Within recent years the popularity of freelancing as a career choice has skyrocketed. In the US alone, in January 2023, it was estimated that there were 70.4 million freelancers in the country’s total workforce, and it is projected that the number will increase by around 20 million towards the end of the decade.
Despite this new popularity, choosing to transition into a full-time freelancer comes with tons of risks, such as a definitive lack of job security and unclear contracts.
However, for many, the prospect of working on their own terms and pursuing their passions is worth the potential consequences.
One of the most daunting challenges new freelancers face comes when it is time to determine the proper rates for their services. Finding the sweet spot for pricing is a bit of an art form, requiring a delicate balance between valuing one’s skills, meeting market demands, and ensuring financial stability.
If you’re just starting out freelancing or considering a career change, here are three tips to help you set the best rates for your clients.
1. Understanding your Worth
As a freelancer, putting a price on your skills is difficult, as there isn’t always an example available to use as a guideline. Because of this, before you set your mind on any sort of figure it is best to take an introspective look at your skill set.
What you find will not only help you set yourself a price, but it will also help you create sales pitches for any potential clients. To evaluate your ability, ask yourself the following questions:
- Do you have any unique talents that set you apart from competitors?
- How much experience do you have in your field?
Be as thorough as possible in your answers to these questions, this self-assessment will serve as the foundation for setting rates that genuinely reflect your value.
2. Research the Market
Your skills should form the core of your pricing strategy. Once you have assessed them it is time to find out where they fit into the broader market. This market research will provide a benchmark to gauge where your rates will stand.
Your research should include but not be limited to:
- Competitors Rates: Pricing too high in relation to your competitors may deter clients. Pricing too low could undermine the image of your services.
- Pricing Strategies: There are three types of pricing strategies, time-based, project-based and value-based. Understand each of the three and which are most common in your line of work.
3. Look at Your Overhead Costs
Finally, when setting a price, look to your daily costs for guidance. After all, your work will have to cover them if you’re searching for financial security. Whether it be the mortgage, car insurance, or the costs in your line of work, account for everything.
A lot of new freelancers also neglect the importance and price of insurance. Consider contacting a Commercial Insurance Broker before completing a pricing strategy to protect yourself as much as possible.
Starting any freelance career involves many risks and rewards. Just remember, setting your pricing correctly is crucial for long-term success, while any significant misstep could potentially destroy any future prospects for success.
Use these tips, along with further research, to accurately value yourself and set yourself up for a long, successful future.