It’s a perennial problem for freelancers: how do I get out of the paycheck to paycheck grind? Am I charging what I’m really worth? If I raise my rates, will I still have clients?
When you’re stuck in a cycle of scraping by, the stories of those who make six figures doing the same kind of work can seem mythological. It can be difficult to step off the merry-go-round and see a way to making better money.
If you’re in that situation, the good news is that you don’t have to remain stuck. Thousands of people before you have found their way to a decent freelance income and there’s really no reason why you can’t do the same.
So how do they do it?
Why Do Freelancers Undercharge?
There are a number of underlying reasons behind why many freelancers don’t charge what they’re worth, but the main three often come down to a lack of confidence, not having a good freelance network to talk to, and underestimating the extent of the work.
Underestimating The Work Required
If you’ve come away from a more traditional 9-5, many freelancers make the mistake of trying to base their rates on what they were making there. However, this fails to take into account the extra costs of striking out on your own.
You’re now paying your own insurance and “benefits” while you also need to account for the amount of unpaid admin time managing clients can take.
If, on top of that, you also underestimate how much time a project is going to take you when you quote it, it’s easy to find yourself making less than you were before and scraping by.
Source: Quirky Works
Lack of Confidence
When you began freelancing, how confident were you when discussing payment with clients? Talking about money is one of the number one discomforts for many people, the problem is that this can lead to grossly under-quoting your work because you’re worried you’ll otherwise miss out.
If you’re desperate for the work, it can be tempting to think that any income is better than none, so you quote a price lower than what the job is really worth just to secure it. The problem here is that clients can sniff out desperation. Whether you’re conscious of it or not, you’re probably giving off a vibe which tells them you’ll take anything.
When you start out undercharging, it becomes difficult to raise your rates to a level that is more reasonable. Clients often don’t take too kindly to large increases and it’s an awkward conversation which many choose to avoid. The cycle continues.
Not Talking To Others
You’re probably hustling hard to network and try to hang out in the places where you’re likely to find new clients, but never underestimate the power of getting to know other freelancers too.
If you’re pricing your services in the dark, it’s easy to end up in that “race to the bottom” situation where you’re charging nowhere near what you’re worth. The Freelancers Union is big on this; if more freelancers were to talk openly and honestly with each other about rates, they can band together to help raise rates and ensure better transparency for all. (For any freelance copywriters out there, the Copywriter Cafe group is brilliant for throwing around ideas and frank talk about rates).
How To Charge For Freelance Work
This is an often-debated topic with fair arguments for all sides.
The argument for hourly rates is that at least you can charge for all the hours you have done. If you are quoting per project, there’s a good chance that you may underestimate what it requires, especially if you’re still a relatively new freelancer.
The chances are, you also don’t know whether or not the client is going to make some major changes part-way through your project, or generally demand more time than you budgeted for. For this reason, Brennan Dunn of Double Your Freelancing tends to advocate charging a good hourly rate.
On the case against hourly rates, many argue that being presented with an hourly figure can actually put clients off. Which sounds more “expensive”? $200 per hour, or quoting a flat rate of $400 for the project? This view again plays into the fear many have about discussing money issues with clients…
Tools like this Freelancer’s Union infographic will help you calculate an hourly rate
Say you did quote $400 to complete the project, the client accepts, you get on a roll and manage to finish up within one hour instead of your expected two. You’ve now made a tidy rate of $400 per hour when you may have quoted (and been paid) $200 if your quote was done for an hourly rate.
This is the essence of the argument for project rates; there are only so many hours in a day, so you are limiting your earning potential if you only quote by the hour. As freelancer Tom Ewer argues, even if you raise your hourly rates you can’t change the number of hours available in a day.
There are six figure freelancers out there who argue for either of these, but the main point is finding a method which works for you and which helps you to confidently state your case. Either way, it needs to be about the value you will bring to the client rather than the dollar figure of the project.
Whether you charge hourly rates or charge per project, you can still find yourself in the “feast or famine” cycle which many freelancers live. Steve Roller of Café Writer and Copywriter Café advocates that freelancers such as copywriters need to be finding other business ideas to set up if they truly want to find more financial freedom.
If you look around at the more successful freelancers, they all tend to have done something “extra” on top of that core freelance work: Brennan Dunn with Double Your Freelancing, Carol Tice with Make A Living Writing, and Tom Ewer with Leave Your Work Behind are just three examples.
As Steve Roller points out, you could be using your copywriting skills (or whatever skill it is that you have) to market your own business outside of freelancing.
While this could be something completely different to what you usually do professionally, a productized service is an idea which can use the skills you currently market. This is simply a packaged “done for you” service, which solves a clear problem for a client for which they pay you a monthly fee.
As Brian Casel of Casjam points out, revenue comes easier and faster when you develop this kind of service because it’s based on skills you already have and you don’t need a large infrastructure investment. It’s also a great way to break the check-to-check cycle as you have guaranteed income coming in every month.
Feel The Fear (And Do It Anyway)
One of the real cruxes for any freelancer is the fear involved with boldly stating your rates, or having the conversation with a client announcing that you’re raising rates.
Don’t let your business be fear-based. This is probably the best way to run yourself into the ground. Calculate what you would like to earn and keep an eye on the market too. It’s good to have an idea of what people are charging for similar services, as long as you don’t let the low-ball rates sway you.
You should also remember there are those charging very high rates which clients are happy to pay them. Why? Because they deliver results. But as Brennan Dunn points out, just because someone charges ten times more than you, doesn’t make them ten times better.
The allure of your service to the client needs to go far beyond the rate for which they’ll pay for it. It’s easy to shop around when the issue is rates, but value is something much more difficult to buy.
One of the best things you can do is figure out exactly which business goals the client has which they would like your service to solve. If you can communicate value by showing exactly how you can help them achieve business goals, they are less likely to get hung up on price.
What Makes A Freelancer Successful?
In any discussion about charging what you’re worth, it’s important to point out a few “facts” which tend to be true for the most successful freelancers. Carol Tice points out that it’s not luxury cars and vacationing all the time, it’s more like this:
- They often work long hours — weekends too.
- They are constantly hustling, marketing themselves and lining up their next gigs.
- Those gigs are often not glamorous.
- Projects are often complex, with tight deadlines, high stakes, and higher stress.
In short, it’s hard work becoming a six figure freelancer, so don’t buy into the visions of sitting on the beach with your laptop just yet!
On the plus side, if you’re persistent, you market yourself well, you confidently pitch clients, deliver value and clear a few “high end” jobs, you will find that you have better quality work to choose from as people refer business and you become more in-demand.
Many freelancers find themselves scraping by from month-to-month, but it’s time to break that “starving artist” mould. No freelancer is an island, so it’s important to make connections, talk with other freelancers, and have transparency around project rates.
There are valid reasons for all methods of charging rates, but the main thing which will set you apart from others is the value you deliver. Don’t let fear rule your business decisions; know your client, understand what value means to them and confidently state your case based on the value you can deliver.
Finally, have a realistic view of what it takes to become one of those high-earning freelancers you hear about. The short of it is, it takes hard work so you need to be prepared.