How much to charge a client is one of the first questions freelancers ask themselves when starting out. Unfortunately, there’s no golden rule when it comes to working out what figure to lay out on the table. Pricing is dependent on many factors, including experience, the project itself, and, of course, what the client is actually willing to pay.
How experienced are you?
First, think about the level of experience you’re bringing to the table. Are you a seasoned professional who’s been working in your field for many years, or are you a fresh-faced graduate with nothing but a newly polished qualification under your belt?
Freelancers who are just starting out or only have a few years of experience probably won’t be able to charge as much as someone who’s been in the game for longer. This is simply because they don’t have the same level of knowledge, expertise, or experience.
However, if you’ve been working in your sector for a while and are thinking about going freelance, you shouldn’t feel like you have to start on the first rung of the ladder. Use your time and experience to gauge your ideal freelance rate.
If you’re new to freelancing, don’t feel disheartened. Your skills are valuable, so don’t devalue yourself by chronically undercharging from the outset. Some companies may offer you work in return for “exposure” – a crafty way of essentially getting you to work for free, something we recommend strongly against doing.
How much do you want to earn?
A great starting point when navigating how much to charge clients is thinking about the ideal amount of money you’d like to earn that falls in line with your experience.
Let’s say you’ve got a year of experience under your belt and would like to take home a salary of £26,000. You’ll be looking to work for 225 days of the year, discounting weekends and 28 days holiday per annum. Your simple day rate is £115.55 (£26,000/225 working days).
You can break this down even further and calculate your ideal hourly rate. Simply divide your day rate by the number of hours you aim to work each day.
Don’t forget that these figures calculate billable time only. Some freelancers knock off additional days and class them as non-billable hours (time spent doing business admin, pitching for work, etc) to give themselves a higher and more appropriate day rate. You also need to consider other expenses, such as saving toward a pension and having some spare cash handy in case you fall ill.
However much you decide to charge clients, remember that any income you make will, of course, be subject to taxation. You’ll also need to calculate in other general costs, such as rent, utility bills, supplies, and equipment. Remember that some of these costs can be counted as business expenses, meaning you can subtract them from your profits and, therefore, reduce the amount of tax you pay.
By project or hourly?
Now that you’ve calculated your day and/or hourly rate, you need to decide how you’re going to charge them to clients. The first thing to do is think carefully about what the client is asking of you.
If a client comes to you and needs help with their marketing strategy, think carefully about exactly what that would involve. How much time will the project take? What is the scope and depth of the project? Are you able to work from home or do you have to commute to an office? Consider whether you’re better off charging per hour or for the project as a whole.
For the above example, it might be worth charging the client for the overall project and outlining a contract for them to agree to and sign. You could specify the services you will provide and ask the client to agree on a marketing budget for you to work with.
Some types of work will result in different types of charges. For example, if the client needs someone to write some blog posts for them, are you better off charging per word or per hour? With written content, think about what will benefit you the most. Can you reel off 1,000 words on a topic inside a couple of hours? Charge per word. Will the project take many hours or days to complete? Charge per hour.
Whether you charge clients per day, hour, or project is entirely dependent on the scope and detail of the project. Think about what your work is worth to the client and value your own work in the process.
If possible, speak to people in your network about what they charge, but remember they might not always be keen to reveal their actual rates.
Learn to negotiate
Sometimes it might seem like the client is holding all the cards when it comes to agreeing on the pay rate. Many clients will already have a figure in mind. Negotiating isn’t always the first skill you think you’ll need to train yourself in when you go freelance, but it’s definitely a good one to have.
There are a few basic ways to help improve your negotiating skills:
- Do your research: Know your market. Find out the typical rates for your field, your locality and your level of experience. There are usually market surveys available or websites that can provide benchmarks (or you can check out our Day Rate Calculator). Don’t be afraid to ask and dig around – when pay becomes a taboo subject, it usually ends up keeping rates low
- Ask high: You should be the first person to mention a figure and you should start as high as you can justify, and have your reasoning to back it up. Why? Because it means you set the reference points. You will get a better end result if you negotiate down from £100 per hour than if you go from £50 upwards. You can always call the fee ‘negotiable’ if you’re concerned it’s too high
- Show value: Customers will pay higher rates if they see the extra value gained from doing so. For example, you can point to case studies where you have delivered the client’s exact requirements and proven good value for money
- Be creative: Negotiation is a highly creative process; successful negotiators always look for solutions beyond the obvious. They look for win-win solutions. The customer has a problem that you can solve, you have a problem that they can solve – work together so everyone is happy
- Get help: If you needed a heart transplant, you wouldn’t do it yourself, would you? You would go to a specialist. Similarly, with negotiations, it’s worthwhile getting help from an expert who has spent years training in this area.
Is now the time for you?
If you reckon it’s time for a career change and are considering setting up your own business, visit our Starting Out homepage for free resources and advice on how to make it happen.