Freelancers often start (and end) pricing too limited for their services. It is natural to feel like you are asking too much – mainly when your charges are more than you have ever paid for anything – but businesses do have bigger budgets than most people have so it is more likely you under charge your customers than you overcharge them.
Apart from this, lack of knowledge of business finances, other difficulties might stand in your way of asking a fair rate:
- You Don’t Feel Your Work Is Worth the Money
While you are getting to learn your trade, you might do so much work for free (if not all of it). Once you get experience and begin charging clients, it may feel awkward to take money for something you were doing for free. Maybe you still feel like a novice, or maybe all your customers are your friends. But if you want to make existence, at some point, you will have to quit doing so much pro-bono work. If you’ve been working for a while, you are good enough to get paid. Knowing whether you overcharge or undercharge can be difficult but the following can guide you in coming up with a reasonable rate.
- You Only Take Small Clients
Let us say you are a videographer and you make a professional sales video for an anonymous blogger. This small-time blogger probably will not gain much value from your service because the video probably will not get the blogger a lot of publicity. As a result, the blogger will not need to pay you much for it. Now, offer that same excellent video service to a successful business owner and the value of your work advances. The business owner with a good following understands that the return from your promotional material is going to be high.
If you keep going after small clients, you will keep having trouble charging a fair rate. Get more powerful clients, and you will not have to undercharge for your services because the value the client receives is greater.
- You Have not Thought About Your Salary
The total amount you get from your clients each year is your salary.
What do you think you are worth per year? Break that number by 52 weeks, and then by 40 hours. Have you been pricing this hourly rate? But wait. You are not done. You need to calculate the cost of all your materials. And, unless you are very inquired, you apparently don’t have 40 hours of work per week all 52 weeks out of the year. The sum in the cost of down weeks and costs from the rate you just calculated. Now, tell, is this the hourly rate you charge?
Freelancers normally charge less than full-service companies which give the same services. That is since there is so much less overhead like advertising, office space, workers, and all sorts of other expenses that freelancers do not have. Business owners know that they receive more of a deal using a freelancer than they would with a full-service company. So do not be shy – charge what you are worth! It is still going to be less than what your client would pay a full-service company.
- You Charge By the Job
Charging by the job is nice if the job is under your check and you have a lot of expertise doing this exact work. Nevertheless, it can drive to losses when you are doing work that is under someone else’s management. When you have to make modifications to your final product; you could end up doing more work than expected. It could be hours or days more work. With the price set in stone, you will end up working those hours or days unpaid. You should track your hours spent on projects & bill your clients for those hours.
Or, if you want, you could resume charging by the job but track your hours to make sure that you are asking the right price. If your hours go overboard, tell the customer that you will need to charge them for the extra work. This helps to assure you never under charge of your clients.