Where do I start? There are plenty of articles online about freelance rates, how to calculate them and how to communicate them. Most of these blogs and authors give good and relevant advice. The exception being the “mentors” that try to convince you that wishing is doing #PositiveThinking.
This article will mostly focus on the mistakes you are likely to make as a beginner when trying to set your freelance rates. The kind of sins I’ve been guilty of when I was a beginner. But mainly, the purpose of this article is to give the authentic perspective of a freelance from West Africa, and to lift some of the automatic barriers a lot of “Third World” freelancers put on themselves.
1. Modeling your freelance rates on the market
Are you setting your freelance rates by browsing freelancing platforms and looking for profiles that are similar to yours? Or maybe you’re looking for job postings in order to get an idea of what clients are willing to pay? Does this sound familiar?
Modeling your freelance rates on the “standard” means you’re fully engaging in a race to the bottom. In order to be competitive, your skills and expertise won’t matter. The only leverage you’ll have will be the “competitive rates”. For a lot of freelancers from Nigeria, Niger, Benin, Togo, or even Indonesia or Bangladesh, that looks like a good solution. We tend to imagine that asking for less is a viable strategy since the cost of living is lower.
The issue is that you get to the point where you’re asking for misery freelance rates hoping to get jobs. This strategy is definitely not a viable long term option. Those who made it their “modus operandi” don’t last as freelancers. It’s not even conceivable that any serious freelancer could deliver top-quality work while working for such rates.
What you should be doing:
Instead of aligning your freelance rates on those of freelancers whose objectives and work quality, you know nothing about, you should be focusing on setting up your own freelance prices. First, decide how much you would like to earn each month. That will let you know how much you’re ideally earning daily. Then, depending on how much time you want to spend on freelance work every day, you’ll get your basic freelance hourly rate.
Also, your rate should take into account the hours and days when you’re not “working”. Ever want to take vacations? Then consider 18 work days instead of 20 per month in order to get a month free of work per year. You should definitely also take into account the time you need for administrative work and marketing your activity.
However, this is not the rate you should communicate to your clients. Your freelance rate should be enriched with the “Value Approach”. For example, a freelancer that delivers copywriting content that speeds and enhances conversion rates should be able to charge for that added value on top of his basic rate. You need to have a deep understanding of the value of your work, being able to communicate it to your clients and make them pay you accordingly.
2. Set your freelance rates by taking inherent costs into account
A lot of freelancers tend to overestimate their earnings. It’s mostly freelancers living in countries where they are not even recognized by fiscal authorities, and where there are relatively low operating charges. I’m thinking about freelancers whose use the low cost of living in their respective countries to justify asking for their extremely low freelance rates.
That creates the kind of situation where the freelancer accepts big projects with big prices without being able to determine if it’s a good offer. Still, one thing is certain. For those who consider freelancing a full-time career, this way of doing things is a waste of precious time. After 3 or 4 years, after 2 or 3 burnouts, they unavoidably get to the point where they want to up their rates. For independent workers that always depended on the “competitive rates” argument, it’s near mission impossible.
What you should be doing:
Adopt the mindset of a self-entrepreneur from the get-go. What are your operating costs? Internet connexion, fees of software, services and platforms that are essential to your work or for each project, taxes, and all other costs need to be taken into account and covered by your rates. Of course, after all is said and done, you should earn enough to make a living.
Sure, in the beginning, freelancers lack the confidence to ask for “big rates”. After all, they are afraid of appearing too expensive. Let’s just keep in mind that even if you don’t add all those charges to your rates from the start, you need to do it over time. Stagnation will never get you anywhere.
3. Having freelance rates that lack flexibility and details
Plenty of freelancers have a standard rate that they give their clients. That standard rate covers a general service without taking stock of the project’s specific parameters. You can find a lot of those freelancers on platforms like Fiverr or 5euros. Their rates don’t grow even when the project is clearly outside of the norm.
It should be obvious that this approach benefits no one. Not the freelancers that is headed straight for a burnout, not the client that is unlikely to get satisfactory work from such rates. As a matter of fact, the most experienced freelancers on those same platforms have different levels and afford themselves flexibility to up their freelance rates depending on various criteria.
What you should be doing:
This is something already covered on the freelance cover letter article. You should always make it so that your freelance rate is detailed. In other words, you should be able to explain every single step of your service. Every delivery needs to have a price assigned to it so that the client know exactly what they are paying for.
This way of doing things will allow you to adjust your rates depending on the complexity or urgency of each job. For instance, let’s consider a translator that offers translation review and DTP check of the translated documents. He can create various levels of offerings and let the client choose the rate that fits their budget. By so doing, you make sure your rate is never the same for a standard project, a complex one or an urgent one.
TL;DR
In order to set your freelance rates, you need to establish clear earning objectives from the get-go. How much do you want to earn and how much time do you want to spend working? Next, take into account fees and various charges that come with your freelance job. You need to make a living after taking care of those bills. And lastly, you must understand the real value of your work and be able to itemize each service you offer to be transparent and gain flexibility.
All this will allow you to avoid typical mistakes from freelance beginners like:
- Participating in the race to the bottom by modeling their prices on market freelance rates;
- Not considering their growth from the beginning and asking for rates that don’t cover the real charges of their freelance work;
- Depriving themselves of flexibility by proposing rigid rates that don’t adapt depending on each project’s specifics.
The illustrations on this page were provided by PixelTrue.