Know your value: How to set the right freelance rates without underpricing yourself

Freelancers have a tendency to do too much work for too little. Know your value; here's how to set the right freelance rates without underpricing yourself.
Know your value: How to set the right freelance rates without underpricing yourself

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In 2019, the average annual salary for freelance writers in the US was $63,488. While this gives you a good place to start when pricing your services, it's still very possible to set them too high or too low, especially if you're not a writer.

The key is to know your value so you set the right freelance rates without underpricing yourself.

But how can you do so? Read on to find out!

Consider your costs and expenses

The main things you want to consider are your costs and expenses. Without doing so, you might set your rates too low, which means you can't even cover these, much less turn a profit.

So sit down and make a list of the things you need to pay every month, such as:

  • Rent
  • Utilities
  • Food
  • Clothes
  • Working materials

Don't forget to factor in taxes as well. These will be drastically different from the ones you paid as an employee.

Think about your desired salary

We all have that desired salary where the rate's just perfect. You won't have to work 7 days a week and you'll be able to live comfortably, even after taxes.

Calculate whether this salary is feasible with the days per week you want to work (for example, 4). Here, you might have to tweak either your desired rate or days per week you work.

This is where you can also figure out your minimum acceptable rate (MAR). This gives you some wiggle room if there's a client you'd really like to take but they're offering to pay just a bit lower than your desired salary.

Hourly vs fixed rates

Another thing you should consider is whether you want to charge hourly or fixed rates. Each has its own pros and cons, so you'll have to figure out which one is best for your working style and industry.

If you do go with hourly rates, make sure you have a reliable time tracker. Otherwise, you might accidentally work for free at times.

Time-tracking apps like Hectic also come with myriad other features that allow you to run your freelance business better. They include client and project management features, as well as invoicing, business development, accounting, and proposal and contract features.

See what your competition is charging

Put some feelers out to see what your competition is charging. If your desired salary falls right in line with their rates, then great!

In fact, you can even increase your prices if you have something to offer that they don't. For instance, if you've been in the field for decades and they haven't, you can confidently charge a little extra for your experience and expertise.

Know your value and set the right freelance rates

We hope this article has given you a better idea of how to know your value and set the right rates for your growing business. Not only can this put more money in your pocket, but it can also give you better peace of mind, knowing that your business will thrive.

If you need a platform that'll help you manage your clients and projects, get started with Hectic now.

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Our team of career freelancers writes about best invoice practices, what makes a great client, and repeats the mantra, "never work without a contract." We're opinionated about the future of work and will always be on the side of freelancers.
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