In the construction trades, you’ll hear the expression “time and materials” as a way of estimating jobs, but when setting your freelance rates, the “materials” part of the equation essentially disappears beyond your office supplies and computer costs and you are on your own to figure out the rest.
The truth is, you can price your creative skills in dozens of ways. None of them is wrong, though some are more profitable than others. As a baseline, there are three elements that you need to consider.
What do you need to live on and what you want to save from your profits? This is a bottom-up calculation, adding up all your current annual expenses and then doing the math to determine an hourly rate. (I’ve created a freelance rate calculator to make it easier and allow you to experiment with different scenarios.) Note: I am not recommending that you use your hourly rate in discussions with clients, but rather that you need to know what your hourly rate is in order to formulate your estimates.
What do you want to earn this year, or what would your skills command at a comparable corporate job? If you are full-time freelance, keep in mind that you are now responsible for supplying your own benefits. (The freelance rate calculator mentioned above can help with this, too.)
What are the market ranges for your services? As a starting point for your research, you can look at surveys of freelance rates published in Writer’s Market, the Editorial Freelancers Association, and elsewhere on the web, and reverse engineer them for the Indian market. Be aware, these aren’t a panacea when it comes to setting your fees! The ranges are wide, and there is no way to know for sure what your own market will bear. To augment your research, you can consult veteran freelancers, or people who use their services such as graphic designers or business owners. Of course, many will want to keep this information close to the vest. An experienced freelancer might consider it a trade secret; a client might not want to reveal what she pays, thinking she might be able to negotiate a better price.
On the basis of these three different perspectives, you will have a general idea of what your hourly, per-word, or per-page rate should be. But don’t stop there! Always keep in mind the following principles when deciding how much to charge:
You can always come down in price; you can’t go up, unless a client requests additional services.
Working through bidding sites or job boards puts you in a competitive situation, which lowers your rates. It is more work to market and sell your services directly to potential clients, but you will gain pricing leverage.
If every estimate you send out is accepted without negotiation, you’re probably not charging enough.
If you fail to price your skills right, your clients will surely fail to value them properly. In fact, rather than deterring a buying decision, higher freelance rates can actually imply greater value to a client or prospect—as long as you have the skills and experience to warrant them.
A freelance corporate copywriter and editor since 1999, Jake “Dr. Freelance” Poinier is the author of several books, including The Science, Art and Voodoo of Freelance Pricing and Getting Paid. He blogs on a wide range of freelance topics at DoctorFreelance.com.