If you’re setting out to do freelance work, either part-time or as a full-time career, you will need to establish your rate. Whether it’s hourly, a day rate, or per project, it can be a daunting prospect.
Set the rate too low, you’ll be working yourself into the ground for peanuts. Set the rate too high and you may not get any business at all. It’s a fine balance, based on experience, skill level, and what you consider a valuable use of your time.
So, if you’re ready to jump into the freelance pool, or you’re already there and want advice on the rate you should charge read on. Let’s start with a warning.
Avoid Freebies and Introductory Rates
It’s an easy trap to fall into. A business wants you to do work for them, but they don’t want to pay. So, they ask you to do a little something for free. If it’s good, you’ll get more work later at a decent rate. Or, you may be asked to charge a lower “introductory” rate, which is the company’s way of saying “hey, we’re taking a chance on you, you need to cut us a deal.”
Very few professions operate this way. Imagine calling a plumber and saying “well, if you fix this pipe for free, I’ll call you for more work later.” Or, “cut your price in half, and I guarantee more work down the road.” In almost every other profession, the price is the price, and that’s it. So, have the same kind of respect for yourself. If a business doesn’t want to pay you what you’re worth, find another that will.
Charge The Freelance Rate You Have Earned
When you first get into the business, you are green. You haven’t learned the hard-nosed, on the job lessons that will make you true professional. You will have college experience, but that’s not a patch on the kind of experience you’ll get from working in a fast-paced agency for a year or two.
So, when you freelance in those early days, you are not doing it for the money, your hourly rate will be fairly poor. You’re doing it to establish a client base, and to get more varied work in your portfolio.
You may even decide to take on free assignments (be careful, though — this is easily abused or sets a low bar for pay), or do a lot of pro-bono work. At this stage, it’s fine to charge anywhere from $20-$30 per hour, or less if you want the work.
After a few years though, say 3–5, you will have gained insights that make you a better designer or advertiser, and you will have learned skills that cannot be learned in college. These all justify your newly increased freelance rate. It can be anywhere from $35-$60 per hour, and this is not taking into account the bigger markets like New York and L.A., which require additional money to cover larger expenses.
In Later Years, You Have The Right To Charge Much More
When you hit the 5–10 years of experience mark and have a ton of excellent work and clients in your portfolio, it’s time to raise your rate again. Now, the prospective clients are paying not only for the work you will deliver but the quality of work you can do and the time it took you to gain that experience. Some will find it a tough rate to swallow; after all, why should they pay you $70-$100 per hour when they can pop online and find a $50 logo, or find a designer on Craigslist who’ll charge peanuts?
Remember to tell anyone who questions your rate that they get what they pay for. After 10–15 years, this rate can go up to $150-$200 per hour. And after 20 years, well the sky’s the limit. At this stage in your career, you have a vast wealth of experience to draw upon. You will be much quicker at your job, too. What used to take you four hours may only take you 90 minutes now. You will come up with elegant solutions in less time, and the solutions will all be very useful.
Remind Clients That Time Is Valuable, Including Their Own
Perhaps one of the greatest injustices in the freelance world is how companies view the value of a freelancer. Let’s look at this in two ways to illustrate the point.
The Traditional Way
After the client chooses a freelancer, he or she provides a quote based on the scope of work. In this case, the rate is $100 per hour, and the estimate if 40 hours to complete the rebranding task given by the client. That makes a total of $4,000, and the work will take roughly one working week to complete, although these hours will most likely spread out over several weeks. At the end of that task, there may be additional work required, a review process, and the usual back and forth until everyone is happy.
After several weeks, or perhaps even months, the job is finished. The additional hours added a further $1,000 to the job, and the client got everything they needed after two months.
In short — Time spent: 2 months. Cost: $5,000
The Experienced Way
After the client chooses a freelancer, he or she provides a quote based on the scope of work. This freelancer has over 20+ years of experience under his or her belt. It will take around 4 hours to do this job, it will be everything the client needs, and the charge for this is the same as the job above — $5,000.
In this scenario, the client gets cold feet. Now, the job is not $100/hr, but $1,250 per hour. That’s a staggering rate, higher than any lawyer or doctor charges. They don’t want to pay it.
But in this case, the client is missing the big picture. The experienced freelancer will not get the job because they are not considered to be value for money. However, they will save the client many many weeks of time, provide the same satisfaction, and do it for the same cost.
If you asked the client, “would you like this for $5,000 in four hours or 8 weeks?” the answer would be blatantly obvious. They’d want the four hours. But because of the way the system works, they think about $5,000 for 50 hours of work vs. $5,000 for 4 hours of work. That’s the wrong way to look at it, considering that time is something a client values above money. Consider this the next time you think about your hourly rate.
One of the best ways to look at this is illustrated perfectly in this story about one of the great geniuses of our time, Pablo Picasso. The legend goes that Picasso was sat on a park bench sketching when a woman, a very bold one at that, asked him to do her a sketch. It went something like this:
“Oh my, I can’t believe it, you’re the great Picasso! Please, sir, you must sketch a portrait, and I shall not leave unless you say yes!”
Well, being something of a gentleman, Picasso agreed. He sat for a minute or two, studying her, and then put his pencil to the paper and with a single stroke, completed the portrait. The time the pencil was touching the paper must have been a few seconds, maybe less.
“It’s…magnificent!” The woman was beaming, gushing in fact, about how Picasso had captured her very spirit and likeness in the one stroke.
“How much do I owe you sir?” the woman asked.
“Ten thousand dollars” replied Picasso, without missing a beat or raising an eyebrow. He was deadly serious.
The woman was naturally shell-shocked and had trouble gaining her composure.
“Ten thousand dollars?!” she said. “That’s preposterous! Why it took you just a few seconds to do this!”
Picasso breathed deeply for a second and then replied
“Madame, it took me my entire life.”
While the chances of you becoming the next Picasso are probably slim, the fact remains that when you charge your rate, you must take into account all the years of experience that made you the designer, copywriter, or art director you are. You are not charging just for your time, but the many years of blood, sweat, and tears that it took to reach your level of skill. Never back down from that.