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- 23 Nov 2018
Great news! You’ve decided to make the move from permanent employment to freelancing.
Starting out as a freelancer is an exciting career transition, but there are some key decisions you’ll need to make before you get started.
Here at The Work Crowd, we’re more than just an online platform connecting freelance marketing communications professionals to client projects. We are a community supporting one another in our freelance careers. Since our inception in 2014, we’ve worked with over 2000 freelancers, helping them win and engage with new business.
Our community is always coming to us for advice, so here we’re providing insight into two of the most common questions we receive: ‘how should I charge for my freelance work?’ and ‘how do I increase my freelance rates?’
When it comes to valuing your service and expertise, many freelancers find it a nerve-wracking experience. Getting it wrong can come back to haunt you, either when you’ve committed to a project paying peanuts, priced yourself out of the market, or left the client feeling short-changed.
To avoid those scenarios, consider these different approaches to charging for your work.
Perhaps the simplest option is to invoice based on the time you work, using a set daily or hourly rate. Quoting your day rate is perfect for agencies, as the majority already work this way. This avoids the danger of over servicing, as you’ll be compensated for overtime or additional work.
This doesn’t tend to work so well with brands. In many cases, particularly where startups and small businesses are concerned, an external consultant is a big financial commitment and they want to control the budget and output. Smaller businesses have less understanding of how long activities take, making it difficult for them to calculate value for money.
In our experience, taking a ‘pay as you go’ approach with brands usually ends in one of three ways: failing to win the business, getting pushed down on price by a client who is nervous about the cost, or the relationship ending prematurely with a dissatisfied client.
The alternative to ‘pay as you go’ is agreeing a fixed budget upfront, based on the client’s objectives and desired outcomes. If a client wants long-term, ongoing support then this would come in the form of a monthly retainer fee, whereas a distinct project would likely be quoted separately.
A day rate allows you to calculate the project cost based on how long you anticipate it taking and communicating this to your client if required. Many clients like to understand how you’ve arrived at a particular figure as it gives them an idea of how much additional work will cost.
A potential downside of agreeing to a retainer or project fee is the risk of over servicing. To avoid this, always agree the scope of work in writing at the start, making it clear that additional work will be costed and charged separately. It’s best to be over generous with your timescale. There’s nothing worse than clocking up excess hours for nothing!
If you’re unsure which charging option is best in a certain circumstance, you could ask the client what they prefer to ensure you both are comfortable with the choice.
Unlike permanent employment, freelancing means no promotion, Christmas bonus, or annual review with your boss. Instead, you have to carefully balance your need to win and retain business with commanding what you’re worth – and not working all hours to get it.
Obviously, it’s easier to increase your rates when you bring on new clients than amongst long-standing clients. Many freelancers start off charging a lower rate to win those first bits of business, but this means that you can be stuck with lower rates, even as your experience and quality of work improves. In the long-term, this can significantly limit your earnings.
In contrast, if you have a high turnover of projects, you have more opportunities to experiment with your rates as you’re regularly quoting for new projects. If clients are easily agreeing to what you suggest, then go a little higher for the next project. You can be bold with your rates when you’re busy or for projects that don’t interest you. You may be surprised to find clients readily agreeing to your higher rate!
Increasing your rates can be daunting, but it’s a vital part of running a successful freelance business. Not only will it ensure you earn more, it will also help you work fewer hours, do more interesting work, and deliver higher quality. You’re also likely to find that bigger clients feel more comfortable paying a bit more, seeing it as a sign of greater professionalism and a higher standard of work.
If you’ve been putting it off, make sure a rate review is one of your top priorities for 2019.
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