Freelancing is tough, especially when you’re just getting started. While it can be nice to control your hours and which projects you pursue, money can be a large obstacle. Freelancers are often required to set their own rates and parameters. But how do you set a fair price?
“Negotiating your value and rate is your livelihood as a freelancer,” said Kat Boogaard, a freelance writer. “It’s how you keep your business and career afloat.”
Most freelancers don’t always have steady work to rely on, which makes negotiating important, said Boogaard.
Here’s how to negotiate rates as a freelancer.
Know your worth
Do your research. Consider your experience, specific projects you’ve completed, education and skills. Next, determine your bottom line. Never negotiate without it.
“Any freelancer needs to know what their ceiling is. What’s the lowest you’ll go? What’s the highest people have charged for this particular thing?” said Joseph D'Agnese, co-author of “The Money Book for Freelancers, Part-Timers, and the Self-Employed.”
To calculate the lowest amount you would be comfortable accepting, add up all your expenses and divide by the number of hours you plan to work. Expenses include essentials like rent, health insurance, retirement and food, and nonessentials like streaming services and meals out. Add an additional 30% to account for taxes. The resulting number should be the lowest amount you should be willing to work for, said D'Agnese.
Coming up with a price for your work may initially feel like throwing darts in the dark. But adopting a “overarching strategy” can help, said Boogaard.
“It’s smarter to work backwards,” she said. “Those who only focus on one client at a time, pulling arbitrary numbers – those are the people who are stressed out with their income.”
Set your parameters
D'Agnese recommends initially quoting a flat rate for a project, unless otherwise specified. Hourly pay limits your earning potential. Freelancers shouldn’t be punished for working quickly and efficiently, he said.
“Ask yourself, ‘How much time do I need to do this? What is my time worth?’” he said.
Don’t just go off a handshake. Get a written contract with a clear outline of what work is expected, the cost and when you can expect to receive payment.
While receiving a flat price is typically a better option, some clients may ask too much for too little. If the scope of the work changes once you’ve begun working, reach out to your client and revise your contract. Include how many revisions to the project you’re willing to accept for that cost.
“It’s also a good way to weed out bad clients,” D'Agnese said. “Someone who is really needy may not be the best client.”
Be open to negotiation (but know when to walk away)
Some companies dictate how much they pay and leave little room to negotiate. Other clients are more open to negotiation. Prior research can help freelancers determine if the company treats freelancers well.
If a client won’t budge on the rate, you can negotiate other things, like the number of revisions or payment deadline, said D'Agnese. Consider the experience you may get out of the project or the doors it may open. While you always want to be reasonable, you shouldn’t settle or give in too quickly.
If you believe you deserve a certain wage, don’t be afraid to fight for it.
“Negotiations are how you stay in business,” D'Agnese said. “It’s in your best interest to work well and be paid well.”
D'Agnese and his wife were once offered a book deal for a price they didn’t feel matched the expected work. They had some back and forth but ultimately decided to walk away from the deal.
The publisher came back a year later agreeing to their original rate.
“You have to be comfortable walking away from something,” he said. “Be confident in your skills.”
A challenge for most freelancers is finding balance between work that pays enough but doesn’t take up your entire schedule, said D'Agnese.
“Some people are just really bad managers of their time and their client’s money,” he said. “You have to be good enough to satisfy the client and leave enough room for them to give potential ways to make it better.”
Check out our guide on how to budget as a freelancer.
Image: Nastia Kobzarenko