How to Communicate Freelancer Rates Like a Pro
As a freelancer, you can either charge by the hour or by the project. Generally, it is best to charge per project, especially if you are fast at what you do, but there are other times when it makes sense to charge by the hour. No matter what you choose, choosing and communicating freelancer rates is a crucial part of being in business.
By the hour
A key benefit of charging by the hour is that you will be paid for the hours that you work. And you will be covered by the Upwork Payment Guarantee of “every hour worked is every hour paid”. When you charge by the project, you will need to know how many hours you need to get the work done. And consider any revisions or updates that might come up as those would be basically done for free. Of course, you can put a cap on revisions and updates, but this requires you to “police” your clients to an extent. Kind of an awkward situation, especially for new freelancers. It’s best to have straight forward and fair charging system.
As a freelancer working via Upwork, you’re not selling a product but your time. Clients may feel your prices are negotiable, making the experience frustrating for you. It is important to spend time developing a pricing structure you feel comfortable with – one you can stand behind even when client’s question your rates.
After all, this is your business. It’s important to set your rate based on your comfort and expertise level, and not what your friends charge or what your clients recommend. Here are my tips to get you started…
Setting your rates
In my experience on Upwork, I’ve seen rates from $0,50 to $125 an hour! Nowadays Upwork has a minimum rate of $3 per hour. As it is a global marketplace there is a huge range of hourly rates from freelancers. Do not compare yourself to a freelancer from across the globe!
Your rate should reflect your experience in your niche. If you are a new to your craft your hourly rate should compare to an assistant rate. The more experience you have, the higher your rate should be. There is no exact magic number that will work, you will need to consider all your expenses, your business goals and competition around you.
There’s more to consider than just experience level and job duties. I suggest you think about these factors when deciding on an hourly rate that works for you:
Hours. Part-time or full-time? If you prefer to work only a few hours a week, then consider charging a higher rate and giving a discount to a full-time project.
Cost of living. If you live in a large city or Western Europe for example, your rates should be higher than those who live in the countryside or developing country. The client will compare your rate to a similar freelancer in your region, not the whole world.
Speed. If you work slowly then consider charging a rate that is slightly lower. As you gain experience, your speed will increase and so should your rate!
Negotiating your rates
Talking about rates and pricing can be an uncomfortable experience for both the freelancer and client. Both have the same goal in mind, find a number that both feels they “won”. Getting there is something challenging especially if you feel uncomfortable talking numbers.
The upside is that you propose hourly rate or project cost upfront, but the down side is that you might be way off in your rate just because you do not have the necessary details available. Generally, the rate will be discussed during the interview and towards the end of the call. I discuss a project with a client first, and then let them know my rate. Then the negotiation starts!
A client wants to leave the call feeling they got what they wanted, so does the freelancer. Never worry about negotiation your rate, it is normal business practise and will not make you look like a difficult freelancer. In fact, if you come across a client that thinks this way, it is better to walk away right away! Too many freelancers just take offered rate and never question it. This is bad for the freelancer and the whole Upwork freelancer community as rates just get lower and lower.
Sometimes, while talking with a client, I have a feeling that my pricing might be out of their budget. When this happens, I justify my cost and level of expertise, but I may offer a discounted rate, if a certain level of work will be promised.