How Much to Charge as a Freelancer: Five Ways to Price Their Work
In September 2021, a record-breaking 4.4 million Americans quit their jobs and said sayonara to a regular paycheck — and good for them. Freelancers are happier and earn more money than their employed counterparts, so making the move to self-employment is a logical step in anyone’s career journey. When you’re new to freelancing, two questions people ask themselves right off the bat are “How can I price my freelance work?” and “How should I charge clients?”
Unfortunately, there isn’t a one-size-fits-all solution for how to price freelance work. Pricing depends on many variables, such as level of experience, the project, and the client’s budget. Here we discuss the five most common pricing models used by all kinds of freelancers.
One of the most common ways to figure out what to charge for freelance work is by the hour. Charging clients by the hour means you’re trading time for money. A benefit of hourly pricing is that clients are familiar with this structure, you can bill for more time if the scope creeps up, and it helps freelancers understand how long projects take.
The downside of hourly pricing is that it has limitations. For example, let’s say you’re a freelance writer with five years of experience, and a client asks you to create conversion copy for a new landing page. A task like this might take you two hours, and you charge the client your hourly rate. For example, two hours at a $60 hourly rate equals $120.
Charging $120 for a landing page that could potentially bring in 10 times the revenue for the client suddenly doesn’t seem very balanced, and you’re penalized for working fast based on your experience.
“Billing the client by the hour is ineffective for medium to large projects,” said Bronwyn Tagg, a freelance writer. “As freelancers we’re charging for our skills and value we can add. You should not be paid less for being fast and thorough at researching, typing, editing, et cetera.”
Billing clients hourly also means your earnings will be capped because there are only so many hours in a week you can charge clients. A quick tip: Track your time using a tool like Toggl or Harvest. Assess how long each project is taking you, and this will help you understand how much to charge clients.
If you’ve landed a larger project, it might seem tempting to charge clients a day rate. Calculated by taking your hourly rate and multiplying it by six to eight hours (the amount you’ll work in a day).
Clients love daily rates because they’re not worrying about the hours the project takes; they have a rate to hire you for a whole day and expect the work to be completed. While this is a benefit, what happens if you’ve billed a client for eight hours of work, but it ends up only taking three?
Not only does charging clients by the day have potential moral implications, but it can also limit your earnings potential because there are only so many days in a calendar year.
“Thinking in terms of an hourly rate, honestly, reminds me of my value,” said John Loeppky, a freelance journalist.
Changing on a per-word basis is simple: The writer tells the client their per-word rate, produces the content, checks the word count, and bills the client. The writer knows exactly how much they’ll earn for an asset, and the client knows how much they’ll likely be paying.
The downside to billing clients by the word is it leaves no wiggle room. What happens if the client comes back with substantial editing changes, or you specialize in shorter copy for social, email, and ads? It also discourages brevity because you want to add in more words.
But what if you’ve been in the writing game a while? If you have lots of experience or focus on a niche topic, per-word billing can be beneficial because you’ll be able to charge a higher per-word rate.
Sometimes known as flat-fee, project-based pricing is one of the best ways to price freelance work. You set a specific price for a fixed scope of work, and the client pays you. It’s that simple.
Project-based pricing works well because the emphasis is on the result for the client, not how long the project will take you to complete. As a freelancer, you have an incentive to work hard and fast to get the project complete and maximize your earning potential. The client is happy because they have security that they won’t be paying more if the project takes longer than expected.
“I’ve tried a lot of different pricing models over 10 years. I either charge per word or per project,” said Ashley Cummings, a freelance content writer. “For long-form content such as ebooks and blog posts, I charge per word. It helps with scope creep. For case studies, website copy, and email copy, I charge per project. I never charge per hour.”
To calculate your project-based work, take into consideration your experience, speed, and availability. A simple formula that freelancers use is estimating how long a project will take, multiplying that amount by an hourly rate, and then adding 20 percent for contingencies.
Value-based pricing is when the freelancer calculates a rate based on the value of the project, not the time it takes to do the work.
Harking back to our earlier conversion copy example, if the freelancer expects that the new landing page will bring in $25,000 of revenue in 12 months, they can charge 15 to 20 percent of that revenue for helping the business achieve their goal. So, in this case, $3,750. A mark-up of over 3,000 percent compared to hourly billing.
Value-based pricing is high-risk, high-reward, and typically only used by freelancers who’ve specialized in their industry for a long time. You need to be able to prove that you’re capable of producing results, otherwise you’re going to have an unhappy client on your hands and potentially damage your reputation.
There’s no hard and fast rule on how to price your freelance work. Use different pricing models for different clients, and don’t be afraid to change your pricing strategy if you feel like it’s not working for you.
Claire Beveridge is a freelance writer and editor who works with innovative B2B companies to help them achieve their growth goals. She loves clever copy, creativity, and talking about herself in the third person.
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Tags: freelance invoices, freelance management, freelance writers, freelancing, how to charge clients, how to pay freelancers, outvoice