What to charge for your time and expertise is an age-old question that many freelancers find themselves asking. New freelancers often make the mistake of charging too little, in effect, undermining their value to potential clients, but sometimes even veteran freelancers find themselves falling behind the average, failing to keep up with industry inflation.
So what should I charge, you ask? Probably a lot more than you think.
True story about me as a brand new copywriter. When asked to what I would charge to write ad copy for a brochure, I decided a reasonable rate was slightly above minimum wage, the logic being that writing copy was slightly more difficult than flipping burgers, but not much. No wonder it wasn’t until years later that I considered being a copywriter a viable profession.
This is a common trap that freelancers fall into: “It’s easy for me and I enjoy it; therefore, it mustn’t be worth much.” I would love to tell you that the second time around I fared better in the what-to-charge department, but that would be a bold face lie. By then, I increased my rate significantly, but it was still well below the industry average.
The important thing to remember is that to our clients what we consider easy and fun is often difficult and painful for them. Writing copy was one of those tasks. When faced with a blank page, they often struggled with what to say about their company, but sit in front of them with a pen and paper in hand, and they could talk all day about the amazing things they were doing.
So back to answering your question: what should I charge? Well, let’s think about it this way. By hiring a freelancer, they are avoiding paying a full-time employee who would cost them full-time wages, salary administration, benefits, office space, computer, office supplies, sick days, and so on.
It makes paying you a high hourly rate seem like a bargain, doesn’t it? That’s because it is a bargain. They have made no commitment to you beyond the contract. When it’s complete, they can choose to renew or not with no potential hassle on their end, but in the meantime, they get a competent resource who knows their stuff inside and out.
You, on the other hand, have to adsorb all those costs, hiring an accountant and/or bookkeeper to manage your financials, paying additional money for extended health coverage, and purchasing every single office doo-dad you require to do your job. That’s all on you and at the end of the day, you could find yourself looking for a new contract. That’s what your freelance rate needs to cover.
Still confused about what to charge? Here are a few considerations:
Research Industry Rates — Start by talking to other freelancers or agencies in your industry to find out what they charge. For example, it was relatively easy for me to find out what ad agencies charged their in-house writers out at (and let’s just say that those first conversations were quite eye-opening for me).
Now if you don’t have the equivalent of an ad agency to use for your research, just talk to other freelancers. You’ll likely find they are quite open to sharing this information. After all, they’ve all been in the same position as you and if you think about it, it’s in THEIR best interest to advise you to follow the industry standard.
Calculate What is Viable for You — Do the math and figure out what is feasible for you in terms of working as a freelancer. What do you need to make to cover your basic expenses? Now you need to factor in gaps in contracts or working less than full-time because as a freelancer, that is definitely a reality, especially if your industry has seasonality to it.
Compare this to what you would get paid as a salaried employee doing the same job full-time. Add in what you would receive in terms of benefits and perks, like a gym membership or retirement savings matching program. That’s what you are giving up by going freelance and that is what your freelance rate needs to compensate for.
Study Your Target Market — Consider what is viable for your target market. Remember, by engaging with you, they are avoiding hiring a full-time employee with all the associated expenses, but it’s still important to consider what is reasonable from their perspective.
If you really love serving small business clients with limited budgets, then you need to find creative ways to work with them without compromising too much. Set up a blended consulting/coaching arrangement where they do the heavy lifting while you act as an advisor or negotiate a contract that guarantees you steady work in exchange for a break on your rate.
Consider What Your Contribution is Worth — Factor in what your contribution is worth to them. Besides giving them access to a senior-level expert with no strings attached, it’s likely that you are working on something that is of value to the company (or else they probably wouldn’t be hiring someone to do that job).
Perhaps your expertise is going to save them money or make a huge expansion possible. Attach a dollar figure to that contribution and compare it with what you are charging them. Even something as simple as filling in the gap between when they need help and when they can afford to hire a full-time salaried employee is worth something.
When it comes right down to it, what you charge for your time is up to you. You may choose to give that new start-up a break to help them get going, but just because you give them a break doesn’t mean that lower amount is your standard rate for other clients or even for that client in the future.