What should a freelancer charge?
I was curious, so I Googled the average hourly rate for a freelancer in my line of work (I’m in advertising, and that’s enough for now). Wow! what a disappointing activity. I quickly learned that most of the results you will find on the first page of this search are completely clueless. If you care about your future as a freelancer, please, please do not use a search like this to set your rates.
What to do instead
Comparing yourself to others is a total waste of time. The only people that matter in your freelance business are you and your clients. This is a luxury that you enjoy as a freelancer which the majority of Corporate America will never understand. Don’t spoil it by bringing others into the picture.
Once you embrace the simplicity and focus that freelancing affords you, settling on a price becomes remarkably uncomplicated.
A good number for your freelance work, whether hourly or project-based, will:
- Work for you
- Work for your client
- Sell itself when compared to the value you provide
1. A number that works for you
This is pretty straightforward. What is a number that works for you?
There are thousands of articles explaining how to account for taxes and healthcare, the time spent bookkeeping and looking for gigs, etc. It’s likely that if you’re reading this you’ve already read a dozen of those articles and still feel lost. That’s because working for yourself is about so much more than making sure Uncle Sam gets paid and chasing down an attractive insurance premium. Yuck! Humans don’t dedicate their lives to something for that. And you’re human, aren’t you?
Knowing what number works for you is less about the number and more about you. It requires understanding yourself and why you’re truly doing this. Nobody else can do this for you. Don’t ask them to; don’t let them. I’ll give you a hint: it has a lot more to do with your hopes, dreams, goals, desires, joys, and sorrows than it has to do with spreadsheets.
The best I can offer is to tell you how I approach the question. I think about what it would take to keep me from going back to work at a “real job.” If you liked working a real job and only freelance because you wanted to earn gobs more money, a number that’s less than you were making before freelancing won’t make any sense. But if you’re like me and you hated working a real job, your number is going to be less (and it’s only going to be one of many factors).
2. A number that works for your client
Remember what I said last section about your hopes, dreams, goals, desires, joys, and sorrows? That was nice, wasn’t it? Now, here’s the kicker: your client doesn’t care.
If I could instill one principle into anyone I’ve mentored in their freelancing journey it’s that it’s not your client’s job to fund your extravagant lifestyle. If you are a creative-type who learned to spend the whole semester in school on a single project because “process” then go ahead and apply that last statement to your process as well.
When you go out freelancing, you will be taking care of jobs for your client. You need to realize it is not your job, it’s theirs. Before they come to you they will have defined what needs to be done and they will have their own idea of what they can justify spending to accomplish it. That number doesn’t change merely because they learn you only like to fly private. They will simply talk to the next person.
If your number happens to be higher than their number, there may be reasons for this that they are not considering. Your expertise in explaining these reasons can be an asset to them. Only approach the situation with an understanding that you’re there for them and it’s a privilege to be considered for their job and you won’t do anything catastrophically stupid. (Never underestimate how easy it is to do something catastrophically stupid!)
3. A number that sells itself
For a number to sell itself you need the number that works for you to be lower than the number that works for your client. What happens when that is not the case? Is your dream of freelancing doomed from the start? Should you just give up now?
Usually not, but you will have to do one of two things: get your number down, or get their number up. It’s always best if you can accomplish the latter. You do this by working on increasing the value you provide.
This is where your passion and drive as a freelancer can shine. You will need it to ensure that when you ask for a high number, your client knows that you will over-deliver. Make sure they understand that your work is not going to be like the work they are used to getting from their payroll employees.
There are many ways to do this. The two that have been wildly successful for me are to provide convenience and speed.
The clients I work with used to have a fairly complicated product pipeline that required the use of three or four specialists. Products took days longer than what was necessary and if they had even minor revisions from their clients it could take a day or two to turn around. In a deadline-driven industry like advertising, this leads to more than just headaches. Real money is lost up and down the supply chain.
What did I do? I busted my ass to become adequate in all four areas that were necessary for their product pipeline. Then I busted my ass further to become excellent in three of them. By the end of it, I wasn’t just offering an hour of my time. I’m offering a significantly consolidated product pipeline and a process that can turn around minor revisions in a fraction of an hour in most cases. Remember: this process used to take days. Do you think my clients have once asked how I justify charging X-amount more than their payroll employees? Not a chance! Once they get a taste of the kind of value I’m able to provide, the number sells itself.
One last thing
Don’t be greedy.
It’s very likely that I’m providing a greater value than what I’m being paid for. I could try to maximize my number so the difference between my number and their number is zero. But that would create a very serious problem for me.
I am admittedly pretty lousy at marketing my own services and finding new clients. Being able to find new clients is a great ability to have, but if it ever becomes a requirement for your business, it quickly becomes a great liability. I know too many freelancers who were great at finding new clients, would work with them once, and then need to do it all over again. When a downturn in the economy occurs, or their specific niche faces major disruptions, the flow of fresh clients dries up and they wind up back working a real job again. Don’t let this be you.
I can get new clients if I need to, but I don’t enjoy it. So when I land a well-paying client with lots of repeat business, they are precious to me. Repeat after me: I will be good to them, I will not be greedy, I will be happy with a number that:
- Works for me
- Works for my clients
- Sells itself when compared to the value I provide.
