If marketing scares freelancers, pricing confounds us.
How do you even begin to determine how much your work is worth?
Over at Shelancers, I learned a formula for computing my hourly rate. It’s based on how much I would like to earn and how many hours I work.
Because I’m a writer who actually loves both words and numbers (yes, we exist), this formula makes perfect sense – if you want to charge an hourly rate.
I do not.
For some reason, ever since I began freelancing, I never felt that charging by the hour made sense, at least not for me. I wanted my pricing to reflect my many years of experience, my vast store of knowledge in certain subjects, my unique voice… In other words, I wanted my pricing to reflect what I bring into the project.
(When I was working in UNICEF, I never did agree with the idea of bidding out a project and always choosing the lowest bidder. I argued that that way of doing things only applied when you’re sourcing water containers and tarpaulin tents for an evacuation center – not for choosing which photographer to send to the latest volcano eruption!)
What’s the solution?
My own approach is eclectic. I have a rough idea of how much my time is worth. And then I estimate how long the project would take to complete. So I do begin with a figure based on an hourly rate, BUT I don’t stop there.
I adjust that number, based on different factors:
- how difficult it would be for me to complete, not in terms of time, but in terms of the mental effort involved
- whether the client is new or a returning one
- whether the task is part of a larger project, which I am implementing for the client
- whether the client is hiring me for the long haul
- what specialized knowledge I need to draw on
- if and how much guidance I will have to give the client (consulting-type of work) to actually complete the project
- how much comparable competitors are charging for similar services
- how much the client is able and willing to pay
As you can see, it’s a bit too complicated to capture in a mathematical formula!
Plus since I am a very touchy-feely person, I tend to follow my intuition and gut more than I do my head (if you’re one of my clients and you’re reading this, please don’t take advantage of this knowledge!)
Trish Lambert of SuccessInSweatPants.com has a 3-dimensional approach to pricing, which considers the freelancer’s need, his/her value, and what the market finds acceptable. Incidentally, you can learn more about this in my interview with Trish about how to make money on Elance.
Whichever formula you use, pricing your services is never simple. There are many factors to consider. In the end, both you and your target clients have to be happy.
What’s your pricing formula? Do share by posting a comment below!
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I don’t really like to charge by the hour because I simply don’t like to keep track of all the time I spend on a project. I work in an environment that has interruptions which eats away at some of my time.
Like you, I tend to just go with my gut instinct. I take into consideration many factors such as the ones you listed.
Maria Palma´s last blog .."Today’s marketing success comes from self-publishing Web content that people want to share. It’s not…"
@Maria I forgot to mention another reason I don’t charge by the hour: I work pretty fast! I write pretty quickly, even when I have to research, so the amount of time I work on something isn’t a good gauge of how much I should charge for it. Thanks for dropping by!
I usually charge by the project with tweaks up and down depending on who referred them, new client, chance of ongoing business, their personality (i.e. if they come across as cock and pushy) how much in my comfort zone the project. and all this loosely based around a rough per hour charge.
dmk´s last blog ..Updated PDF portfolio
Hey @dmk, thanks for your comment! Looks like we have a similar approach: use an hourly rate as an initial ballpark and then move up or down from there depending on several factors. Works great!
I don’t charge by the hour either, I have set rates. And I’ve learned what I lose money on, and what I don’t. I specialize now in Sales Letters, Squeeze Pages, Information Products and Small Reports.
I also work the offline market too, since I have a background in magazines.
What works for me is going with my strengths. And working with great clients.
Marya Miller´s last blog ..If Gilderoy Lockhart Was An Internet Marketer