Money matters can be a sticky subject for freelancers, but they’re a key element in any contractor-client relationship. Your knowledge and energy are valuable, but putting an accurate price tag on them is never quite as easy as it might seem. Nonetheless, charging rates that match your experience and expertise is vital to a successful freelance business.
How can you avoid charging too much or too little for your work? What are the best ways to increase your rates over time without losing new or existing clients? These tips from the Hiring Headquarters—Upwork’s resource for entrepreneurs, executives, and freelancers—will help you avoid or adjust your learning curve.
Know What Mistakes to Avoid When Setting Rates
Every new client is an opportunity to make important decisions about your rates that can have a lasting impact on your financial stability. Unfortunately, finding the confidence to negotiate competitive rates is something many freelancers struggle with.
“Mistakes Freelancers Make When Setting Their Rates—and Ideas to Fix Them” looks at some of the more common stumbling blocks that can lead you to underestimate the value of your work. It discusses how you can determine what your contribution is worth and weigh the many considerations that can impact your calculation.
Six-figure freelancer Danny Margulies breaks his success into four core tenets.
Look beyond the confines of the 9-to-5 mentality. It can be easy to start a freelance business with an employee mindset if that’s what you’re familiar with. As a business owner, however, you have other considerations to account for, such as self-employment taxes, business expenses, and other unpaid administrative tasks that must be completed on top of your client commitments. You shouldn’t hesitate to account for these elements when setting your rates.
Set rates that give you flexibility to level-up your skills. Charging rates that are too low can leave you with a full schedule as you aim for your financial goals—and little time left to improve your skills or gain new ones. Ideally, leave time available to take online courses, read books, and add knowledge that could increase your value to your clients.
Check your assumptions. Not everyone has the same skill level or expertise, and the knowledge you bring to the table has value beyond billable hours. You do yourself a disservice when you assume how a client will respond to a proposed rate.
Focus on delivering value and don’t work for free. Offering to work for free can send clients the wrong message about what your time is worth, and you risk devaluing your skills and abilities. Instead, it’s better to focus on finding ways to provide value.
Learn How To Increase Your Pay Rates Thoughtfully
Even when you’ve set a rate you’re comfortable with, over time you’ll find moments where it makes sense to increase your rates. This is another challenge that most freelancers face at some point. How you do it can affect your degree of success and the relationship you have with clients.
“6 Methods for Raising Your Rates (Without Losing Any Clients)” offers ideas that can help you increase your rates without upsetting clients or missing out on excellent opportunities. Here are a few different ways to help navigate this delicate subject more smoothly with existing and new clients alike.
Niche toward more specialized services. By avoiding general work and specializing in a specific area your target client base needs help with, you can make yourself more appealing and put yourself in a better position to charge more.
Break your services down into tiered packages. When given the choice between a cheaper basic service, a middle-tier package, or a premium offering with extra bells and whistles, you’ll find many clients may be willing to pay more for higher-end services.
Be flexible and willing to negotiate. Even if a client is reluctant to pay a higher rate, they may be willing to negotiate and still leave you with a better rate. Learning to negotiate well is another useful skill to cultivate.
Check out the Hiring Headquarters for more tips on how to boost your freelance game.