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Guest post by Amy-Lynn Denham, Author & Freelance Business Coach
What is your worth as a freelancer? It sounds like a simple enough question, but surprisingly few new freelancers know how to answer it. I’ve asked this question before, seen eyes light up with ideas then, when it comes time to really tell me the answer, the words do not come forth. Why? Most new freelancers (and even some veterans) really aren’t sure.
By the end of this article, you will have a better understanding of what should be considered when setting your rates and other key ways to define your worth as a freelancer.
Your Monetary Worth – Setting Freelance Rates
One of the most common responses I get when I ask someone their freelancer worth is their hourly rate. Some people will tell me what they think they’re worth per 100 words, per graphic, per blog post, etc. They tell me that their worth is determined by their work. Their work has a particular value.
Don’t worry, I’m not going to try to convince you to stop valuing your work. (Please don’t work for free – you have bills to pay!) But I want you to really think about the number you assign to your work – whether you figure it hourly, per unit of work, or in some other way.
Stop reading this for a moment and really think about it. What is your monetary worth as a freelancer? Write it down. If you have several ways of charging clients write them all down.
Now, ask yourself, does this accurately reflect my worth?
When I ran a few freelancers through this exercise I was surprised at how many weren’t really sure of their answers. They’d chosen numbers based on other people’s opinions, advice, or by averaging out rates they’d seen other freelancers charge. These are all a great way to establish a base price, but there’s a lot more to the equation.
When setting your freelance rates, it’s important to ask yourself:
- What is the minimum I need to make in order to sustain myself?
- How does my work stack up against the competition in terms of quality?
- How much experience do I have?
- Do I want to discount my rates to get more clients?
What is the minimum I need to make?
This is, perhaps, the most important calculation you will do when establishing your freelance rates. If you can walk away from this post with only one thing left in your mind, I hope it is this: know what you need to make to break even!
When most people make goals about income they have to consider things like housing, groceries, cell phone bills, internet bills, lifestyle things (entertainment, travel, etc.), and clothing. As freelancers, though, we are our own bosses. That means that we also have to consider all of the expenses tied in with running a business. Our base rate will, therefore, be higher than the typical income most people need to survive.
Consider all of the following when setting your “base” rate:
- Regular expenses (housing, clothing, food, etc.)
- Office supplies
- Time spent doing bookkeeping
- Time spent looking and applying for jobs
- Time spent on professional development (learning about your craft, industry/niche, etc.)
- Money spent on professional development (books, e-courses, coaching, etc.)
How does my work stack up against competition?
Setting freelance rates also requires that you consider the competition. If you are still developing your skills and require a lot of feedback from clients to perfect your approach you will have a hard time convincing clients that you’re worth $100 an hour, like some top-tier freelancers.
Now, hold on a minute, Amy. Are you telling me that all those articles and Facebook posts that told me to start with a base rate of $100 an hour were wrong? Well, yes.
This might be an opinion that gets me in hot water with some people, but it’s one I stand firmly beside. In any other industry we have to work our way up the ladder – earning more as we learn more. Do I think you should raise your rates as you get better and better at your job? OF COURSE! But starting with a rate of $100 an hour when your skills just don’t support it isn’t going to help you get or keep clients.
Have a look at what other people at your skill level are charging and consider charging a similar rate.
How much experience do I have?
Even if you are very skilled, it can be difficult to charge premium rates if you don’t have much experience. Before you get discouraged, though, remember that your experience doesn’t have to be in freelancing. Maybe you have experience using the same skills in different areas of your life or in previous non-freelancing job. These all count as long as you make sure your prospective clients know about them.
Include your previous work experience and life experience in your resume, cover letter, and pitch where appropriate. Don’t just list skills and job titles, though. Paint a picture in your pitches and cover letters that is specific to their job posting. For example, if you’re applying for a writing job, ask yourself, “Have I written blog posts for my own blog? Have I written copy for my previous company’s website, newsletter, etc.? How well did I do at writing papers in college?”
Do I want to discount my rates?
Some freelancers set their rates exceptionally low when they first begin in hopes of drumming up some quick business. Is that the right choice for you? It’s a tough question to answer. Opinions go both ways on this one in the freelancing world. In all honesty, I was hesitant to even include it since it is such a controversial topic. But, those are the topics we need to discuss most often.
If you decide to discount your rates there are a few things to consider. I won’t go into great detail, here, but let’s look at some of the pros and cons of setting discounted rates.
Pros of setting discounted rates:
- You may land simple jobs much quicker.
- You can gain experience to show future clients who you will, hopefully, charge more.
Cons of setting discounted rates:
- You may not attract quality clients.
- Your clients may expect that you will always discount your rates.
- It can be difficult to raise your rates if you start really low.
- It can tell prospective clients that your skills aren’t up to par.
- It’s harder to make ends meet, financially.
In the end, the formula you use to set your freelancing rates will be specific to the minimum you need in order to survive, your skill level, experience level, niche, and confidence.
Your Personal Worth – Setting Freelance Boundaries
I can’t finish this article without touching on boundaries. Boundaries are hugely important to me in my own life, my business, and in coaching freelancers. Since this industry is largely unregulated and we cannot rely on rules, regulations, and laws to protect us much in our careers. It’s up to us to set a solid foundation with each client that will lead to success or, at the very least, protect us from harm.
Before you can set boundaries in your business, though, you need to ask yourself, “What is my personal worth?”
Naturally, I want to jump in here and tell you that you are worth more than you can imagine, etc. etc. But it doesn’t matter what I think. What matters is what you think.
If you feel anxious at the idea of setting boundaries with clients you likely have some self-esteem and assertiveness work to do. If you aren’t sure what sorts of boundaries you can have in your business you have some research to do. Here are a few ideas to get you started:
- What type of language/communication is OK between you and your clients?
- When are you reachable by clients?
- Will you work “overtime” or weekends? If yes, under what circumstances?
- Will you use contracts with your clients?
- What happens if a client doesn’t hold up his or her end of the bargain?
As you move forward in your freelancing career, always remember that your “worth” is multi-faceted. There is a lot to consider and only you can define your rates and your boundaries. Do your research and settle only when you are comfortable. Also, remember to check in with your rates and your boundaries from time to time.
Have you struggled to set your rates or establish boundaries? What has held you back or made you feel stuck? What has worked to overcome those hurdles? Share your answers in the comments below. I’d love to talk more!
Amy-Lynn Denham is a business coach for freelancers. Her work focused on helping new freelancers learn the ropes of the industry without getting caught in the overwhelm that often goes along with the business. She strives to help each of her clients achieve a positive work-life balance, even in extenuating circumstances. To be the best coach she can be, Amy-Lynn engages in daily meditation and self-reflection, holding herself accountable for her own emotions, thought patterns, and mindset. To learn more about Amy-Lynn and her services visit www.amylynnwriting.com