One of the most challenging parts of being a freelancer is trying to accurately set your rates. There is a fine line between overpricing and underpricing your freelance rates which is something that can be difficult to achieve.
- Projects tend to take more time than planned
- Your competition charges more
- Your hourly rates haven’t budged for years
- Someone other than you sets your rates
Figuring out if you’re overcharging your clients isn’t hard – you just won’t get hired for the job or will outright be questioned about your pricing. Underpricing, on the other hand, is a bit difficult to gauge. You’ll very rarely be told by your client that your freelance rates are too low or that you’re underpricing yourself. They run a business and part of that is trying to get the best deals possible.
Underpricing yourself is one of the biggest mistakes that a freelancer can make. Lack of knowledge about the industry or a lack of confidence in their abilities are the most common reasons why freelancers do this. Trying too hard to win a particular project is also another reason which is the sort of attitude that clients can prey on.
Let’s take a look at some of the signs of underpricing that you need to be on the lookout for:
1. Projects tend to take more time than planned
If you find yourself often underestimating the amount of time you’ll have to put in to get your freelance project done, chances are, you could be asking for less money than you should. If you tell a client it’s going to take you 20 hours to complete a project, they will pay you for exactly 20 hours. You can’t tell them that it actually took you 30 hours afterwards, because everyone will assume you were just slacking off.
The way to avoid this is to always very carefully and realistically consider how long a project will take in advance. Don’t try to impress your clients by showing them how fast you are. Ask for a fair price for the time you are going to spend and deliver a quality product – that’s the best way to impress them without charging too little.
2. Your competition charges more
Before you affix yourself with a price, consider researching what your competition is charging, specifically, your direct competition. These are the freelancers who work in the same industry as you, have similar experience and are applying for the same projects you are. If most of them are charging more than what you are, you are probably underpricing yourself.
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3. Your hourly rates haven’t budged for years
The prices for goods and services are constantly fluctuating due to supply and demand. This theory also applies to freelancing because of the constant development that a freelancer goes through.
As a freelancer, you’re constantly learning new things, working on different projects and getting more experience. And so, if everything about your work has changed in the last couple of years but your rates have stayed the same, you should consider raising them.
4. Someone other than you sets your rates
Letting clients determine what your time and work is worth will often lead to underpayment and you underpricing your rates. Don’t be afraid to talk to your clients about how much you’d like to get paid and why. More often than not, clients will accept the number you give them if they expect to get quality work in return.
Underpricing is not only a threat to your financial security, it can even put off potential clients from working with you. Your fees can be interpreted as an indicator of the quality of your work and if you charge too little, clients may think that you simply won’t do a good job.
Make sure to look out for these signs! Do you think you’ve been underpricing your freelance rates? Tell us below!