So you have a skill set you've decided to turn into a freelance business. Good for you. Now comes the fun part – actually setting up your business. While setting up a website and deciding how to promote your business is, of course, an important part of planning your business, another important aspect is determining your prices.
It goes without saying that the prices you set for your freelance services will help to determine how much money you make, but they do more than that. They also say a lot about your business. When starting out in the freelance industry, many people are tempted to set their prices low so they can attract clients, but price them too low and your business may not be viewed as reputable – and you won't attract a reliable client base. Set them too high, and you run the risk of putting off prospective clients.
Building a successful freelance business begins with setting the right prices, but how do you go about determining what the right prices are? Here are some tips to help you strategically set your prices so you can show your worth and build a successful – and profitable – freelance business.
1. Watch the Competition
In business, it is always a wise idea to keep an eye on the competition. Not only does this let you know the types of services you are competing with, but it also helps you determine how much you should charge for your services.
While it may seem tempting to charge far below your competition in order to draw attention from your competition, doing so can actually brand your services as not being reputable. Keep the competition in mind when setting your rates, but remember that you want to show your worth and actually make money from your business.
2. Don't Charge by the Hour
By setting an hourly rate, you are assigning a value to your time, which isn't fair to you. If you are a freelance writer, for example, it may take you half an hour to write a 300-word blog post, while it may take you two hours to compose a 600-word researched article. Instead, try setting a rate for each service – X amount for the blog post and Y amount for the researched article.
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3. Consider the Goals
What is it that your clients hope to achieve from the services you offer? Are they hoping to drive tons of traffic to their website in order to allow them to continue making money over a long period of time? If so, you might want to consider charging more for your service.
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4. Consider the Client
Instead of actually setting your rates out in the open, you could elect to detail your rates upon consulting with the client. This will allow you to learn what clients are looking for, what they hope to achieve, and even give you a sense of the type of client with which you are working. Once you have a better idea of exactly what the details of the project will entail, you can determine a price that fits your effort and their needs.
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Before you launch your business, set aside some time to research and decide on your rates. Besides the aspects above, you'll also need to consider things like self-employment taxes, health insurance, office supplies, and other related business expenses — be sure to calculate these items into your rates. What you provide as a freelancer is valuable, be sure to set prices that reflect the value of your work and what you are worth.
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Bridget Galbreath is a freelance writer who has first-hand experience setting her own freelance writing rates. Not only does she offer advice for determining fees, but she also encourages freelancers to consider taking mobile payments to make doing business even easier.