Negotiating your rate can be one of the most intimidating aspects of freelancing. It can be hard to place a value on your work and services, especially if you’re dipping your toes into the freelance waters for the first time. You might worry that if you charge too much, you will price yourself out of potential clients. Conversely, asking too little can and will jeopardize the security of your personal and business finances.
Spoiler alert: there is no one-size-fits-all approach you can take when it comes to compensation. Truthfully, nailing down your rate is a process that’ll take a little time. However, to help you get started, we’ve broken this process down into a few simple steps that you can use in any freelance position.
In this article, we’ll cover how to:
- Figure out your rate when first starting out.
- Negotiate your pay rate with potential clients.
- Adjust your rate as your business grows.
You’ll be out there confidentiality negotiating and getting paid in no time!
Figuring Out Your Rate When Starting Out
Before you begin any project, you’ll need to have your starting rate figured out. Do not go into an interview and ask the prospective client what they might be willing to pay. Doing so suggests you are uncertain of your value, which raises red flags about the quality of your work. Freelancers are generally expected to have some type of proposal and quote ready to go for a client.
Consider the following factors to help you figure out the initial rate that you’ll charge for your services.
- Your previous job. Calculate the pay and benefits of your previous position. Don’t forget to include the value of benefits like health insurance and 401(k) contributions. Breaking down the salary from your previous full-time job is a great first step to identifying your hourly rate.
- Your experience and education. Are you a seasoned professional or possess unique credentials? These and other questions will help you put a value on your services. A freelancer with years of experience and an extensive portfolio will almost always have a higher rate.
- What others charge. If this is your first foray into the industry, you can always turn to other freelances to get an idea of appropriate rates. If you don’t already have people in your network that can guide you, join an online community. There are many supportive freelancing groups online, with members always happy to point other freelancers in the right direction.
- Your pricing format. You will also need to determine how you want to be paid. There are two ways you can go with this: charge by the hour or by the job. What you decide on will depend on what field you’re in and the nature of the projects you undertake.
All of this should be taken into consideration when determining your rate. Of course, one of the most critical factors— and one that will vary from job to job— is the project itself. Before giving a quote to a potential client, be sure that you fully understand the scope of work they are asking you to complete.
Negotiate Like a Pro
Commonly, you’ll also have to negotiate your rates with your clients. While we all hope that they are happy with the first number we give them, they are making money and cutting expenses.
How much you’re willing to negotiate will vary depending on the scope of each project. If it’s a client or project that excites you, you might be more flexible in what you charge. Many freelancers will work at a lower rate as long as there is some long-term upside. How you value the relationship is entirely up to you.
Regardless, here are a few things to keep in mind when negotiating with others.
Don’t be quick to settle or accept whatever the potential client’s counter, especially if it’s far from the number you initially presented. You’ve put in the time and research to come up with a fair number for your work. You can and should be comfortable fighting for what you deserve.
Know Your Minimum Acceptable Rate
When it comes to negotiating, having a minimum acceptable rate comes in handy. This amount is the very minimum you’re willing to take. If the client insists on an amount below this, knowing your hard floor will allow you to walk away from a project that isn’t worth your time confidently.
This rate should be based on real-life factors. Calculate your monthly expenses and identify the amount needed to fulfill your cost of living expenses. Once this is done, break your total down into a per-hour number. Any work you accept that falls beneath this minimum acceptable rate will make it harder to make ends meet.
Remember: even if this is your first rodeo, you presumably have some degree of skill, knowledge, and expertise. If you walk in with a suspiciously low number just because you’re hoping to snag a client, they may question your work quality.
Get It in Writing
Once you and the client have reached an agreement, always make sure to get the rate in writing. Contracts lay out an expectation for not only the payment but what the project or work will entail.
Legitimate businesses should have no issue drawing up a contract for your work. If you find that someone is hesitant to put it in a binding document, be wary. This could be a red flag and result in payment issues down the line.
What to Do As Your Business Grows
Rates are not a permanent thing. As your business grows and you gain more experience, your rates will likely change. It is even possible to renegotiate rates down the line for current clients.
Take time every so often to reassess your rates, as it’s an integral part of growing as a freelancing professional. Typically, freelancers will do this around the same time each year (or however often you choose to reassess) and give their current clients plenty of notice of changes, so no damage is done to long-term relationships.
Know Your Worth
The best thing you can do as a freelancer is to establish your worth. You’ve put the time and effort into your craft— don’t let businesses undervalue your services. Start your negotiations with some real numbers in place and your confidence - and business prospects - will soon grow.