Pricing Your Services as a Freelancer
“Whatever your task, work heartily, as serving the Lord and not men, knowing that from the Lord you will receive the inheritance as your reward; you are serving the Lord Christ” (Colossians 3:23-24).
One of the most confusing tasks I’ve run into during the process of starting up my writing and editing business is pricing my services. Too high? Too low? Will this client be able to pay what I’m asking? What if they decline because my prices are too high? Pricing your services as a freelancer or other service business owner is a surefire way to experience a little (or a lot of) self-doubt and apprehension.
Though my business is focused on copywriting and editing for small businesses and nonprofits, the following tips can just as easily apply to other service-based businesses, like web design, business strategy or photography.
As I was building my business plan, I was overwhelmed at first by the various pricing methods out there. Choosing which one will work best for your business is entirely up to you, but the following are a few common methods:
By hour: Set an hourly rate, and provide clients up front with an estimate of how many hours a job will require. Then, you might want to use a time tracking tool like Toggl to keep track of your time as you work on a project. A drawback to this method is that as you inevitably become more skilled at your craft, you’ll be able to work faster, meaning you’ll earn less per project.
By word: If you write, charging per word is an option. There are many online resources that can help you determine where to land your rates, often based on what freelancers of similar experience and skill are charging — like this 2018 survey, for example. I started pricing my services this way and still use it with some of my clients. I prefer this method to charging an hourly rate for a few reasons. First, I’ll receive payment at the same rate for a 500-word post whether I write it in two hours or half an hour. It’s also usually easier to provide a quote with a per-word model, and I don’t have to worry about tracking my time. On the other hand, this model puts a heavy emphasis on words, but I’m not selling words — I’m selling results.
By project: Finally, an often preferred method of pricing for established freelancers is creating a rate for each project. It’s a model I’m pursuing gradually in my own business. It’s often called “value-based pricing,” because your fee is based on what it should be based on: the value you’re providing your client. For example, let’s say your client needs an important page added to their website. This page may take you less than an hour to create, but it will dramatically transform the client’s site and lead generation potential. You can and should make more than one hour’s rate for that project, because your skill is worth it to the client, and you’re providing immense value.
You Have Immense Value
Some methods will work better than others, depending on the nature of your business (though value-based pricing will likely work well for everyone). If you’re doing work regularly for someone — for example, as a bookkeeper or virtual assistant — an hourly rate may make more sense. As you read about these three models, consider which will work best with your business, clients and financial goals. Remember, you can gradually move away from one pricing model if you feel it’s in the best interests of your business.
You have valuable experience and skills that can drive results for your clients. It’s not in your best interest, or your clients’ best interest, to underprice your services. People associate value with higher prices. Which do you think will be of higher quality: a $75 blog post or a $15 one? Will a $200 website build look better than a $1,000 one? Probably not. Some companies may be looking for a deal, but the ones that are looking for real value are the ones you can forge long-lasting relationships with.
How to Set Your Prices
First, remember that nothing is set in stone. It’s your business. You can change your rates, and even your pricing model, down the road. (It’s best to not change things up too much with existing clients, though.) You can also experiment by charging different rates for different clients to determine which works best.
There’s usually not a simple formula to come up with a price, but there are a few things you can consider:
What are your income goals? Start at your monthly income goal, and work backward to determine how many projects and clients you’ll need to take on each month. You don’t have to be completely inflexible if a client can’t swing what you’re asking — especially if you like the project and envision a solid working relationship with them in the future. But it’s okay to have a minimum that you’re willing to work for, because you need to make sure each project is worth your time.
I often feel bad saying “no” when a client isn’t able to pay my rates. However, some projects take more time than they’re worth. My time is valuable, and instead of working on a project for which I’ll be paid very little, I could be working on business development and networking in order to attract higher-paying clients.
What is your client’s budget? When a potential client first expresses interest, it’s OK to ask if they have a budget for the project. This question can help you weed out clients that are asking you to do too much for too little. But just because a client’s budget is low doesn’t mean you should end the conversation there; it’s worth pointing out or reminding them that the reason your rates are what they are is because of the skills you bring to the table and the value you provide. Resist the temptation to underprice your services for the sake of adding to your list of clients.
Consider the clients’ potential and your time. Here’s where pricing becomes especially subjective. You know your time and a client’s potential better than anyone else. Consider whether you foresee a long-term relationship with this client and whether you have the time for the project and an interest in working with them. For example, if a non-profit comes to you with a budget lower than you were hoping for, you may decide to work within that budget because you like its work and want to foster a relationship with the organization, and you have the time and ability to enjoy the work it’s asking you to do.
Setting my prices caused a lot of fear and apprehension. I still worry about rejection when I send a price sheet and often experience that sinking feeling that if I’d just lowered my prices, I would’ve landed a signed contract.
However, your time is valuable, and so is your work. Underpricing yourself may get you clients now, but in the long run, it will stunt your business’ growth and devalue what you have to offer. Saying “no” to projects and clients that aren’t right for you gives you more time to build your business and work with higher-paying clients.
There is no hard-and-fast rule when it comes to pricing your services. There are considerations to keep in mind, strategies to employ, industry standards (sometimes) and plenty of opinions online. But ultimately, your knowledge of your own financial goals, services and clientele is all you need to set fair and fruitful prices.
Sarah Coffey is a freelance writer, copywriter, and editor. In college, she converted to Catholicism, met her now-husband Jesse, and received a B.A. in History. In 2018 she took the entrepreneurial plunge and started a copywriting and copyediting business – Coffey Copy & Content, LLC – and hasn't looked back. She loves using her talents for writing and editing to help business owners, students, and writers convey their messages powerfully and cleanly. She is also currently working on a Master's in Sacred Theology through St. Joseph's College of Maine and writes on matters of faith, theology, business, and travel. You can read more of her writing here.