How to set your rates and know your worth

Article Contributed by Nina Hendy.

Rates can be a closely guarded secret for freelancers and soloists. Here’s how to set your rates. 

Setting your rates and knowing what you’re worth can keep soloists and freelancers awake at night.

If you quote too high, the client may walk away. And if you quote too low, you’ll be giving clients the impression that you’re not all that great at what you do.

Whatever your magic numbers are, it’s crucial that you know exactly what your rates are. That means by the hour, word or the service you offer – and the ability to calculate a quote at a moment’s notice.

When I started out offering my services freelance over a decade ago, I turned down countless low paying jobs, which freed up my time to chase the better paying work. I also wrote my rates down and taped them to the corner of my computer, ready for when that call came in from a new client.

Calculating that magic number is dictated by a whole lot of things. How you market yourself, for one. It certainly helps if it’s easy for clients to find you online in a few places, because you’re probably going to get more work than those who have some obscure website and no online listings anywhere. A steady flow of work can mean you can accept the better-paying jobs and pass on the rest.

When working out an acceptable rate, many soloists and freelancers start out by asking others what they charge in freelance forums and social media groups. And that’s great, but it’s by no means an indication of what you should be charging. The reality is that the range of what’s ‘normal’ can be really wide. Your experience, background, skills and earnings budget also need to come into play here.

For instance, soloists who are just starting out can’t expect to earn the same as someone with years of experience.

Learn to say no

The big mistake is simply taking work that’s below your rate. By turning down low-paid work, you’re clearing the decks to concentrate your energies on sourcing work that pays you what you’re actually worth.

When calculating your magic numbers, start by working out how many hours you’re prepared to work a week, and how much you need to earn per hour, per day and per week to cover your expenses, holidays, sick leave, superannuation, and taxes.

Bear in mind that you won’t be working eight billable hours per day, with other business activities like invoicing, emails, phone chats, marketing and other essential elements of running a business eating into your working hours.

Spend your time wisely

Of course, how you spend your time will of course determine how much you earn. You can either squander your working hours on low-paying gigs and not make much, or devote your time to more lucrative work to ensure you’re on a good income.

How quickly you can tackle the job of course needs to be part of the consideration. And whether you quote based on an hourly rate or project rate can also have a major impact on how much you earn.

Knowing your worth is also paramount. To work this out, think about how many others are offering the same skills as you out there, how valuable your skillset and experience is to the client, and whether you’ve got a unique creative approach, for example.

Motivate yourself by setting a weekly, monthly and annual financial earnings goal. This might be to earn more than you did last year. Or if you’re starting out, your goal might be to earn as much as you did in your full-time role.

Don’t put all your eggs in one basket, either. Ideally, you want a mix of clients that use your services regularly, one or two on a monthly retainer, plus room for new exciting projects and one-off jobs.

Also, beware the potential danger for regular clients to drag your rate down. If you keep your clients around at the same rate, they can actually suppress your true earning potential.

About your Guest Blogger: Nina Hendy is the founder of The Freelance Collective – an online curated community of top Australian creative freelancers.