Freelancer Rates: How to set them and raise them
Deciding on a freelance hourly rate can be nerve-wracking — especially if you’re a beginner freelancer.
You don’t want to charge too much and lose potential clients. On the other hand, you don’t want to undersell yourself and lose out on potential profits.
So what’s a new freelancer to do?
Luckily, there are three proven systems that you can use to find a good freelance hourly rate to start with. I’m going to walk you through each one and even give you real-life examples of rates many freelancers use every single day.
Common Freelancer Rates
While your own personal situation will dictate the rate that you need to set, it’s also helpful to know the base rates in the industry for some of the most common freelancer careers out there. You want to price yourself right, not too far below or over. In fact, hitting the number dead-on is probably your safest bet.
|Copywriting||Graphic Design||Digital Marketing||Web Designer|
|Beginner||$38,000 p/a||$34,000 p/a||$43,000 p/a||$35,000 p/a|
|Mid-Level||$53,0000 p/a||$46,000 p/a||$67,000 p/a||$51,000 p/a|
|Expert||$76,000 p/a||$65,000 p/a||$99,000 p/a||$75,000 p/a|
These rates are just basic rate calculator searches on sites such as Payscale and Glassdoor. It’s important to remember that each role has its variances, which of course means different rates would apply. For instance, in copywriting, you might come across junior, senior, or copy editing. These would all have different salary bands but should give you a decent idea of what to aim for.
The last thing you want is to outprice yourself so wildly that it would be cheaper for your would-be client to hire a person for that role full-time, with a long list of benefits.
Factors to consider when pricing your freelance work
If you’re leaving your 9-to-5, it might feel a little overwhelming to try and rally up the right number of clients to fill that gaping hole left by your no-longer recurring salary. Knowing what to price might leave you blank, but we’ve got you covered.
It’s easier than you think. You need to calculate what you need to make each month to keep your standard of living. If you left your job because it wasn’t paying enough, then your freelancing rate can’t be at that same rate. You need to push it higher.
Tally up all your expenses, plus some new ones that might come along with your new role. Think changes to your taxes, additional insurances, paying your own health insurance. Once you have a monthly figure in mind, it’s time to break it down to your weekly, daily, and hourly rates. Take a deep breath if it feels too high, it probably isn’t.
2. Your experience level
This is where things might become a little tricky because experience is a big bonus. Clients want to know that you’re familiar with their projects, needs, processes, systems, whatever. They don’t want to feel like they have to train you. So your pricing strategy has to be on point.
If you’re starting out in the freelance writing industry, it’s going to be hard to charge $100 per hour. In fact, going to a client with that rate and nothing to show for it might conjure up a giggle and good chance they’ll ghost your emails.
3. The client’s willingness to pay
This one is a little bit of a tight rope and one you’ll need to watch closely. If you’re only dealing with cheap clients, you’re never going to get the rate you deserve, beginner or not. Think of those $2-per-hour offers on bidding sites where you need to scour for hours, plus compete against other freelancers, before landing a project. Just don’t. You’re worth more than that. Even as a beginner, you shouldn’t work for anything under the $20 mark in most industries with a high percentage of freelancers.
On the other hand, if you’re constantly coming up against brick walls and not even bigger agencies can afford your rates, you might be overpriced. Request a counteroffer if a client rejects your rate, and see if it’s something you can work with. Just make sure that you’re not undercutting yourself for cheap clients.
4. Your resentment number
What is the lowest rate you’re willing to go before you start resenting the project? $30 an hour? $20 an hour? Maybe even $10? That figure is your lowest rate and shouldn’t ever come into play. No matter how nice the client or the project. Why, you may ask?
Imagine working for a company that offers you everything you like. Endless coffee at the coffee bar, football in the conference room on Sundays. But the pay keeps you on the edge of your seat. One flat tire or a medical emergency not covered by your insurance and you’re in the hole. One more emergency and you find yourself applying for a personal loan. You can hardly pay the bills, you don’t have enough money to join your friends for dinner, ever. How long before all those lovely benefits start curdling in your stomach?
