IT CAN BE DIFFICULT TO QUANTIFY YOUR WORTH & HOW YOU LIKE TO BE PAID FOR IT.
One of the simplest, yet hardest, things for a freelancer to do is to set their rates. Living in a full-time world we’re used to our income being defined for us. Sure people ask for raises now and then, they have a certain income goal they’d like to meet, but all of those numbers are based off the existing salaries that employers have established. Ask yourselves, how did employers, companies, industries come up with these numbers? How do they quantify the value of these things? All these numbers floating around in the economy, these “standard rates,” had to come from somewhere. Somewhere, in this case, was everywhere. Employers look around to see what their competition is doing. They base everything they do off what their peers have done, but guess where their peers looks? Right back at them. So really, there is no original source for these salaries. Someone just made them the fuck up. Guess what? That means you get to make yours up too (within reason of course).
KNOW YOUR INDUSTRY & MARKETPLACE
The easiest way to figure out the ballpark your salary should land in is to do exactly what employers do: look at your competition. What are other freelancers like you charging? This is an important step in your research, but unfortunately it’s where the research ends for many. You should be researching not only your competition, but competition with your exact same credentials (how many years they’ve been working, their schooling, their portfolio), with less credentials, and with more. Is there a freelance web designer who is charging as much as you but with less experience? If so, there are probably freelance web designers with your exact same experience level charging more than you are. Are there capabilities that other freelance web designers have that you don’t? Perhaps clients will pay more for someone with a cursory knowledge of motion graphics. If you’re able to gain this knowledge without spending too much time or money then do it. You can bump up your rate.
KNOW YOUR FINANCES
Another incredibly important factor, and one that more and more people will need to think about with the adoption of remote work, is where you’d like to live. Now that a client’s pool of freelancers is basically the whole world, you need to take into account your cost of living. If you can charge less living in Omaha than a person in Brooklyn then you’ve got an edge in the market. Of course, do you want to live in Omaha? Say you’re beginning a freelance career in entertainment, or journalism, or tech, or finance. It may still be important to live those hubs to best expand your network, get some hands-on experience, and feel part of that ecosystem. You don’t have to live in LA forever if you want to work in entertainment, but in the earlier days of your journey, it can certainly be helpful. If you feel you’re at a place in your career when you can get all the work you want while in Omaha, then that gives you a huge advantage.
Calculating your expenses can vary drastically based on where you live. Once you’re settled, you can create a floor for your rate. A floor meaning, your rate can’t go below this number because you wouldn’t be able to afford your life. Ideally though, you want to be making more than your expenses. Not only do you want money to put into savings, but you’re human too. You need some extra scratch to get a nice meal now and then, or take little vacation, or go out with friends on an average weekend without having to worry about money.
TRIAL & ERROR
Once you’ve taken the cost of your lifestyle and the rate of your competition into account, next comes the most important part: experimentation. Try out a number and see what the response is. If you currently have clients, don’t raise the rate on them out of the blue. Let them know that if you were to re-sign a contract with them, you will be charging this much more. Maybe try out a few different rates on various job sites and see which one bares most fruit. The reaction from new and existing clients will be very telling. Figure out whether to charge hourly or on a project basis. You can do both depending on the project and the client. If the number you choose is universally disapproved of then you probably went too high, but if the first client you tell reacts negatively, that could just be them. Get a wide variety of reactions before making up your mind. By the way, you will be shifting your rates throughout your career. If it’s a small change, like a couple dollars an hour, that’s not a huge deal. You could probably just go ahead and do that, although definitely let existing clients know beforehand. But anytime you want to make a serious change, you should go through this process of trial and error.
There is no “perfect” or “ideal” rate for your services. Don’t comb the internet for what your rate “should’ be. At the end of the day, the only real rule of thumb is this: you can charge as much as people will pay for. The exercise we’ve outlined here will help get you close to that number, but you have control over it is well. If you’ve established a great relationship with a client and really shown your worth, you can charge a lot more.