per hour, and 24% charge $100-149 per hour, and 22% charge $1-49 per hour.
The full survey is not yet released, but you can sign up to get it when it’s released.
I hope this was helpful to you. If not, please reach out and let me know what information you’d like to see here.