How Much Should You Charge as a First-time Freelancer?
13 Tips to Keep in Mind as a New Freelancer
It's tough to put a price on your work—especially when first starting out.
Luckily, there are many tools and resources to make this process easier. A lot of factors come into place when deciding how much to charge as a newcomer: the type of work required, deadlines, etc.
Here are 13 tips anyone can keep in mind when deciding how much they should charge.
- Charge Based on What the Client is Asking For
Is the project a small portfolio site? Or is it for a rapidly growing startup? Is it for your mother or a stranger? Take into consideration what the client is asking for, and also who it is for. Also, what is the standard rate in the area where you/the client live(s)? Think about the value you are giving them.
- The "Jerk" Tax
Is a client a pain to work with? Are they cutting into your personal time? This should be taken into account, as well. And remember: it is perfectly acceptable to "fire" clients. It's not all about the money, it's also about your happiness.
- Honesty About Skill Level
How much experience do you have in this area? Be honest. Just like entry-level positions at companies, when you're starting out, you will be on the lower end of the pay scale. Also, be honest about the time it'll take you to finish a project. It is typically good measure, especially when first starting, to give deadlines farther in advance than you think it'll take to finish.
- Consider Hourly vs. Project-Based Payment Options
There are pros and cons to both. Charging by the project is best for when you’ve done a similar project before and know how long/how much effort it takes. Or, if designing/developing a website, consider charging by the page. So a ten-page site versus 20 page would have different costs. Think about the value you are bringing them and their business.
- How Much Do You Want to Earn This Year?
Take a look at sites like glassdoor.com and see what comparable salaries are. Base what you charge from that.
- Don't Forget About Taxes
If you’re self-employed, there are still taxes to worry about. Luckily, the IRS has a page full of information regarding taxation for self-employed individuals, and tools to estimate taxes. According to Lifehacker, it’s easy to make a rough estimate of your taxes: “...(You) can simply add a factor of 15% to your salary to cover tax contributions. In our example, 15% times the $45,000 salary is $6,750. Adding these together, our new salary with taxes is $51,750.”
- Factor in Supplies and Other Materials
Don't forget about any expenses you may have to cover, on behalf of the client. Make sure to take that into consideration before giving a final price estimate.
- Factor in a Profit Margin
Make sure you pay yourself enough to be able to sustain slower work periods. Lifehacker advises you to add in a profit margin of between 10% and 30%. This way, you’ll have an extra cushion when you need it, and capital for growth and other financial necessities if you don’t need it.
- Don’t Be Afraid That Your Price Is Too High
There will always be other people out there who charge less. Likewise, others who are more expensive. If you put your prices too low, you won’t make enough to sustain yourself.
- Look for Studies/Releases on Freelancer Rates
Keep an eye out for what trade publications or studies say on freelancer rates. Coroflot has a salary guide for design, which aggregates survey responses about freelancing salaries.
- Find Freelancer Networking Groups
This can be online or offline. These kinds of networking communities are a great way to exchange ideas and learn about ways you can improve your business. Plus, you may be able to glean some insights on how they charge their clients.
- Ask Your Client What They'll Pay
Lots of freelancers worry about how to price a new project proposal. And if their price will be within their prospective client's budget. However, why not ask the client what they want to pay? Many will give some kind of ballpark of what their budget is for a project. This will help you come up with a better proposal, and more likely to land the gig.
- Don't Be Afraid to Ask for More; It's All Negotiable
This last tip is important: there is no standard rate for freelance work. No one will ever turn you away for work if you request a bit of leeway in the budget. Everything is negotiable. If you bid too low for a gig and don’t realize it until after you start working, it’s a learning experience. Try to raise your rates and bid higher the next time you see a similar gig.
Change Takes Time
In the end, knowing what to charge takes time. It’s not easy at first to price your work and gauge time spans. But over time, you’ll get the hang of it.