The million dollar question, quite literally. When starting out as a freelancer, you may find yourself asking this question more often than not. Should I charge by the hour? What if my project takes longer than I expect? What is the going rate for this type of work?
As a result, many freelancers end up undercharging for their services. According to studies, women in particular tend to undervalue their worth, resulting in them being paid less than their male counterparts. But whether you’re a man or a woman, setting your price too low can have lasting effects on your career. Not only does it put you at a disadvantage when competing for projects, but it also devalues the quality of your work in the eyes of potential clients. So how do you set your price? Below are some factors to consider when determining your rate.
The first step is to calculate your costs.
This includes both your direct and indirect costs. Direct costs are those that are directly related to the production of your product or service, such as materials, labour, and overhead. Indirect costs are those that are not directly related to the production of your product or service, such as marketing and administrative expenses. Once you have calculated your costs, you can then add a markup to determine your selling price.
The second step is to research the going rates for similar products or services.
This will give you an idea of what other businesses in your industry are charging for similar work. Keep in mind that there is always room for negotiation, so don’t be afraid to ask for what you think you’re worth.
The third and final step is to consider the value of your time.
Your time is valuable, and should be compensated as such. If you’re billing by the hour, make sure that your hourly rate is one that you’re comfortable with and that covers all of your costs (both direct and indirect). If you’re working on a fixed-price project, make sure that the final price takes into account all of the time that you’ll need to spend on research, planning, development, testing, delivery, and follow-up.
🍩 Just the Sprinkles
There is no one-size-fits-all answer when it comes to pricing your products or services. However, by considering your costs, researching the going rates for similar work in your industry, and valuing your time accordingly, you can come up with a price that is fair and reasonable—for both you and your client!