How to Set Your Prices as a Freelancer
Reach out to other freelancers to ask what they charge for similar work. You can also use websites like the Freelancer’s Union, HelloBonsai Freelancer Rates’ Explorer, or GlassDoor to investigate average rates for your field. Remember that certain factors play a big part in how much you can charge:
Once you have basic information regarding rates, you can start to think about your own rates. It’s important to be realistic when you start out. If you’re just starting out, you may not be able to charge as much as someone who’s been in the business for ten years. However, unlike the world of conventional employment – if you can offer unique talent clients can’t find elsewhere, you can charge accordingly.
When you calculate your rate, you need to take payment processing fees into account. Some platforms, like Upwork and Fiverr, charge the client for the cost of payment processing. But if you’re getting paid through PayPal, for example, you’ll have to pay 2.9% +
What’s Better, Hourly Rates or Fixed Rates?
Some freelancers have an hourly rate, while others prefer to charge a fixed rate for each project. We can’t tell you which is the best option for you – there is no right or wrong answer. In fact, you’ll probably find there are some situations when it’s best to charge per hour, and others when a fixed project rate will be better. Here’s a clear rundown of the pros and cons of each method of pricing.
Pricing per Hour
An hourly rate is sometimes the best option for new freelancers just starting out and don’t know how long a project will take. With hourly pricing, you can learn how fast you work without worrying about overestimating or underestimating yourself. Hourly pricing is also best for open-ended jobs where the client isn’t sure what they want.
Fixed-rate pricing is best for experienced freelancers who would need to charge very high hourly rates in order to reflect their real market worth. It’s also ideal for small projects which would take only a very short amount of time, but have high value to the client.
How to Choose between Hourly and Fixed Rates
.30 for every payment. Other payment platforms like Wave and Due also charge payment processing fees. It might not be much each time, but it can really add up. So add the cost of payment processing onto your price quotes.
As you gain experience, you can gradually increase your rates. It’s always important to review your rates after the first six months. If clients are turning you down for projects you know are suitable for you, it could mean that you need to lower your prices. Alternatively, you might get a pleasant surprise when clients offer to pay you more than you requested, because you’re undercharging.
Keep in Mind: Rates are not permanent. If a client offers a steady stream of continuous work, you might want to give them a discount. If you have a client that asks for a lot of revisions, you might want to charge them more (or charge by the hour instead of according to a fixed rate). Also, remember to check your rates every year against the industry standard. The industry can change, and that means so can your rates.
How to Calculate a Fixed Price for a Project
Calculating a fixed price can be a complex undertaking, but we’re here to help. Essentially, your fixed price for a project should be based on the value of your time and skills that will go into it.
- How long will it take? This is the baseline for every project rate. By now, you should know roughly how long it takes you to develop three logo options, write 1,000 words, or edit three hours of video, for example. Don’t forget to consider the time needed for phone calls, research, or meetings. Multiply the estimated time by your regular hourly rate to get a starting point for your fixed price.
- How prestigious is the project? You can charge more for a project for a New York hotel chain than for a project for a local coffee shop. You need to price according to your client’s market, not your local market.
- Will it tie up all of your time? If you need to put all other projects on hold for the next month to fulfill this client’s needs, you should increase your price. Exclusive access to your skills comes at a cost.
- What’s the timeline? If you’ve been asked for a rush job to be ready by the next morning, raise your price. Similarly, if a client begs for something to be completed over the weekend or during a national holiday, add a premium for holiday rates.
- Is this client easy to work for? It’s only fair that clients who pay on time and communicate clearly and politely get better rates than the ones who are obnoxious, demanding, and impossible to please. If you find it hard to work for a certain client, raise your prices so they are high enough to make the project worth your time and effort (or high enough to scare the client off, so you can focus on clients you enjoy working with).
- What is the client’s budget? This shouldn’t be the foundation of your pricing, but asking the client for their budget gives you a sense of how much they value the project. It both protects you from accidentally under-charging and stops you from setting your prices out of your client’s reach.
Mastering Value-based Pricing
There’s one slightly different approach to take to calculating a fixed price for a project, and that’s called value-based pricing. Value-based pricing means charging based on the value of your work, instead of the value of your time or skills.
To make this clearer, imagine you’re a graphic designer who was asked to design a new logo. You could either think of this as three hours of design work, plus two hours of meetings and exclusive access to your 10 years of design experience, or you could consider that you are selling a product, namely a new logo, and think about how much that new logo is worth to the client.
Communication skills help freelancers consult with clients on project requirements, like deadlines, materials and content. Using great verbal and written communication skills ensures accurate work and can enhance the overall quality of a project. They can also use these skills to express ideas for improvements and changes to the work.
