Luckily, there are plenty of resources online you can use, like my blog, to help you set your rates, or change your existing rates, with confidence.
My first tip is super simple: google it. Search for other people and companies in your field. Many freelancers and companies post their rates on their websites. This will give you a realistic idea of what the rate range is for your services.
Think About Your Needs
Next, analyze your current situation. Before you factor in your experience and expertise, it is important to understand your financial needs. This may help you develop your business more efficiently, or you may realize it’s not a feasible full-time or singular source of income.
Take stock of your monthly expenses. These may include things like rent, mortgage, child care, car insurance, health insurance, technology and software needs, etc. Will your hourly rate provide a livable wage based on your needs.
Know how many hours you can / want to work. Consider that in addition to the time you spend working on client needs, you will also spend A LOT of time working on your business.
If you like spreadsheets, check out The Remote Nomad’s writable rate sheet. This is one of favorite resources because it is very detailed, and it really makes you think about the financial breakdown of your business.
If you like infographics, check out CreativeLive’s hourly rate formula. It will help you get a general sense for what your rate should be to meet your needs.
Super Important: Keep in mind that these formulas help you understand your financial needs, but may not be what your services are worth. The value of your services depends greatly on what other people and companies are charging for similar services as well as your experience and expertise.
Lastly, don’t forget to factor self-employment taxes into the equation! You may charge $30/hour for your services, but you’re actually only keeping $21/hour after taxes.
Remember that your rates aren’t set in stone. My lightbulb moment happened when a longterm client said to me, “I couldn’t have done this without you! We should be paying you more.”
I realized the only reason they weren’t paying me more is because I hadn’t changed my rates since I started working as a freelancer, even though my skills and quality of work had significantly improved.
As you continue to master new skills, grow your portfolio, or change your core services, you should increase the price of your services accordingly.
BONUS: Not sure how to let clients know about a rate increase? Use my simple, effective, FREE script at the end of this post.
Conversely, if you are an experienced person in your field, but find that you have trouble securing clients are your current rate, it may also be time to reevaluate. Analyze the feedback you’ve received, and consider a rate decrease or improving the quality of your services.
Once you’ve set your rates, be confident and don’t let people pay you less than you’re worth. There will always be people that will try to convince you to work for free or at a discounted rate, but it’s up to you to know what clients you want to work with and who will value your expertise. CareerFoundry says it best:
“I once read a story about a time Henry Ford hired a mechanic to fix one of his machines. The mechanic came in, replaced one of the nuts that had come free, and gave an invoice for $100. When Henry Ford got the bill he was furious, ‘How can one nut cost $100?’ So the mechanic submitted a new invoice listing $1.00 for the nut, and $99 for ‘knowing where to put it’. Henry Ford paid the bill, or so the story goes.” – Rosie Allabarton
Next time, I will share my tips for being realistic about working remotely. Subscribe at efbooth.com/blog to receive my pearls of wisdom directly to your inbox. Follow me on Facebook for daily tips and resources!