Please note: These are some ideas but how you set your rate is entirely up to you.
By Fred Schebesta, Co-founder & Director at finder.com.au
The path toward becoming a freelancer isn’t always an easy one. It’s very similar to building a startup business, except instead of selling a product you’re selling your own skills, talents, and time. Without understanding some key principles and rules before diving in, you could wind up underappreciated, underpaid, and left with a plummeting self-confidence.
How can you start strong? I’ve learned a lot by getting started and finding out what’s worked for other people.
I built financial comparison site finder.com.au in 2009 after writing a single page about credit cards. I received incredible feedback and enough incentive to push on to launch a startup—but I realized I had no idea how to value my work, which is perhaps the cornerstone of effective freelancing. I was neck deep in an industry I had very little experience in, and would have drowned had I not come across these four foundations.
1. Price is a signal of worth, not just a source of income
When you put a price out on the table, you’re saying two things: “this is what I want as compensation,” and “this is how valuable my work is.”
Whether you’re a seasoned freelancer or are considering testing it out, your prices will help determine the type of clients you attract. Set the bar reasonably high, and always deliver quality! Remember: You can always lower your fees, but it’s difficult to increase them.
2. The easiest way to increase profit is to charge more
This point sounds ridiculously simple, but that’s why it works. Increasing the prices you charge can strengthen the sense of worth around your company.
A good starting point is doing market research of similar providers. How do you stack up in terms of quality and influence? Once you know what your competitors are up to, you can determine your room to negotiate from there.
This doesn’t mean ridiculously jacking up your prices, but people are generally happy to pay more if they receive quality. However, don’t become the person who goes above and beyond then doesn’t bill every working hour—it rarely works out for you in the long game when you become busier. Your clients will get used to you undercharging (or won’t be aware of it), and will be frustrated the moment you start billing for the hours you truly work.
3. Test, test, and test again
Try different rates for different types of jobs, test different proposals, test and test again to find what works for you. “Kaizen,” or continuous improvement, is about constantly changing your work and making minor tweaks, then reviewing which version led to a better outcome.
A focus on constant experimentation is crucial for every profession; mixing up your material is the only way to learn what works and what doesn’t. You might bottom out a few times, but you’ll also experience some tidal waves that you can mimic in your next piece.
4. Leverage pre-existing frameworks
If there’s any aspect of freelancing that can be hard to show potential clients, it’s efficiency.
To potential contractors or business partners, you’re just another face in the crowd of applicants. What I think will sell you more than anything is showing the frameworks you use in every aspect of your work.
For example, use an hourly rate calculator to determine your rates, or build a project management framework to show clients how much time and resources you spend on each aspect of a job. When people can see that you’re not being airy about pricing or your efficiency, you’ll gain their trust—and have the opportunity to deliver on that trust.
5. Never compete only on price
Try to establish a core customer group and a differentiator that they respond to. Believe in your self worth and your clients will, too.