Conquer your freelance pricing anxiety in just 5 minutes
A friend of mine recently started freelancing again. He found it incredibly hard to apply for jobs. Not due to lack of skill or experience – but because he was agonising over what rate to charge. Here’s the advice I gave him. He said that it lifted a great weight off his shoulders and allowed him to move on. Hopefully it will be useful to you too.
There is no correct freelance rate
As I’ve written before, the idea of the ‘correct rate’ is largely a myth. More often than not, it’s your ego talking. You don’t want to undercharge and get undervalued for your services. Often this is tinged with a bit of fear – you also don’t want to charge too high and scare away the client.
While these emotions are completely natural, they are getting in the way of more important activity: learning how to develop yourself and your freelance business. Freelancing is going to provide you with an income for years to come. In the early stages, focus on learning the ropes and building a strong foundation. Worrying about your rate will stop you developing essential skills -and, in the end, you will never make it to the good bit, where you can double or triple your rate and grow into a successful business.
My approach therefore is this:
Calculate the lowest rate that will still put food on the table.
(I will show you how below)
Quote above this rate, and you’re fine.
As long as you get work consistently above this rate, you are fine. That’s all you need to ensure as far as your rate is concerned.
Armed with this information, you can power through quotes and negotiations and focus on what’s really important: learning the fundamentals of surviving as a freelancer.
My friend called this rate ‘enough to cover your nut’ (I hadn’t heard this expression before! sounds rude but isn’t :)) He was also surprised by how low this rate actually was. It was in that exact moment that he felt the weight being lifted off his shoulders.
And now it’s your turn. Grab a pen and paper and follow along:
Calculate your own minimum freelance rate
First, write down your typical monthly expenses. You can work these out (rent + bills + food, etc) – or just take the average of your last 3 bank statements.
Let’s say that’s $4000.
Add 25% to account for tax:
$4000 + 25% = $5000
So you will need to make $5000 per month to keep your life afloat.
Next, work out how many days you will freelance each week on paid work. Keep it real, don’t plan on working 100 hours per week. If you’re full time, 4 days is a good yardstick. Don’t forget you will need 1 day a week for marketing, admin, etc. Let’s say you work 7 hours per day:
4 days * 7 hours * 4 weeks per month = 112 hours per month
Divide your expenses by this number and you will end up with your minimum hourly freelance rate:
$5000 / 112 hours = $45 per hour
Charge this rate, and you will be fine.
Just to re-iterate: your task at the outset is to learn how to become a freelancer, not to worry about rates. Use this minimum hourly rate as a yardstick to remove the anxiety and emotional baggage attached to quoting and negotiating for freelance projects so that you can say ‘yes’ more easily and focus on what is really important.
Note: You could of course be more accurate with your calculation. For starters, the numbers above don’t take into account sick pay or holidays. Remember though, this is a yardstick minimum freelance rate designed to keep food on the table. You will be looking to increase it substantially in future.