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Setting Your Rates As A Contractor Or Freelancer
Striking out on an independent venture can net you a comfortable living in an industry you’re passionate about. The problem for first-time freelancers and contractors though is, unfortunately, a practical one: ‘How much do I charge my clients when I’m relatively unproven in the market?’
This question will be racketing through your mind before everything’s set in place. The answer will only present itself when you’ve taken a sharp, cogent look at the facets surrounding your potential workload. Let’s see what they are…
Avoid hourly rates
Time is your primary resource, and it shouldn’t be taken for granted. Many freelancers launch their career by charging clients on an hourly basis, reasoning that, like a ‘traditional’ workday, our economic viability is measured by the time we spend on something. But this will prick holes in your income when you’re wooing high-level prospects, who have the cash to pay for amazing work with a good turnaround.
That’s because clients aren’t paying for the effort you’re expending; they just want the finished product in their lap, as good as it can be. You might surprise yourself by completing a top-notch assignment in record time, which means you’re earning substantially less than purposefully dragging the process out. And if you do so, then you’re not turning to other projects, squandering your productivity. So consider charging per project or task, as opposed to per hour.
Research your peers
Like any sphere of professional work, freelancing requires a fair knowledge of what people like you have to offer: before, during and after you arrive on the scene. Depending on the industry you’re in, rates could vary wildly. This necessitates an awareness of what is justifiable for certain types of clients, and what competitors have provided for them on a consistent basis.
Research freelancer profiles on sites like Upwork and PeoplePerHour; their rates will be clearly visible, supported by relevant examples in a portfolio. Log those details in a spreadsheet, and calculate the median price range. Don’t be scared of matching an industry average, or upping it in some cases; clients may see it as a sign of confidence if you can back it up.
Consider retainer fees
We all want a guaranteed influx of work, but securing it can be tricky. As a freelancer, explore the possibilities of a retainer – basically, a commitment from the client (and a proportional upfront fee) that you’ll get X amount of assignments in a given month, for instance, for which you’ll lower the overall price tag as a benefit on their end.
Both parties win: you get the surety of a set income, whilst the client receives the equivalent of a package deal for their foresight. It’s a fantastic way to agree on a long-term strategy for your relationship. Also, you can plan ahead for each project, knowing that your prep time is wisely invested.
These are just some of the pointers for your rate-based decisions. Others lie ahead in the scope of your journey, as a freelancer with plenty to prove. Don’t undervalue yourself, and investigate the worth of a specialised accountancy firm – like us, we might add! – to support your bid for independent success. Call 0161 669 4221 or email info@biaccountancy.com to learn more about savvy, flexible finances…