How Much Should I Charge? Pricing Tips from an Experienced Creative Freelancer
I made so many mistakes. I did so much guessing. Whenever I was asked for a proposal or questioned about my freelance rates, my mind would go completely blank.
Luckily, I had some amazing mentors who set me straight. After several years of freelancing on the side and almost a year of doing it full-time (yes, I make more freelancing than I did in a “real job”), I now welcome the opportunity to price out projects.
Here are some real-deal tips on how to price your services as a freelancer (and don’t worry, I use actual numbers - none of this vague “charge what you’re worth” stuff).
Lesson #1: Your hourly freelance rates should not be the same as your expected salary for a full-time job.
My simple advice to freelancers is to charge two to three times what you would in an hourly job.
If you are at a skill level where you should be making around $30 per hour in a job with set hours, your hourly rate should be between $60 and $90.
Most experienced freelancers don’t dip below $40 per hour unless they are doing unskilled work or the job is a long-term contract with some level of job security and flexibility. As you gain more experience and your skillset becomes more in-demand, you can and should increase this amount.
If you’re like me, this might seem excessive at first. Many of us were raised to understand the value of our labour through the lens of full-time employment. Why would the math be so different for short contracts?
It’s important to remember that your compensation at a full-time job is more than just the number on your paycheck. Consider what your client is saving (and what you’re missing out on) by going the contractor/freelancer route.
- Benefits - Do you wear glasses? Or go to the dentist? How about RRSP matching? In Canada, the average benefits-offering employer spends an additional 10-30% on top of your salary in benefits. Making up those costs as a full-time freelancer isn’t cheap, especially if you have dependents.
- CPP contributions - Did you know that 9.9 percent of what you make at work goes to CPP? If that seems high, it’s because employees are only responsible for half of that amount. Employers pay the other 4.95 percent, which means self-employed people like freelancers are responsible for the full amount (oh, and those rates are going up in a couple years).
- Job security - “Feast or famine” is a real thing in the freelance world. With the exception of longer-term service contracts, freelancers don’t always know where they are getting their next paycheck and aren’t covered by employee protections. Even if I were to opt into EI for self-employed individuals, I still would have no recourse if all my clients left at the end of their contracts. So when business is good, you have to prepare for less busy times if you want to succeed as a freelancer. If you’re signing away your employee rights while taking the same compensation you would in a salaried job, something is wrong. Remember, employers can save a lot of money and avoid a lot of obligations by hiring someone on a contract/freelance basis, so it’s important to price yourself the way a business would.
- Vacation pay/sick days - In Ontario, people are required to receive 4% of their wages in vacation pay as well as up to two paid days minimum (ten days total) in sick or emergency leave. This hits freelancers in two ways – the financial loss of vacation pay, and the fact that your freelance clients are free to hire someone else if you’re away sick or on emergency leave. That’s business, baby!
- Equipment - If your laptop breaks down or you need a new phone, your client isn’t going to cover that for you. You’re a business, and you need to pay for all those things. Yes, they are tax deductible, but between invoicing software, hosting for your portfolio site, design programs, printing costs and computers, the upfront costs can add up.
- Unproductive time – Studies show that the average office worker is productive for less than 3 hours a day. Startling, right? The fact is that many hourly or salaried workers aren’t truly “working” every moment they are at the office. Hiring a freelancer means that clients are paying for exactly what they are getting, rather than putting someone in an office that they are financing and hoping they get stuff done while they’re there.
It’s customary to have a range of rates which can vary based on the value your client is getting and your skill level at that particular task. Pick a number that you absolutely will not go below and stick to it, then offer value-based pricing within your comfortable range depending on the size of the project and how much you will bring to the table.
Lesson #2: Avoid charging hourly unless it absolutely makes sense to do so.
Hold up - didn’t you just tell me what my hourly rate is?
Yes. That’s super important for you to know and have in your head.
But clients don’t always respond well to hourly rates. They may be caught off-guard when you charge double or triple the amount they’re used to paying an employee, even if that cost is super justified. Or they may be concerned that they can’t estimate the number of hours which will be needed, making it hard to budget for a project.
Instead of providing an hourly rate, translate that into a flat cost accompanied by a list of things you will deliver to the client. As a writer, I typically specify not only the article I will deliver, but my policy on edits, SEO, content calendars, entering content into a CMS and so on.
Pick apart your process and account for every bit of value you are bringing to the project – this will also help you gauge the work involved to set a fair price. Use the hourly rate in your head as a starting point for this price, but also consider their budget (if it’s higher, you can offer more; if it’s lower, narrow your services), the expertise you have in this field and the value it will bring to their organization.
There are exceptions to every rule. I learned early on that I had to charge hourly for copyediting, because until I dug in I really had no idea how long it would take. I also bill consulting services like meetings and training hourly, as well as rush projects for clients who don’t have time to wait for an estimate. But outside of those two outliers, charging by project is easier for me and the client alike.
Lesson #3: Remember that your time is your inventory.
Still nervous about charging $75 per hour when you used to make $25 for the same task? I know how you feel. I felt very similarly, until I realized just how quickly a week goes by – and how much I would need to charge in order to guarantee my clients the attention they needed for real results.
As a freelancer, your time is your most precious inventory. If you look at the hours in a day, you’ll quickly realize this is pretty limited stock. You can’t order more from a supplier. You can hire people to supplement your work, but only if you’re charging a client enough to attract talent and pay them fairly for their time.
Understanding time is extremely important for freelancers. If you take a gig that pays less than you would like, you should negotiate some flexibility in your deadline so you can prioritize appropriately. If a client wants something done quickly and done well, they should to be willing to pay for the quick turnaround.
Pricing freelance services is not a perfect science.
One of the reasons there is so little information available on how to price freelance services is that there are so many ways to do it. What may sound affordable to one client (“Wow, the big agency charges so much more!”) can sound super expensive to another (“Pfft, I know a guy who’ll do it for free.”).
The most important lesson is to not undersell yourself. Be reasonable in your pricing, but take steps so you don’t create an unsustainable system where you’re working 12 hours a day for very little income. Making the same or more money than a full-time employee without gouging clients is absolutely possible for flexible freelancers, but you need to be aware of the value of your time and your skills in order to make it happen.