How to Set Your Rates as a Freelance Developer

It’s been six years since I began my freelancing career as a full-stack developer in Tunisia. In recent years, I've spent 40% of my time working for companies and 60% on personal projects, while still maintaining the same income. I love my lifestyle, and it's all thanks to project-based pricing instead of hourly pricing.

I typically work with start-up companies. I start by having a meeting with them to understand their project and suggest how I can help. The scope of my work varies widely with each project, including tasks like designing UI, building front-end and back-end systems, developing mobile apps, operating databases, and conducting data analytics. Once the scope is determined, I prepare a quotation for the work and present it to the client.

Many freelance developers opt for hourly rates because it's straightforward and doesn't require much negotiation. However, if you are an experienced developer, reconsider your pricing strategy, as you may be undervaluing your work. We are not assembly line workers; our pricing should reflect the project's value to the client, not the hours we spend on it. With project-based fees, I gain more time for my personal projects and avoid earning less for finishing work quickly and efficiently. The client's satisfaction with the end result is what truly matters.

Determining how much to charge isn't formulaic—there are no strict rules or perfect methods. However, there are several key criteria to consider when setting your prices for each client, which I will explain shortly.

Trust Yourself: Setting the Right Price as a Freelancer

When working as a freelancer, understanding the client’s request is just the beginning. The next step involves considering your tasks and evaluating them based on four key criteria:

efficiency, urgency, specialty, and effectiveness.

However, it is crucial to determine your desired price before diving into these criteria. Essentially, this means knowing how much you expect the client to pay.

Your desired price is significantly influenced by your self-confidence. A lack of confidence often leads to lowering your price because you might want to avoid the responsibility that comes with your work. Building self-confidence through numerous successful experiences is essential. This confidence enables you to propose a fair price that you believe in, ensuring you are satisfied with your proposal.

Trust yourself and your abilities.

Knowing Your Market Value as a Freelancer

Understanding your market value as a freelancer is crucial for setting competitive and fair rates. While you may have a desired price in mind, it's essential to balance this subjective perspective with an objective understanding of market prices. Here’s how you can navigate this process effectively.

Avoid Comparing to Salaried Positions

When determining your freelance rates, avoid using your previous salary as a benchmark. Salaried positions often come with additional benefits that freelancers must account for independently. For example, salaries typically include costs for office space, welfare benefits, and equipment budgets. As a freelancer, these expenses are your responsibility, so your rates should reflect these additional costs.

Leverage Your Network

One effective way to gauge the market price is by referring to other freelancers in your network. For instance, an expert Ruby on Rails engineer might earn around $7,260 per month. However, this figure can vary significantly based on location, experience, and skill set. An engineer in Tunisia who works efficiently and has strong management skills may command a different rate than someone in San Francisco, where the cost of living and market demand are higher.

Use Market Insights Wisely

Having a rough understanding of market rates provides a foundation for justifying your pricing to clients. It’s not necessary to pinpoint an exact number but aim to have a reasonable range that supports your rates. This approach helps ensure that your pricing is competitive and reflective of the value you offer as a freelancer.

In summary, knowing your market value involves more than just a simple comparison to past salaries or anecdotal rates from peers. It requires a comprehensive understanding of the costs you need to cover as a freelancer and insights from your professional network to set rates that are both fair and competitive.

Determining How Much to Charge for Your Services

When it comes to pricing your work, balancing subjective insights with objective criteria is crucial. Here are four key criteria to help you determine your rates effectively:

1. Efficiency

Charging based solely on time worked may not always make sense, especially if you can complete tasks significantly faster than others. For instance, full-stack developers often reduce communication overhead by directly designing UIs with code, eliminating the need for mock-ups. This efficiency should be factored into your pricing as it adds value by saving time and resources for your clients.

2. Urgency

If a client needs a project completed quickly, you can justify a higher rate. Urgent requests come with higher risks, such as the possibility of not meeting the tight deadline. Only accept such projects if you are confident in your ability to deliver on time. For example, I once had to develop an Android app within a week. The risk was high, but the urgency justified a premium charge.

3. Specialty

The rarity and complexity of the skills required for a project should influence your pricing. Common tasks, like building WordPress websites, have lower rates due to the abundance of professionals who can perform them. Conversely, specialized projects, such as developing image recognition or recommendation systems, warrant higher rates. It’s not about how easy the task is for you, but about how many others possess the same specialized skills. The time and effort you’ve invested in acquiring these skills should be reflected in your pricing.

4. Effectiveness

The effectiveness of your work can vary widely, even for the same set of requirements. The minimum expectation is that your solution ‘works’. Beyond that, if your work enhances user satisfaction, gains media attention, or significantly benefits the client, you can command higher rates. Proven achievements are key. For instance, I excel at creating user-friendly apps. One of my iOS apps attracted over 34k users, and I’ve developed products that users are willing to pay for. Demonstrated success speaks louder than words.

By considering these criteria—efficiency, urgency, specialty, and effectiveness—you can set fair and justified rates that reflect the true value of your work.

Don’t sell yourself cheap

As you can see, these four criteria offer no formula or perfect way to calculate pricing. Instead, they are intangible metrics to base your pricing on.

You can even add a reason for the client to entrust you by making pricing cheap a little instead of charging it 3 times higher while you can finish the work 3 times better/faster. But don’t sell yourself too cheap or try to fit the client’s budget. That will result in both of you unhappy because low fees make you less motivated and it generates less quality. No one can be happy with poor works. If the client seems not to have enough budget, you can suggest them to drop some requirements to make it just right. So you first make a quotation, explain reasons and see their reactions.

When figuring out pricing look at these metrics and consider them, but remember that it’s important that you and the client can understand and accept the pricing to get the best result.

Criteria tell you the proper way to go

Interested in increasing your income efficiently? These criteria outline the path forward: prioritize efficiency and flexibility, specialize in your expertise, and strive for significant achievements. Focusing on specific goals is key to success.

Additionally, consider tapping into lucrative markets like California if you're based in another country. This strategy can open doors to new opportunities and boost your income. Best of luck on your journey! :)