Freelancers commonly use contracts that create deals between themselves and the company they’re working for, which includes information about compensation and project requirements. To ensure that you and your client have similar expectations, you can use negotiation skills that help create fair contracts.
Freelancers often work independently without much guidance, so it’s useful to have a strong understanding of the industry. Since freelancers might not work in a traditional workplace setting, they may need to rely on their own knowledge to complete projects. Therefore, it’s especially important for them to have confidence and a deeper knowledge of their field.
Freelancers within the marketing field can use marketing skills to help their clients build strong and reputable brands. They should have an understanding of how audiences perceive a business and how they can improve a brand to make it more marketable and popular.
As a freelancer, you could use a logo or image to represent your services. Having graphic design skills helps you better represent your freelance services accurately. For example, if you’re a freelance writer who specializes in educational content, you might use a logo that represents schooling, like textbooks or chalkboards.
Freelancers can use creativity to enhance their projects and optimize their skills. Creativity could help them brainstorm project ideas while still meeting a client’s expectations and requirements. For example, if a freelance graphic designer produces high-quality, unique material for a project that sets them apart from other freelancers, it may make clients want to continue using their services.
Since freelancers typically complete several projects during the same time period, it’s vital that they have extensive project management skills that help them stay organized, goal-oriented and proactive. Freelancers can track upcoming deadlines and prioritize their projects according to the order in which they’re due.
Freelancers may work in human resources as consultants. Professionals within this field should possess empathy, since they work with numerous employees, and they sometimes handle sensitive topics. Typically, individuals can strengthen their empathy skills by familiarizing themselves with conflict resolution and actively listening to colleagues.
Writing and research skills
Freelancers use writing skills for projects that involve content writing, copywriting and blogging. Companies typically need freelance writers who can produce meaningful content while remaining unique and interesting. To better understand the information they’re writing about, they perform thorough research that offers context and background knowledge.
Web development skills are ideal for freelancers who work with technology. These skills include programming, software development, website creation and coding. Professionals who are familiar with more advanced software programs may impress clients by creating well-formatted websites.
Freelancers who work in marketing often create visual content for a company’s social media page. Having social media skills allows freelancers to grasp the kind of online content that draws attention and how they can get audiences to interact with a company while staying up to date on social media trends.
Freelancers who work in the data science field gather, interpret and evaluate data. They could use data analysis to analyze a company’s sales, target audience and marketing campaigns to identify areas of improvement and create plans to boost company sales. Data analysis can be a useful skill to learn if you freelance in industries like retail, manufacturing, hospitality, marketing or finance.
Pros and cons of freelance work
Freelancing isn’t for everybody. There are ups and downs to every choice and choosing to strike out on your own is no different. If you still want to be a CAD designer but aren’t sure if you want to strike out on your own, here are the pros and cons of working freelance.
Pros of being a freelance CAD designer
☑ Your hours are flexible
You can decide for the most part when you work. You can choose to take breaks between projects, to only be available on certain days, or that you are unavailable after 3 PM so you can pick up the kids at school. You can spell out in your terms and conditions when you will be working in an office building, or you can choose those times when you are freelancing. Either way, there is more flexibility in when and where you have to work.
☑ You decide your pay
When you put up your rates, you decide how much they are. Every client who agrees to use your service is agreeing to that price. If you have always felt underpaid by your job, this can be a liberating experience.
☑ You decide who you work with
Most of us have that one coworker we can’t stand to be around. At the very least if you end up working with a client who is unbearable, you can finish the project and never accept more work from them again. This possibility is a big relief if you’ve ever suffered from workplace bullying.
Cons of being a freelance CAD Designer
✘ Goodbye, steady paycheck
Unfortunately, the big trade-off for being able to pick your own hours and clients is that there is no guarantee that you’ll get either. Not knowing whether you’ll be able to pay the bills next week can be a harrowing part of freelancing, until you start getting steady work.
✘ Goodbye, healthcare, and paid vacations
As a freelancer, you, unfortunately, won’t get healthcare benefits through your work. You’ll need to include the cost of healthcare, sick days, and vacations, if you want them, into your rates.
✘ Hello, taxes
Without a business withholding taxes for you, you will have to file/remit them on your own. This detail can be confusing and stressful if you don’t know what you are doing. Be prepared to hire an accountant if necessary so you can keep your payments to the government straight.
Becoming a freelance CAD designer is a fun and rewarding career. You can expect to make a decent living, with average wages running about $50,000 a year, and you can do so with the flexibility not found in many other careers. It’s a chance to use your creative side, while still enjoying a detail and math-oriented career.
Don’t let the fear of the unknown stop you. If you’re tired of living the 9:00 to 5:00 grind and are ready to embrace a new lifestyle working for yourself, this choice could be a great career path for you.