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!

photo credit: mahalie