Freelancing 101: Pricing Your Freelance Services

One of the many concerns of new freelancers on virtual marketplaces such as oDesk, Elance, and Freelancers is how to price their freelance services. As discussed on my previous post How to Reasonably Price Your Freelance Projects, freelancers should consider the following factors when setting their rates:

• Skills, experience and expertise
• Utility bills and other expenses
• Cost of living and the average wage

Consider the competition

Aside from these, independent contractors should also take into consideration their competition. We must check what rates other freelancers of the same skill set, also of the same geography, have. Many freelancers may offer their services at lower rates but that does not mean you should lower yours too. Just keep your rates realistic and make sure that you can justify it with your skills, knowledge, experience, expertise, and professionalism. While there are many buyers/employers looking for the cheapest rates, there are also many who requires quality service over the rates.

You may be surprised that some freelancers especially on oDesk would offer their service for as low as $.50 - $1. I know what your thinking, it is ridiculously low! You won't be able to buy a decent meal for your one hour of work!

Let's keep in mind that regardless of the industry or the business, the cheapest is not always a good find.  

Checking the rates of other contractors makes you cautious of how you price your service. Your rate could also be too high compared to others who can provide similar service. Unless you are a sole provider of a certain skill then, you do not have to worry about competition.

Facts and figures

Elance published an overall talent trends. You will see the average hourly rate of freelancers based on skills regardless of their geography and years of experience. Below is just an excerpt from that report.

In an article released by Manila Standard Today, Filipino professionals working at home earn more than P300 an hour, equivalent to one-day net pay of other workers. In 2012, according to Elance country manager Ron Cirujano Filipino freelancers earned an average of $8.30 per hour. New freelancers, however, tend to lower their hourly rates.

In the same article, Cirujano mentioned the following rates received by Filipino freelancers based on skills

• $6.4 for administrative support
• $7.9 for management and finance
• $8.7 for sales and marketing 
• $8.9 for writing and translation 
• $12 for graphic design and art
• $12.2 for architecture and engineering 
• $14.4 for IT and programming.

While these facts and figures give us idea on how to price our freelance services, these are not set standard. At the end of the day, it is going to be our decision on what rate we offer our service. But let us be wary that innate in a global marketplace, freelancers have to deal with pricing issues and stiff competition.