How Are You Going to Charge Your Client?
You can charge for your projects in two ways: based on an hourly rate or based on an agreed upon amount of money. Both methods have their pros and cons.
An hourly rate is a good solution for projects that require additional tasks, such as research, communication with clients or implementing adjustments. You don’t need to be worried that you will be working for free. At the end of the project, you just need to add everything up, presenting detailed data of your work time to your client.
You can measure the time you spend on work using a traditional clock or a stopwatch, but I recommend online solutions. From my experience, I can confidently recommend Toggl to you – an application that measures how much time you spend working on a specific project and presents data in attractive looking reports. The basic plan, covering time tracking, manual time adding, editing and deleting data, offline mode and much more, is free. For creating reports and a few other extras, you will have to pay a bit.
Some online platforms for freelancers also have their own time tracking applications and offer pricing based on time worked. For example, Upwork. You need to download an application to your computer, choose a specific project, and start working, while the application takes screenshots every 10-15 minutes (if it catches you browsing Facebook or answering e-mails, you can delete it later along with the time logged).
Unfortunately, you will never be able to predict fully how much time it will take to complete a specific project, even if you rely on your extensive experience. It is possible that 3 hours of work will turn into 2 days. In that case, projects based on a fixed rate may turn out to be one big disaster. Instead of earning anything, you will only struggle, wait impatiently for the end and get angry at every single adjustment you need to make.
On the other hand: let’s assume that your client asked you to do an urgent task, which takes 5 minutes. He would do it himself, but he has no idea how to do it. Your hourly rate is $50. Pricing your work based on the time worked, you will charge $5. But is the value that you deliver to your client worth so little?
It is very likely that your client will gladly pay you much more (to have the work done correctly), and yet he doesn’t need to know how much time exactly the work took you.
Try to sell the value that you offer, not your time.
You can price your work in advance – for the entire project or a part of it. It may be risky sometimes too, but the most important thing is to set rates before you start working. More about rates below.
What Does Your Client Expect?
Most customers expect the same thing: to have the work done well, quickly and as cheaply as possible. The problem lies in the fact that you can’t provide all that at once.
Look at the “magical triangle” with project parameters below. It shows three main options: fast, good, cheap.
Those three components depend on each other and can’t be analyzed separately. The problem is that if one parameter changes, it will affect the other two.
- If the work has to be done quickly and well, it won’t be cheap.
- If the work has to be done quickly and cheaply, it won’t be done well.
- If the work has to be done well and cheaply, it won’t be quick.
Clients aren’t always aware of this. They rarely know how much work actually lies behind the end result. As a copywriter, I often meet people who believe that one good 500-word-long article can be written in an hour. Because anyone can write. But to write well, you often need to conduct research, think carefully about composition, double check text in terms of linguistics and other errors, etc. All of that can take a whole day.
Make sure that before working on the project, you discuss every single detail with your client and you know his expectations. If necessary, show him the triangle above and present him the best solution you are able to offer.
How Much is Your Client Able to Pay?
As a freelancer, NEVER show a detailed price list on your website. Instead, price every project individually, taking into account expectations of your client, deadline, complexity of the tasks, and a few other factors, including the total budget of your client.
It is logical that a client who represents a start-up will have a smaller budget than a big corporation. The same price that would make a startup vanish away, may seem ridiculously low for a corporate representative. You would think that in the case of a project for a corporation everybody would be happy. Unfortunately, it’s not always like that…
If you offer your client a very low price (low from his point of view), he will simply stop treating you seriously. He will think that you offer low quality.
Of course, raising rates several times isn’t the solution. Instead, you should take care about offering services for as much as your client is able to pay you.
Sometimes it is good to simply ask a client what his budget for a specific project looks like. By doing that, you will learn more about his expectations and possibilities, helping you decide whether you agree with them or not. If you think that the budget is too small, you should openly tell your customer about it. He will have two options: give up on working with you and find another person who agrees to his terms; or increase his budget and agree to your terms, already knowing what exactly to expect.
What Are Prices of Other Professionals in Your Field?
Before pricing your work, you need to take a look at prices in your market. Remember, however, that there is no single price list. Prices are based on how much a freelancer values his time and how much his client is able to pay.
You will realize quickly that there are freelancers who offer their services for hundreds of dollars per hour, as well as freelancers who will do anything for five dollars per hour. I have nothing against the first ones (and I respect them that they can sell their services). But when I see the second ones, my heart breaks. Is it that they don’t respect themselves, or their work, or time that they have put into gaining necessary skills and knowledge? Or do they simply give such poor results?
What do you do? Check the Internet and take a look at prices offered by other professionals in your field. Ask on different Facebook groups, and read various freelance blogs. But don’t expect many specific answers. As I wrote above, each project is usually measured individually.
Take into Account Additional Cost and Time
When pricing your work, many people often forget about indirect losses. What I mean here are costs related to energy use, accounting and other paperwork, as well as time spent on answering e-mails, phone calls, etc. When we add all those seemingly trivial actions or costs, we can be surprised. And what if that additional work equals about 1/3 of the time you spent on your project? Adding costs of electricity, consultation, accounting costs and taxes and your earnings will no longer look that attractive.
Always consider additional costs and time spent on all tasks related to the job. Your work is not only to finish a specific project for your client. It is also everything else associated with it. From the beginning to the end.
Don’t be Afraid to Raise your Prices (But Do It Carefully)
In the life of every freelancer there comes a time to raise rates – both for regular and new customers. Raising prices for new customers is simple: it is enough that you price a project based on your new rates.
So how can you raise prices for current clients that are already used to your system of pricing? First of all, look at your agreement and make sure that it doesn’t include any specific information on pricing.
Remember that you don’t need to raise rates for every customer. You can do it only for clients whose projects don’t give you much satisfaction and joy or for clients whose projects require more and more time from you. Just tell your client about it, presenting to him your point of view. If he likes your work, he will surely understand– because finding a good freelancer is not easy.
Don’t raise your rates too often. Clients will quickly assume that what you care about the most is money and you don’t want them to think that. Above all, you should care about providing terrific results, so it is worth their money. And don’t raise your prices too drastically. If you raise them about 20% or more at once, you won’t achieve anything good. You will only scare away your client.
How Much Do You Know About the Project?
Before I start working on any project, especially for a new client, I always like to make sure that we understand each other well. If you discuss everything carefully, you will be able to avoid many problems, have less re-work and save a lot of time. I always have a simple brief that I share with my new (and sometimes even old) clients, asking them to fill it out.
Generally speaking, a brief is a series of a few to a dozen questions related to your client and his needs, budget, preferences, etc.
A good brief asks your client to provide the following information:
– General information about your company and you: Who are you? What’s the name of your company? Where is your company based? What industry is it in?
– Overview of your project: What project would you like completed? What tools or methods would you like to use?
– Objectives of your company: What do you want to achieve for developing your business?
– Audience: Who is the target group for your project? How old is your ideal audience? Are they mostly women or men? What do they do? How much do they earn? What are their interests?
– Supporting materials: Do you have any materials that should be used in the project? (for example logo, product photos, brochures, articles, etc.). If yes, please send it to [email address]
– Deadline: When would you like the project to be completed by?
– Format: In what form would you like the project to be done? How should it be delivered to you?
– Number of revisions: Do you accept a limit of 3 free revisions? ([amount] paid for every additional revision).
– Budget: Do you have a specific budget for the project? If yes, how much is it?