4 fee-setting strategies for freelancers
In this blog post, we’ll teach you 4 strategies to set the fees that feel right for you.
1. Track your time
Setting a correct fee begins with tracking the time you spent on certain tasks. That also means that you’ll need to track your time task by task. It doesn’t really matter how you track your time, be it pencil-to-paper or using a digital tool, but in this day and age most people – and clients – prefer a digital system. In some cases you might even be able to log your work using your client’s system. In other cases there are tons of (free) online tools you can use to track your time. Toggl is a great one, for example (and their comics are freaking hilarious). At ACA IT-Solutions, we use Tempo Timesheets for JIRA. But there’s tons of others to choose from! In order to pick the right one for you, ask yourself this:
- Am I working alone or with a team of people whose time I also need to track?
- Do I need to track time worked offline?
- Will I forget I have a timer running? Does the time tracking app have idle detection or a running timer visible no matter what I’m doing?
- Do I need thorough invoicing and expense-tracking tools included? Will I use a separate invoicing system, and if so, which time-tracking apps integrate with it?
- Can I get by with a free time-tracking tool or do I need to pay for a more thorough feature set, and if so, what’s my budget?
Answer these questions for yourself and go through or try out some time tracking apps to see whether they really suit you.
2. Know your pricing
Knowing your pricing includes avoiding feast or famine pricing and knowing your rock bottom. You should find the zone that reflects your value, but leaves room to negotiate. This means you’ll need to do some market research, get a sense of job scope and, if possible, budget from the client before you crunch numbers. Your market research should involve learning the benchmark for rates in your particular industry. Check industry discussion boards and professional networking sites where people swap stories, strategies, magazines and books or ask a professional you trust. Also find out your lowest number — the price you won’t go below, no matter how great the gig is.
Knowing your pricing is not just important for your business, it also avoids a lot of frustration. Going too low or too high with your prices causes stress and costs time. Undercharging can lead to a feeling of being taken advantage of, while asking too much can lead to a loss of potential clients.
3. Communicate your value
If you’ve done your market research properly, you know how much you can charge for your services. But your clients may not. It’s okay to educate a client about what you’re worth. In fact, calculating and communicating your value to your clients is part of your job. It’s not their job to know exactly what you do and what you ask for it, as long as you offer a solution to their problem.
So what’s the best way to communicate your value to your clients? Here are a couple of tips:
- Emphasize exactly what’s included in your pricing so people know exactly what to expect. This means you also may have to talk about things that are not included in your service.
- Explain to your clients where their money goes. You might relate to this yourself: how often have you gone shopping and wondered why something costs that much? A great way to build trust with your audience (and set yourself apart) is to tell them just that. Explain exactly where your buyers’ money goes and why you charge what you do. Online or in-person, this kind of transparency is rare and seeing this information readily available alongside your price tags lets your audience know that you’re not just out to turn a profit.
- Measure how satisfied your clients are with your level of communication and transparency. Do this when clients decide to take you on for the job, but also when they don’t. This may reveal some interesting information that you can use to your advantage in the future! You might feel you’re doing an excellent work of maintaining communication with your clients, but without direct input from your clients themselves, there might be a nasty surprise in store.
4. Prices don't have to be fixed
Earlier in this blog, we discussed finding the “zone” that reflects your value. That means your prices shouldn’t always be exactly the same. Don’t fear fluctuation. In some industries, it’s pretty much “one price fits all” for a given task. But if there’s a price spectrum, why not quote ’em as you see ’em?
Do you anticipate hours of meetings and revisions in your future? Perhaps there’s tons of overhead? Think of the cost to you of serving that client: you won’t have time for other projects and you’ll have to deal more with the less fun parts of your job. And if it’s your busy season or you’re cramming this gig onto an already full plate, that can be another reason to raise your prices.
On the other hand, will this gig boost your career, add visibility, or give you a new skill? Do you believe in the project and want to help it happen? Do you need the work? All valid reasons to allow a (reasonable) discount.
In this blog post, we’ve shortly discussed 4 strategies to help you set the right fee as a freelancer. The two most obvious ones are tracking your time and knowing the pricing zone that feels comfortable for you. Additionally, you should let others know what price you think you are worth and why. Communicating your value to your clients is essential. Don’t think of it as a way to justify your prices to them, but rather as a way to build trust. Finally, your prices shouldn’t be set in stone. Depending on the situation, it’s fair to raise or lower your prices by a bit.
We hope this blog has helped you set the right fees for you! If you’re looking for a new gig, check out all the current opportunities on our website!