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How to Set Your Freelance Pay Rate

by Bryce Emley Oct 1, 2013

We lucky freelancers are about the only people who get to decide what we make. It’s just too bad people who hire us usually do so because they can’t afford in-house workers.

Setting wages when the decision is all yours is tricky at best, and there’s really not a right way to do it. So forget everything you know about getting paid; this is an art form in itself.

Know what you’re really getting paid for.

I remember thinking the $9/hour I made for my first real job seemed like a killing. Now double that isn’t usually enough. The first key to setting your price as a freelancer is understanding an hourly wage doesn’t mean the same thing it does for a regular employee.

$20/hour may seem like a lot, and it is if you’re getting paid that for 40 hours a week every week. Freelancers, on the other hand, may only get paid for a fraction of their full-time workweek. Suddenly $20/hour might look something more like $10/hour. When people hear my hourly wage, they’re usually really impressed. They’re far less impressed by what I make for the month.

Decide how much your time is worth.

Most freelancers don’t get to work for strictly hourly wages, but rather individual set contracts. But you still need to think about what an hour of your time is worth based on the amount of time it takes you to do a general job.

If you expect to get $100 for a job that takes you two hours, that job is worth $50/hour — you get the idea. That’s what your time is worth, and from there you can bid accordingly based on a client’s budget and the size of their job.

In your cover letter / pitch, explain your situation.

If you’re new to a freelancer site or the freelancer industry at large, you’ll have to start out charging lower rates than you deserve. Let prospective clients know that you have a ton of experience on another site or in-house somewhere, but that you realize they have to take you at your word for that, so you’re charging under your usual rate. This’ll build your credibility and help them feel like they’re getting a bargain for a professional.

See what other people charge.

Head over to freelancer websites like oDesk or Elance and see what people in your industry post as their rates on their profiles. If you haven’t established yourself yet, don’t expect to make those rates anytime soon, but see them as something to shoot for.

Before you have lots of stellar reviews or a killer portfolio, you’ll be competing with cheap overseas labor. Start just above those wages.

See what other people bid.

Elance used to show bid stats for every job, but now you have to pay for a premium membership to see them (bastards). It’s worth the small monthly fee to get access to this, even if you just do it for a month to assess the market.

Start out going just below the average or just over the low, letting them know you’re giving a discounted rate. Also, try looking up the contractors in your industry again; some sites show the jobs they’ve applied for in the past, as well as jobs they’ve actually taken. There may be a difference between what their profile says they charge and what they’re actually paid.

See what a client pays people.

Some sites, like oDesk, also show you the client’s contract history when you look at a job; scroll down and see what they usually pay people, and apply accordingly — granted, you’ll have to go lower if you’re starting out.

Propose based on workload.

Remember what I said about hourly rates for freelancers not being the same as that of our traditionally employed brethren? There’s a certain premium you pay for not having to shop around for more jobs or communicate with lots of different clients, so you might need to take less for a steadier job.

If someone can offer you a guaranteed 30 hours per week, or a job that might take you 30 hours in a week, it’s worth it for both parties for you to take it for a little under your usual rate. I’d much rather make a guaranteed $15/hour for 30 hours than work a couple $20/hour jobs totaling 15 hours, then spend the other 15 with my thumb in my butthole.

Gradually scale it up.

Keyword here is “gradually.” My first gig paid about $3 an hour. My next, about $4, then it jumped to $10, then $14, and so on ad nauseum for over a year until I became the only marginally underfunded freelancer you’re reading today. Though this should never plateau, your rate increases should slow down as you go along.

I generally gauge it by how often I get unsolicited job offers for the proposed rate on my profile — once I get a couple of those, I know it’s safe to move it up because people have assessed me as worth a certain price. Once their jobs become good reviews and solid portfolio additions, I get to charge more. Remember, it doesn’t hurt to charge too little, as long as you at least test the waters at higher rates.

Learn what it all means.

This is all to say there’s really nothing anyone can tell you about how to set a price. You have to feel it out by industry (I’m a writer; I therefore make far less than a developer), by your experience, by your experience on a given website, by your competition, by the employer, and even by your quality.

Quality is the hardest one to self-assess, but let’s face it, if you suck at what you do, you can’t charge much. If you’re getting bad reviews or if people just aren’t hiring you, you should probably take the hint and either charge less, get better, or find a new job. There are people out there willing to pay more for quality work; if you’re good enough at what you do, you’ll land those jobs eventually.

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