Now let’s get back to that lowest rate. You’re going to need to increase it. Even double it. As a freelancer, there are few things worse than living on the edge of your income. It’s tough to make good financial decisions when you’re constantly in the hole. And the hole is your resentment number and lower.
Take Ramit’s friend who considered tanking her consulting side hustle because the $25/hour and endless hassles with the client were simply not worth it. With Ramit’s help, she landed a new client at double the rate and suddenly $50/hour seemed worth the effort. Only, the new client wasn’t half as disorganized as the first one.
The lesson here is that even if you’re making money, you will get to a point where effort and reward need to make sense. If it doesn’t, then it’s time to raise that rate, or else, you guessed it. Resentment.
5. Your goal salary
A ballpark figure is not a great idea. You need to know the salary you want to earn and the billable hours you can and are willing to work per day. More importantly, you want to know how many hours you’re willing to slog away at your desk to meet that salary. For instance, if you have a monthly income goal of $10,000 and you want to work a 40-hour week, you need to earn at least $62.50 per hour.
If you’re a work-from-home parent, is a 40-hour week still realistic? Would you need to cut back to 20 or 30 hours? More importantly, can you adjust your rate higher if you do? These are all questions that you need to work through when deciding on your goal salary.
6. Your competition
Ramit tells the story of two freelancers who did great work. Both were equally great, but the one charged double what the other did. When it was time for renegotiation, Ramit chose the freelancer with the lower rate. There was simply no reason to keep the other on, as the quality of work was the same.
When you’re looking at setting your rate, it helps to know what others in your industry are charging. A few dollars here and there are not worth mincing over, but it’s when you’re looking at rates that are no longer competitive that you place yourself in the danger zone. Ask around on social media boards or befriend a full-time freelancer to understand work hours, income per month, and whether their years’ experience affected their pricing. Scour blog posts and industry best practices to draw up your own rate sheet.
7. Whether people are buying what you’re selling
It doesn’t matter what rate you set, how much time you spend marketing, or even whether you’re the cheapest on the block. If you’re putting out a product that no one is buying, you’re wasting your time.
The opposite might also be disastrous for a decent rate. If people are buying and too many are selling, you might find yourself in a price war in no time. Think of the bidding sites such as Upwork and Freelancer. Many freelancers have made a substantial career out of freelancing just on those sites.
But move the parameters to the lower end of the market. Suddenly you’re competing against hundreds of other freelancers who can offer the service at a fraction of the price you want to go in with. In fact, it’s not uncommon to have to pay for more bids or higher placement in the queue just to get noticed. And then get paid $4 for an hour’s work.
You need to stand out from the crowd and even if you’re entering a saturated industry, you can still place your own spin on it.
How to Raise Your Freelancing Rates
You’ve gone through the mission of pricing, landed a few great clients, and then two years down the line realized that your utilities, housing, and insurances have all gone up, but your rate hasn’t increased. Here’s a spoiler for those who come from corporate, there are no automatic rate increases when you’re freelancing. Your clients are hoping that you’ll stay none the wiser and keep the rate the same, all while all their other providers have increased their rates religiously every year.
Something to bear in mind though is that the passing of a year is not reason enough to increase your rate. You need to give your client some tangibles to have the upper hand in these negotiations. This is called value-based pricing.
1. Document your value
It’s time to document the wins in your line of work. Are you a web designer that wrote code allowing your client’s site to load twice as fast as before and improve the bounce rate from this to that? A graphic designer who helped your client build a household brand?
You want to document the facts, the figures, how you add value, and what your contribution did to make a difference in their business. Profit increases, lead conversions, organic traffic, increased sales. The list is long, and these things matter.
2. Explain why the rate is increasing
Firstly, they need to know that the new rate makes sense to you and that you need to increase the rate as a good business practice. For instance, you’ve hired an assistant to take on some tasks or do research, which means a faster turnaround time which can lead to more sales for your customer.
