Become Freelance

Sit up and take notes!  This is one of the MOST IMPORTANT sections in the whole BecomeFreelance webbook.

Knowing how much to charge is the most puzzling of all topics for new Freelancers.  While it may seem obvious, many new Freelancers fail to create a structured rate guide for work.  Instead, they make up prices as they go along, with a fair amount of guesswork and a strategy of trail and error.  They do not have enough confidence in their own abilities to charge top dollar.  This is a grave error and an erroneous belief.  I see many Freelancers who charge WAY less than the going hourly rate.  I also see a few who charge WAY too much.  The reason is simple.  They don’t know any better!

Although there is no magic formula to set up an accurate Freelancing fee system, there is Rhyme. And there is Reason.  First, here are your common questions:

• Should I bill hourly or by project?
• Should I bill by word, page or by piecemeal?
• How much should I mark up tangible items?
• Should I charge a commission or royalty on the sale?
• Should I submit a medium bid as opposed to low or high?

Ideally, you should create an initial price sheet for your services or products that will be readily available to potential customers.  This will be used as a guideline, even if you are doing your Freelance work on a ‘winning bids’ basis.  We’ll talk about that in just a few minutes.  Winning bids and proposals is a whole different strategy, but you will still need an hourly rate to refer to.  If you have more than one service, figure out an accurate hourly rate for each service you offer.  In addition, you should set a flat rate or minimum fee for special services or projects.

For example, a Freelance Marketing Consultant may have an hourly rate of $150, but may also charge a flat rate of $300 for writing an RFP (request for proposal).  Think about whether you will offer discounts to any non-profit organizations or special clients.  Those must be part of the rate sheet.  By the way, this rate sheet doesn’t have to be public information unless you want it to be.  You can hang it up in your office to use as a reference tool.  Think about every service you will offer and make a list.  Next to that list, you will be able to develop an accurate pricing structure upon reading this section.

But before you go setting your fees based on the ‘hit or miss’ method of trial and error, you need to know what factors should determine your pricing strategy:

6 Factors That Determine High or Low Rates:

1. Demand for Your Service or Product – Search online or around your area for proof of the need for your business in the marketplace.  If there are fewer suppliers than people who need the service, then theoretically you should be able to command a higher rate.  On the other hand, you may want to consider lowering prices if it seems like every Joe Shmoe has a business that is similar to yours.  Pay attention to the signs and do your homework to see how valued your place will be within the industry.

TIP:  IF YOU FIND A HUGE NEED FOR YOUR PRODUCT OR SERVICE -
Charge as much as the market will bear.

2. A Niche Business – If your Freelance idea is original and represents a specialty, then you will be able to charge a lot more than someone who carries a category of ‘general’.  For example, grant writing is a highly specialized technique that not every writer is knowledgeable to do.  Therefore, grant writers command top dollar for their expertise.  Think about the prestige of your enterprise and try to focus on one particular market, rather than trying to be the jack of all trades.  For example – if you worked for ten years as a health inspector, you could venture out into the world of Freelance consulting for businesses who either want to prepare for an upcoming review or who have failed an audit.  Your service could be of great value and should therefore be more costly than someone who has never been involved in the profession before.

TIP:  HONING IN ON A SPECIAL TALENT WILL INCREASE THE VALUE AND THE RATES YOU CAN COMMAND.
If you’re one of the few or only individuals who can do what you do – isn’t that worth a whole lot more to a potential client?

3. Cost of Living – Add up all of your expenses for the month and divide by four weeks.  That is the minimum you must make every week just to get by.  But you don’t just want to “get by” now, do you?  You want to be wildly successful.  Double or triple that number in front of you and make it a goal to achieve each week.

TIP:  WEEKLY GOALS ARE MORE ATTAINABLE THAN MONTHLY OR YEARLY.
Fix a number at the beginning of each week that you will make, no matter what!  If you miss the mark one week, make sure to hit it the next time so that you won’t ride off the rails.

4. Competency – If you don’t have a lot of skills, training or experience, it will be difficult to charge a higher rate.  It doesn’t mean you should give up, either.  People just aren’t going to pay a lot for a so-so performance.  You can still find work, but take on assignments in your field that you can use to gain experience and add to your portfolio.  Update your portfolio often, at least once a month with new things you have done.  Keep practicing your craft as often as possible to perfect your skills and level of experience.  Then raise your rates gradually.

TIP:  NEVER UNDERSELL YOURSELF IF YOU HAVE A VALUED TALENT.
If you are too cheap, clients will be suspicious.  If your service is too high it will scare them away.  A strong balance between mid to high rates is best!

5. Competition - Although many competitors are hush-hush about how much they charge, you have ways of finding out what the going rate is for your desired Freelancing talent.  Pay attention to what they’re doing.  Look through their portfolios.  Is your stuff WAY better?  Or maybe they’re a veteran and you’re new.  Either way, you should set your prices somewhere in the ballpark to the other vendors or they will run you over and snatch those jobs away.  Keep your prices competitive with theirs.

TIP:  IF YOUR FREELANCING CAPABILITIES ARE GLOBAL RATHER THAN LOCAL, YOU WILL NEED TO RESEARCH COMPARABLE RATES OF THE ENTIRE INDUSTRY.
Don’t limit yourself to one geographical region.  The Internet does not know if you live on a rural farm in Iowa or a metropolitan city of Europe.

6. Longevity - How many years have you been doing what you do?  Let’s go back to that Health Inspector who wants to venture into her own Freelance consulting gig.  Since she has already been working in her desired field for a decade, she has gained plenty of knowledge and experience.  Rather than having a mindset of “just starting out” and billing lower rates to get new customers, she could charge as much as or higher than competing Freelancers in the marketplace.

TIP:  ALL OF YOUR EXPERIENCE FROM PAST EMPLOYMENT COUNTS TOWARD YOUR EXPERIENCE AS A FREELANCER.
Who can disputably say that because you just started your business you are not qualified to handle an assignment?  No one should or will devalue your qualifications if you add them to your current repertoire.