Pricing your services: how to set the right price point as a freelancer

There are two critical moments when you’re confronted with the big question about pricing your services (how much can (or should) I charge per hour?): First, when you create your profile on a freelancing platform, and second when you submit a proposal for a project.

While your profile rate is an indication (mostly used by platform clients looking actively for freelancers to be invited to their projects), your project rate is key to show your competitiveness when customers evaluate who should be hired. Both are important and should be coherent, nonetheless, a profile ratio could be understood as an average, while project rates may vary depending on the complexity of the specific tasks.

Here some hints to help you set the right price point for your services as a freelancer online:

SOME INITIAL CONSIDERATIONS

There are 3 basic methods you should considering when thinking about pricing your services, each one requires you to answer a specific set of questions based on your market research:

1. Cost-driven:

• How much does it cost to provide your service?
• What is the margin you want to keep as a benefit?

2. Market-driven:

• How much are other freelancers charging for similar jobs?
• How much are the customers willing to pay?
• Are there many (or just a few) freelancers offering the same service?
• Are customers paying “global” rates? Or the rates depend on their (or the freelancer) location?

3. Value-driven:

• How big is the benefit that my contribution will generate to the client?
• What share (%) would I like to get from it?

BENCHMARKING: HOW TO RESEARCH THE MARKET TO SUPPORT YOU PRICING YOUR SERVICES?

There are multiple sources of information you can use as data points to build your pricing model. Make the most out of the information that is publicly available such as:

1. Search for freelancers in your skillset and experience level

In general, online freelancing platforms allow you to search for jobs AND freelancers. You can have a look at profiles similar to yours who have completed at least 5 projects recently, and compare their profile rates with the payments made by the clients for specific projects. You’ll be surprised by the amount of information you can find about specific rates and the details related to the task complexity publicly available).

2. Look for market research reports related to online freelancers pricing

Here a couple of them, just the tip of the iceberg to kick-off your search, the list of results in Google is endless!

• Payoneer: 2020 freelancer income report 
• Upwork: How much can freelancers make in 2021?

3. Benchmark on the go

In platforms like Freelancer.com, it’s possible to see most of the proposals and rates submitted for a project that is still open, being possible to drill down to the profile details of every freelancer. Have a look at open and closed projects aligned with your area and level of expertise and try to find a relationship with the profile of the freelancers that submitted them. Sometimes you can even find information about the freelancer hired for the job with the rate paid and the previous jobs completed by that person.

Using a structured approach to define your prices is a key tool, not only to submit competitive proposals but also to defend your prices during the negotiation with potential clients. Enjoy the benchmarking process while doing it as conscious and constructive as possible.

PREPARE TO CHARGE HIGHER RATES IN THE LONG TERM

Although it’s recommended to start with a modest rate to balance your lack of documented experience in the platforms, it’s key to work towards increasing your rate as fast as possible to market levels. Here some ideas to mind when defining your pricing strategy:

1. Align to complexity

Platform clients are very used to pay for performance. The complexity of the task involved and your demonstrated capability to complete it with the right quality at the right time weigh more than your years of experience when a budget is assigned. Make sure you keep your skill set evolving to stay competitive charging increasing rates for tasks of increased complexity.

2. Stay competitive

The balance between supply and demand rule also in online freelancing marketplaces. Highly demanded skills with few freelancers available to complete them mean higher pay rates. Here again, staying up to date with a life-long learning focus is key to keep your profile competitive.

Find more tips and tools for freelancers at wisar.pro/blog