More people are embracing the freelance lifestyle. According to a study by Upwork, 64 million Americans performed some freelance work in 2023. Doing freelance work, whether part-time or as a full-time business venture, could help you increase your income.
If you’re new to freelancing, you may wonder what to charge for your work. You want to set your rates accordingly so you can live on a comfortable budget and are paid fairly. I’ve been a full-time freelancer for nearly eight years. Let me share some advice to help you price your services.
1. Consider the time involved
Some freelancers bill by the hour — but not all do. Whether you bill hourly or do project-based pricing, estimate the total time you’ll spend on the assignment or project. Doing this allows you to set a fair rate for your time and effort.
The last thing you want to do is spend hours or days on a project only to feel resentful because you didn’t charge enough money. Your time is valuable, so make sure you’re being paid for it.
2. Factor in the cost of your business expenses
You should also factor in the cost of doing business. If you’re paying for business expenses like insurance, software, or tools, don’t ignore these costs. These expenses help you perform better, but they also cost you money. Building a portion of these expenses into your rates is wise.
Taxes are another expense that reduces your earnings, especially if you’re a freelance worker. Since you’re a contractor or self-employed worker, you’ll need to save for and pay your taxes. As you set your rate, remember to factor in these additional costs. Otherwise, you could walk away with much less than you initially planned.
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3. Set and stick to your boundaries
It’s important to set boundaries in your personal and professional life. It can be tempting to accept lower-paying work, reduce your rates, or agree to do extra work outside of the project scope to improve your chances of getting more work.
But this isn’t a good idea. It’s best to set boundaries and clearly communicate them to avoid being taken advantage of. Keep this in mind when determining and communicating your rates.
4. Talk with other freelancers
Networking with other freelancers has many benefits. One major perk is it can be valuable to have a support network when you need guidance. Many other freelancers do similar work. You can look to them for support when setting your rates.
I recommend joining freelancer groups on social media so you can get help when you need it. I see freelancers asking questions about pricing all the time in these groups.
For best success, it can be beneficial to join groups that are more specific to your exact work. For example, if you’re a freelance writer, join freelance writing groups — not just general freelancing groups. You’ll likely find the resources and help are more targeted to your needs.
5. Learn from your mistakes
You’re human — you’ll make mistakes throughout your freelancing journey. Some of those mistakes may involve pricing your work. Learn from your mistakes so you don’t repeat them.
6. Charge more than you think
Here’s my final tip: Charge more than you think. Many of us undervalue the work we do, so you’re likely undercharging for your services. This is especially true if you’re a new freelancer.
If you set a rate that is too high for the client, there is room for negotiation. If they can’t meet your rate requirements even after negotiating, they’re not the right fit for you.
Keep your finances in mind
No matter what type of business you run, keeping your finances in mind is a must. As you make business decisions, consider how your finances will be impacted. Taking care when pricing your work is just one way to set yourself up for financial success. Plus, your business checking account balance will benefit.
If you need help invoicing your work or collecting payments from clients, accounting software can help. There are affordable options for freelancers like you. Review our list of the best accounting software solutions for more information.
