Setting your freelancing rate is both an art and a science. On one hand, it does not take a lot of market feedback to realize if you are charging too much or too little for your services. It is also very easy to look for similarly credentialed freelancers in your field to see where the acceptable range of rates falls. Yet, on the other hand, there is a great deal of negotiation in a freelance contract, and many longer-term contracts may require a rate increase as time goes on.
In a sense, each freelancer should be willing to acknowledge reality while consistently testing limits, in a professional manner of course. At times, this also means negotiating the balance between your personal needs and broader market dynamics.
Evaluating the Market
Unless you can provide a truly unique or niche service, you probably exist in a crowded field of fellow freelancers. Many of these freelancers are direct competitors and will bid against you for contracts. In the process, however, each competitor provides you with valuable information about what an acceptable rate is and how to win projects.
Suppose you are a freelance web designer and create a profile on Upwork or 99designs. Those sites ask you to post a going rate, not necessarily what you’ll be paid, but a visible rate by which potential clients can predetermine if you’re a viable candidate. You can use the site to think like a potential client. If you wanted to hire a designer with your skill set, do a search and find other web designers. You’ll be able to see their quoted rates and can use those as a baseline from which to frame the value of your services.
Set Your Minimum Rate and Track Your Time
It is not enough to just know what you might be able to charge. You need to know your minimum acceptable rate. This is the lowest equivalent hourly rate at which you are willing to work. Test several minimum rate calculations to come up with a realistic figure.
Track your time every single day and for every single job. Include the time it takes to perform research, locate new clients, and negotiate. You might look into job-tracking software that has a time-log component, or set up a simple Excel log on your own. Adjust your time management habits and the rates you charge to ensure you’re hitting your target hourly income.
Negotiation and Feedback
Haggling is a part of being a freelancer. The early parts of client interaction, such as the initial bid and internet conversations, are an information-gathering session for each party. Don’t be afraid to adjust your rate based on new information as long as you can justify it to the client.
Periodically review going rates in your industry and pay close attention to how much interest you generate from clients. If you are consistently a finalist and winning every contract you bid, chances are you are not charging enough for your work. If you aren’t getting any bites, consider lowering your asking price.