After new freelancers have set up what services they’ll be offering, they’re left with a big quandary: what to charge clients?
Researching the answer to this problem on Google ‘what to charge’, you’re inundated with lots of contradicting information. This doesn’t help matters, you need a clear answer to work out how to charge for services done by your business.
A ballpark figure of £15 – £25 an hour doesn’t help. There’s a lot of variables that can change this answer.
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Freelance platforms with low rates like Fiverr, just don’t help. Experts on freelancing then start telling you to charge hundreds of dollars.
I know, I was there. Overwhelmed and burned out just with the amount of information out there.
Finally, after putting myself back together, I worked out a plan. A plan to be able to earn what I wanted. Then finally I found a formula to know how to charge for your time as a freelancer. This formula allows you to earn what you’re worth.
By the way, I am not someone who works around the clock. I have a chronic illness and a young child, so I am always feeling knackered and cannot work 40+ hours a week.
You have your own situation and have to take that into consideration.
Another thing you have to think about is your expenses. Yeah sure business expenses can be written off in your tax return. But you still need to know what to charge that is fair and realistic for you and your client.
Therefore, I have created 5 simple pricing strategies. Pricing strategies that are true for your freelance business.
5 Strategies For Freelancers So You Know What To Charge
Set Your Income Goals
Financial Goals Meaning
Financial goals are defined as
Targets set by an individual to achieve financial milestones or plansNerdwallet
It doesn’t matter what type of budget size you’ve got, you’ll have financial goals.These goals can be either short-term or long-term.
Short-term goals could be paying for activities that month, paying a big bill, or just have a bit extra disposable income after payday.
Long-term goals are bigger ambitions. These income goals could be to pay for a wedding, buy a car, or a holiday.
How To Set Income Goals
Setting income goals you want to set with the end first. This might sound counterintuitive to begin with but stick with me.
Whenever you’re planning a journey or event you look at what the end result you’re wanting to achieve. For a journey, this is your final destination. For an event, it’s what the event will look like.
What’s your final destination? Is it paying a bill, buying your dream vacation? Only you can answer this. Your answer is what determines your income goals.
To set your income goals, write down what:
- Amount you need to earn
- What services you offer
- How much time you’ve got to achieve your financial goal
Break down your goal into
how much time you have + what services you can offer : how much time you’ve got
This makes your financial goals more achievable. Even better, you get more clarity on what to charge so you hit your goal.
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Calculate Your Running Costs
Not the costs of your running shoes, but the costs of running your freelance business. These costs are a big factor in knowing what to charge.
You want to have insurance, even as a freelancer. If you’re taking on projects that have a high cost to your customer then you need to take on liability insurance.
If you make a mistake they may want to take you to court over it.
This problem couldn’t be truer than freelancers who are in bookkeeping or accounting services. Freelancers in this niche need insurance that covers their arses, just in case things go wrong.
Speaking of bookkeeping services, as a freelancer it’s a good idea to have a bookkeeper.
Having someone being able to manage your finances and tax return whilst you’re earning the money makes your time more productive.
Over time you’ll be saving yourself hours of work that you can be using to assist your clients.
Website hosting is a must-have for freelancers.
For freelancers to be successful, they need to have an online presence and a shop window for prospective customers to look at what it is you do and are an expert in.
Therefore, you need to choose a website host that is reliable and is the best for freelancers.
You can self host your own WordPress site, but this is not advisable as you’ll run into these issues:
- Piracy (hackers stealing your content)
- Run out of space – quickly
- Don’t own your own content
But with a website hosting company you will get more control, freedom, and security with your website.
- Get More Done In Your Day
- Build A Website
Consider Times You Don’t Work
Planning on working 365 days a year to reach your income goals?
Avoid this by adding in how many holiday days you will have. Include any potential sick days.
Sick days may be a little bit harder to calculate. As who exactly plans on having a cold?!
If you are fortunate enough to be in good health, you can just plan on the possibility of going down with a cold. But if you have a chronic illness like MS (Multiple Sclerosis) then this can be trickier to plan for.
As a fighter of MS, I know that I am normally ill 2 days of the week. For the rest of the week I can do my work like a typical person. With this in mind I always plan for this.
Another aspect that I have to plan for is that I have a young child and she requires my attention on the weekend. Maybe you have children or family members you care for. How much time do you have to give them?
All of these other factors make up our lives and we have to add them into the calculation as to how we will achieve our goal income.
Set Your Freelance Rates
Time-based pricing techniques in simple terms is charging per hour.
This pricing strategy usually works well for new freelancers in their first year or two freelancing. New freelancers tend to prefer the time-based pricing technique as they’re unsure of how long it will take them to complete tasks.
Even what the market value is of their freelancing services can be tricky for a new freelancer to judge, especially when they come across freelancing websites offering the same services for only $5.
You don’t want to tire yourself out working for next to nothing. You’re running a business which is what will be your main source of income. Develop an hourly rate that’s fair and takes into consideration your expenses and living costs.
To work out your hourly rate you need to start with your end goal. End goal as to how much you want and need to earn per year. Next, you need to consider how many hours a week you can work plus the amount of weeks a year you can work.
Be very realistic about this and take into consideration all the things that life throws at you and your need to take a break so you can relax to refresh your mind.
Freelance Rates Calculation Example
Desired yearly earnings £24,000
25 hours per week
48 weeks a year = 1200 hours worked per year
Rate per hour is £20 per hour
At a rate of £20 per hour and working 25 hours a week will equal £500 a week.
Just don’t forget that part of the weekly income will be taxed so don’t go spending straight away. For a new freelancer and using the pricing techniques further in this blog, this is a real prospect for you to make £20 an hour.
Check out this infographic to calculate your hourly rate in your pricing strategies.
Package Your Services
Packaging your services instead of charging per hour does tend to work out better for freelancers. What’s even better is that clients love packaged services.
Clients love packaged services because they are looking at the full service you’re providing. How long it will take you to complete and what the final cost is. Hourly rates only tell the client how much you are charging per hour to work on a project, not much else.
Here are some tips on how you can package your freelance services.
When you’ve been freelancing for awhile or are completely confident about everything you can deliver, then it’s time to create packages. Packages are a collection of services that will deliver a specific result for a client.
For example, if you offer sales funnel services and can create a complete sales funnel for a client within a specific amount of time, you can charge a project rate.
- Marketing automation
- Graphic design
- Facebook Ads campaign
- Google Ads campaign
With this bundle of services you’re charging a specific price.
This price doesn’t change if you get it done quicker in the time or it takes a bit longer than expected. To work out how you should price your project really depends on the amount of work needing to be done.
Although ultimately, project pricing is more about what value you’re bringing to the client.
In A Nutshell,
Freelancers need to have pricing strategies for their services. Without pricing strategies, you don’t know what to charge or even reach your income goals. So use these 5 strategies to start earning what you want to be earning. When you’ve got a client and negotiated with them, create a freelancing contract.
Pricing & Packages Workshop To Have A Profitable Year