How to Reasonably Price Your Freelance Projects

"Businesswoman Working On Desktop"
by imagerymajestic

I took the oDesk Market Research Test today, which I successfully passed and got certified as a research consultant. One of the advantages of taking the test, any skills test, is finding out your ranking and knowing how much certified contractors are charging their clients. For the test that I have taken, it states that qualified contractors who passed the test have average hourly rate of $12.45, which is twice the price I give to my clients. This made me ask myself, should I raise my price now?

Pricing is one of the challenges that many independent contractors face especially the new ones. As a one-year old contractor, sometimes I still experience that hesitation. But at the end, my decision would always be base on number of factors. To answer the question how to reasonably price your freelance projects, we need to look into these:

• Skills, experience and expertise

The reason why freelancers show off their portfolio and profile with great feedbacks from previous clients is because we wanted our prospect employers to see the value of our service. Freelancing is a business. As independent contractor, our name is our brand. Our skills, experience and expertise are the key factors to setting a reasonable price. We have invested our time and even money to acquire those skills so, it is justifiable if we look at our freelance rate as a return of  investment. It is also good practice to take a look at the the job market and see how other freelancers are charging their clients. This gives you an idea on how you will be setting your own price.

• Utility bills and other expenses

Always take into account the costs or expenses that you are going to incur while doing the project, for example electricity bill, communication cost, printing cost, coffee, etc. Your rate should cover those expenses.

• Cost of living and the average wage 

When setting your price, you need to factor in the cost of living in your region and the average wage. This could be a little tricky. You should do your math and research on this. Here in the Philippines, we typically don't compute our salary per hour. But in freelancing, since we are particular on the per hour rate, we need to be aware on how much the per hour rate for an average wage earner. This would help us determine how to set our pricing .

When to negotiate?

Negotiation typically happens in a fixed-priced job. Some clients would say they have a low budget, they are spending much on other stuff, other freelancers are bidding low, etc. Sometimes freelancers give in to the request especially if we had a past business relationship or if we are really in need of a project. However, it shouldn't happen like that all the time. You see, we are earning a living and we need to be properly compensated. And, it is terrible to get a low-paying project when it means losing our sense of pride and missing those projects that would willingly pay us with our freelance rate.

Honestly, as how I see it, those employers/companies that bargain our price do not really value our service. They can always replace us anytime as soon as they find someone else who can do the task for a cheaper price.

So, when is the best time to negotiate? The answer to that would actually depend on the priority of the freelancer.

• When the employer is a high-profile company
• When the project is exciting and fun
• When the project is a rare opportunity and it would look good in your portfolio
• When you are really in need of a project (as in desperate)
• When you find the sense of purpose of doing it

You can justify your rates with the quality of service you provide. If you have an outstanding track record with great comments and feedbacks from clients and great portfolio, there is no reason a good client wouldn't want your service. Clients who are doing good business want good people in their team. If they see you as a valuable contractor, they would seek for your expertise or service. Price comes secondary.

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