Help! How should I set my freelance rates
and get paid what I deserve?

Being your own boss and setting your own hours? Awesome. Stressing about getting paid what you deserve, while not also scaring away potential clients? Less awesome. Don’t worry – you’re not alone! We’ve been there too and are here to help with some expert advice.

Here are few tips to help get you started:

1. Start with your annual salary goal. Perhaps you’ve recently moved away from your corporate job which provided an annual salary. If your goal is to replace that salary with your freelance income, you’ll need to calculate your hourly rate to make that happen. Many freelancers are willing to give up some amount of money in exchange for more flexibility and work “freedom”, but don’t forget to incorporate common freelancer expenses into your price. You may have expenses like health insurance, taxes, equipment, office space, software subscriptions, and marketing costs. Here’s a handy formula you can use to calculate your desired rate:

Divide your desired annual salary by the average hours worked per week and the number of weeks worked, then multiply by 1.3

Using the formula above, for example, someone with an annual goal of $90K working full-time with four weeks off per year would want to charge around $60 per hour. 

• Salary: $90,000
• Hours worked per week: 40
• Weeks worked per year: 48
• $90,000 / 40 = 2,250. 2,250 / 48 = 46.9. 46.9 x 1.3 = $60.97

2. Know the market rate for your services. Knowledge is power. Spend some time looking into what other freelancers in your field are charging for similar services. Ask your friends. Research online. This will give you a baseline. But remember to do your best at comparing apples to apples; someone with your same job title in India who typically services companies overseas should have a drastically different rate than yourself if you’re primarily helping US clients and have US training. Check out Glassdoor or PayScale.com to help determine a general salary range for your career.

3. Know your Worth. Related to the above, make sure to know how awesome and unique you are. What skills, experience, connections, background, etc help you stand out from the competition? In this sense, it’s important to view yourself as a business. And your business, like any other business, needs to position itself with unique and different capabilities and offers that aren’t easily found elsewhere. If it’s not already documented in your resume or CV, write down some of your unique accomplishments and capabilities.

4. Project-based. Some clients see less risk in moving forward with a single set rate for a contract or project. This might be a good option, rather than an hourly rate, especially for larger projects. This will give your client a clear idea of what to expect in terms of cost and deliverables with no risk of going above budget with hours due to unforeseen work requirements or issues. Make sure to always use contracts to outline your project details and always ensure that both you and the client are clear on deliverables and payment terms. Clients love predictability.

A few more ideas here that many freelancers often forget:

• Be flexible. Clients don’t only prioritize cost and quality when picking a potential freelance partner. They also love to find freelancers and contractors who are super easy to work with. Try to be flexible and do your best to come up with a win-win compensation scenario for both you and your client. Some ideas here:
  • Free Trial. It’s hard to escape the allure of a try-before-you-buy model. Perhaps you should consider proposing a higher-than-average rate, but also offering to work for free for the first week or so to let the client experience just how outstanding you really are. Back when RC Willey was a struggling startup (currently does over $300M in annual revenue), Rufus Call Willey grew the company by lending out refrigerators for a week and promised to take them back 100% free of charge if the prospect wasn’t totally happy. The switching costs of swapping out a fridge might not be the same as swapping out a freelancer, but this strategy could still be a great one.
  • Performance Based. A performance-based rate will help you stand out. We know of a few freelance marketers who agree to a low (or no) hourly rate, but have revenue share components built into the agreement that align the incentives. Clients have a hard time saying no to someone who will charge only, or mostly, based on performance and results.
  • Stay Updated. Understand that your rates may need to change over time, depending on your experience, the demand for your services, and the overall economy. Be willing to go higher or lower depending on those factors, and the needs of your client.
• Be confident. When you’re setting your rates, it’s important to be confident in your abilities. Believe in your worth, and charge a rate that reflects that! Customers often see price as an indicator of quality – so don’t feel like you have to be the lowest-cost option out there. Remember that you are providing valuable services and expertise to your clients, so don’t undervalue your work. 

Some Fun Facts about Freelancer Earnings and Rates:

• The average freelancer in the US earned $71,100 in 2022.
• The top 10% of freelancers earned over $100,000.
• Entry-level freelancers typically charge between $10 and $15 per hour, while more experienced professionals can charge upwards of $50 per hour
• Worldwide, the average freelancer earns $21 per hour.
• The majority of freelance wages currently range between $25.72 (25th percentile) to $87.02 (75th percentile) across the United States

Conclusion

You are awesome and deserve to get paid what you’re worth. Remember – selling your skills to a potential client is a skill in and of itself – you can and will get great at it, so don’t give up! Setting your rates as a freelancer is always a challenge at first, but with proper research, confidence in your worth, and some creativity and flexibility with your rates, you’ll eventually settle into a wonderful freelance groove. You got this!

Sources:

https://www.upwork.com/resources/how-much-do-freelancers-make

https://www.ziprecruiter.com/Salaries/Freelance-Salary

https://www.flexjobs.com/blog/post/set-freelance-rate/

https://thesavvycouple.com/best-freelance-jobs

https://ddiy.co/freelance-statistics

https://explodingtopics.com/blog/freelance-stats

https://hbr.org/2017/01/how-customers-perceive-a-price-is-as-important-as-the-price-itself