Whether you are new to freelancing or have been doing it for a while - one of the most critical decisions you'll make is determining your rates. Your rates not only reflect your worth but also play a significant role in attracting clients, sustaining a successful freelance career and being happy! That's why I want to point you to some valuable strategies, platforms, and factors to consider when setting your freelance rates.
Understand Your Worth and Value
Starting off strong, I know, but you have to sit through this one. You need to know your worth and value to 1) know what to ask for 2) know what not to accept. Before setting your rates, take time to assess your skills, expertise, and the unique value you bring to clients. Are you one of the AR-Filter designers? Any 3D skills? Or do you have a very unique art style? And don't forget to consider your years of experience, specialized knowledge, and any certifications you hold - even if it's from a different field you still gain relevant skills from those other jobs. All set? Got that strong mindset and self-concept to dive in? Let's go!
Calculate Your Expenses
Easy peasy - yes and no. It's so so easy to overlook and/or miscalculate your expenses. Account for overhead costs such as software subscriptions, domain costs, equipment maintenance, health insurance, and self-employment taxes. And because we don't work just to survive: our rates need to cover these expenses while allowing for profit on top!
Something I really recommend paying attention to? Costs that come with the business. These depend on your country and your setup but: Health care needs to be covered by you (can easily be 180€/month), mandatory business insurance by law (add another 80€/month), mandatory union membership (add another 25€/month). And these are just a few of the non-negotiable costs, you will have to cover yourself.
Additional costs that come with doing business: you might need some advice in the beginning (120€ for a tax consultant session). Maybe you even want an accountant to do your taxes (200€ for that). First client who isn't paying? Need to pay for a lawyer or legal advice session.
And let's not forget about: Income tax! Even when you cover all your costs and and even make some profit in the end, you will need to keep in mind that a percentage will be gone for taxes.
Consider Your Desired Income
Set a realistic income goal for yourself... and then recalculate, and then recalculate. Be realistic, be cautious. Get your monthly expenses, savings, and desired earnings sorted. This will give you a clear picture of the minimum amount you need to charge to meet your financial goals. At the end of the day, you want to be able to go on vacation, invest in things, be able to cover for quiet months or sickness and so on. You want to be able to live the life you want. Here are some rate calculators based on desired income:
Use Official Rate Sheets, Industry Standards, Statistics & Co
When starting out it really can feel impossible to get any good feel of what even is acceptable to charge. Don't worry! Many professional organizations and freelancer associations publish rate sheets and guidelines for different industries. These resources provide a benchmark for what you should charge and can help you avoid underpricing your services. Definitely have a look at them to make sure you at least don't overcharge - if you determined your rate to be higher that's very much okay, of course.
Even if you can't find any organisation's or guild's official sheets for your country or discipline, simply google your way through 'discipline city or country hourly rate'. You will surely find some references. Just please be advised that, again, you can take these to get a general idea to not undersell yourself but definitely don't take some of these as the golden rate - see them more like a minimum.
Germany:
USA:
Canada:
Local Pricing and Global Markets
This one is an important one! But if you completed all the steps so far, it should be easy. Just because you live in a tiny village where the minimum wage is 10€/hr doesn't mean that you should comply to that. Like, at all! You wan't to have fun, be valued, invest and scale. So, keep the rate you calculated that matches your financial goals, worth & value as THE STANDARD. And then, be very aware of, if you work with a client in a different country and/or industry, you might easily increase your rate again.
Does this sound confusing? Let me show! (These rates are just random numbers/examples!!)
Your standard rate (based on your worth, value and financial factors) | Average hourly rate in your tiny village
| Rate in bigger cities in your country | Rate in a different/ corporate industry
| Rate in a different country |
45€ | 18€ | 69€ | 90€ | 110€ |
You see how important it can be to look past your very specific own factors. That doesn't mean that sometimes, this can't be reversed or switched. There might be cases where your rate is commonly higher in your own town or non-corporate industry. But it's a perspective you need to have on your radar.
RATE/PRICING TYPES
And finally, very important to consider is: the type of pricing. Please note, it's totally okay and normal to have a mix of all of these. I just want you to have an overview and then find your best mix & match.
Base Hourly Rate
A common approach is to start with a base hourly rate. Calculate the minimum hourly rate you need to sustain your business, factoring in all expenses. Don't forget to adjust this rate based on the complexity of projects, client budgets, and your expertise.
+ you definitely get paid for how much you work
- you might get paid less in relation to if you would charge per project, as bundle or retainer
Project-Based Pricing
Consider charging a flat-fee for a project IF you outline the deliverables clearly and know for a fact how much time you roughly need to complete the task.
+ you can charge higher fees as a flat fee compared to an hourly rate
- if the project somehow takes way longer or things change, you will be underpaid rate-wise
Bundle Services
Instead of charging per hour, consider offering service packages. Bundling related services together provides added value to clients AND gives you more control over your earnings.
+ you have very detailed deliverables and can charge a great package price
- might only be a one-off project/thing
x our example service: 35 €/hr
Retainers
And now for my ultimate favourite! Bundling related services together can provide added value to clients and give you more control over your earnings.
+ you have reliable inocome and can worry less about the next gig (game changer)
+ you can upsell increasingly and/or upgrade the package itself
+ you have very detailed deliverables and can charge a great package price
ADDITIONAL ADVICE
Negotiate Wisely
Be prepared to negotiate with clients, but do so strategically. By now, you should know your lowest acceptable rate. And be willing to walk away from projects that don't align with your financial goals. There are other ones that will pay your rate or, get this, even more! Be friendly but centred and stick to it. You will know when to offer discounts e.g. the client books several months ahead, they need not only 1 sticker design but that one design in 5 colours. Remember any cost you lower on the client's side you don't want to cover yourself (time- and money-wise)
Reevaluate Regularly
Freelance rates aren't set in stone. Regularly assess your rates based on your growing skills, market trends, and the lovely factor: costs (inflation). Besides, up your rates if you work with clients consistently. Worked on a retainer with them for 3, 4, 5, 6 months? Up your price. Worked for them for months and their sales have doubled, tripled, who knows? Up your price. They come back after you worked for them 6 months ago? Your prices have increased during this time.
SOME LAST WORDS
In conclusion, it's difficult, yes, but you got this! Consider your skills, market trends, expenses, and personal financial goals. Don't forget your value, research industry standards, and factor in local and global pricing. You absolutely can and will confidently set rates that reflect your expertise and attract the right clients. Thanks for reading through all of this and when in doubt, I hope you come back to re-read this advice :-)
And if you still want to hear a number - don't set your rate lower than 45€, 38$, XYZ. I understand, you might need to acquire some projects first, get a portfolio going but don't wait too long to set this as your minimum. You cover all the costs and bring all the value, don't forget!
Oh and PPS: If you are a woman, I want you to really re-examine your rate again. Why? Because it was found that men charge 48% more than women for freelancing (Bloomberg, 2022). So up the rates and persist!