Freelancers sometimes find it hard to determine what they want to be paid or can be paid. Furthermore, the process of negotiating rates can be, indeed, very difficult for a lot of people. This article provides a few tips and tricks on determining the value of your work and knowing when and how much you have to charge. Here are a few things you have to keep in mind when setting your rates as a freelancer.1. Price by the service, not by the hour
Let’s first look at how your services should ideally be priced. Most people don’t directly jump into freelancing. Instead, they have a working background, which gives roots to an understanding that work is paid by the hour. Companies welcome such prices, because it helps them keep things nice and simple, and the way they are used to it. There are a lot of reasons why freelancers should opt to price their complete service, not their working hours.
Firstly, one shouldn’t give up of the best perks of freelancing has – working when you want. An hourly wage is likely to reduce your potential and motivation. Putting a price tag on your services will turn this around and allow you to work more efficiently towards your end goal. Secondly, if you are very good at what you do and you do it quickly, there is no reason to become less. If you have, say, profound knowledge on a product you have to write an article about, you could write a three-page-article in an hour, but a person without your knowledge will take a lot more. That’s why you should price your complete service and not the hours you put in.
2. Competition influence
This next tip applies to almost every worker. Look at the competition. How much do they charge? Some freelancers post their rates online. Others you could just ask, keeping in mind they might have an interest to over- or undersell themselves. But it’s not just important to know what the freelance competition gets, more so why it gets it. Compare yourself to those working in your field and determine how your experience and work stacks up to theirs. Figure out whether you are nearer to the top or the bottom of the scale regarding experience and service quality. This will tell you if you can be aggressively raising your rates or if you should lower your freelance rates.
3. Determining your Minimum Acceptable Rate (MAR)
Once you have the first two done, you can go around determining the minimum you are willing to receive for a certain service. This will be very crucial in the negotiation with your client. A simple, but good way to calculate your MAR is to divide your current or previous salary by the work hours you plan to put in. Or, if you are just starting, think about what your time is worth to you. If you want to be a successful freelancer, your rates have to be high enough to motivate you to deliver the best you can and push your limits.
Keeping these things in mind will help you go into the negotiation and know where to start and where to stand your ground. You have your pricing format determined, you know what others earn and you know what your bottom line is. When you negotiate, a client might attempt to go below your determined MAR. Sometimes you might want to accept, because of so-called indirect benefits, like getting your name out there for the first time or working for a well-known company, which will increase your reputation a lot. You should, however, know when to stand your ground and play hard. This has to happen if you are certain what your services are worth and the indirect benefits don’t outweigh the lower rates. One last thing you shouldn’t forget – rates change, just like people do. Every client is different and your experience grows with each one. Don’t forget to reassess what you are worth now and then and check in on the market developments regularly. Other than that, even a client who refuses your rates can be helpful, because that shows you it might be time to rethink your demands and it helps you learn how to effectively negotiate. Practice does, indeed, make perfect.
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