Be sure to add some details to the “why” part of your request. While your client might balk at the thought of just an increase, they might feel differently if there’s something in it for them.
3. Raise your rates with referral clients
It’s not always easy to raise your rates with your existing clients, for several reasons.
- They might have been on your books for a number of years
- They offer steady or fixed work which allows you to budget more effectively
- You’re not the only freelancer on their books and they’ll simply divvy up the work between the remaining freelancers after they’ve given you the boot
So while there’s not much wiggle room with some clients, you can always ask for a referral. Especially if you’ve delivered a great product. In fact, that’s exactly the right moment to ask for a referral.
A referral client is the proverbial golden goose because you don’t have to sell yourself, your client already did that. You simply have to name your price and they can accept or decline your service. Simple as that.
If you’re worried that the client that referred you will divulge your rate, don’t. Even if they do and your new prospect asks you why there’s a difference in rate, you can answer honestly and say it’s a rate you started with years ago, however, all new clients you’re onboarding are on the current rate.
There is a bonus to increasing your rate that extends beyond the dollars in your bank account. You’re also starting to fish in a bigger pond. This means landing customers who aren’t going to winge about dollars and cents, but rather focus on the task at hand and how you can help them. You’ll also find that you’re no longer called on to do the grunt work, or multiple sessions of rework, or answer your phone at all times of the day. You’re working with professionals who focus on the task at hand and who know how to strike a balance.
When you’re not getting paid what you deserve, it’s easy to fall into a trap where you might believe your work is not up to standard. Doubting your ability can be crippling and you’ll be scraping the barrel, happy for a few crumbs here or there. But who wants to live like that? More importantly, how does that get you any closer to living your rich life?
4. Set yourself apart from your competitors
Figure out what is needed in order for you to get to the next level to start earning a better rate. Sometimes it’s just the ability to showcase what you can do. Setting up a portfolio of evidence will give you that edge over your competitors who might forego the rights to claiming the design or work as their own for the sake of bulk work. Think ghostwriters and ghost coders.
Approach a local business and offer to do their landing pages for free, track the results, and use it to land a paying client in the payscale you want. Do a few graphic designs that aren’t necessarily for a particular client. You might have to do some free or low-paying work to create a portfolio that will net better payers.
This might be a bitter pill to swallow, especially if you’re a graduate with oodles of experience and now have to settle for a lower rate but you might have to start at the bottom while you’re building up your base. Gradual increases might be the norm, but nice big leaps aren’t unheard of either.
The bottom line
Setting your freelancer rates needs to make sense. Not only from a personal position but also with the industry standards in mind. Your wishlist and your client’s willingness to pay need to align. In that same breath, make sure that you’re working with the right client. It doesn’t help you’re marketing yourself to those who will keep you below industry because some guy he knows back in Townsvilleshire will do it cheaper.
Now, if you’re still not sure whether this is for you, Ramit started out with a rate of $20/hour. He scraped the barrel, felt disillusioned with his chosen role, and was just about ready to call it a day. His strategy allowed him to increase his hourly rate to $3,000/hour. Yep, you read that right. Best part? He gets to choose who he works with, what he works on, and when. Isn’t that the goal? If you want to boost your income, learn how Ramit helps his students land those salary and rate negotiation meetings effortlessly and more importantly, effectively.
BONUS: The Ultimate Guide to Making Money
If you want even more information on becoming a freelancer, be sure to check out our articles on the topic below:
- How to make money online freelancing — 3 super simple steps
- How to make extra money on the side
- 6 ways to get your first client
- The Ultimate Guide to Digital Marketing
If you’re really interested in making money in freelance marketing, we here at IWT have a gift for you: The Ultimate Guide to Making Money.
In it, we’ve included our best strategies to:
- Create multiple income streams so you always have a consistent source of revenue
- Start your own business and escape the 9-to-5 for good
- Increase your income by thousands of dollars a year through side hustles like freelancing
Download a FREE copy of the Ultimate Guide today by entering your name and email below — and jump into freelance marketing today.
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