Adjust to make client-ready prices

So now you have a working billable hourly rate and you are getting close to the finish line! It’s a good time to take a step back, and remember why you went into freelancing and why it’s important to you. In this step, we’ll be walking you through other possible ways to price your services and how to factor them into your final hourly rate. ‍

Remember why you went into freelancing 

Take a step back and remember why you’re here. Setting an hourly rate should make you motivated and confident to invest in your business. But if how you’re charging clients is preventing you from meeting your goals, causing you to struggle financially, or leading to burnout, you may want to reexamine your pricing strategy. 

You now have a minimum billable hourly rate — and this step will help you make any necessary adjustments before you put it in front of clients. 

Why this matters

While hourly billing is easy to understand, it doesn't always capture the amount of work you put into something, especially if you work in a highly-specialized or technical industry. It also can create uncertainty for a new client, who may not know how many billable hours it will take you to complete something. 

Here are a few different pricing approaches to consider: 

Project pricing

Like charging an hourly rate, this is another straightforward way of pricing. It involves offering a flat-rate quote for completing an entire project, calculated by the estimated number of hours worked. For example, let’s say you’re working on a blog post on a topic you’ve written about extensively. You know that project, on average, takes you five hours to complete. If your hourly rate is $50, you could charge a $250 project fee for the blog post. It gives the client certainty on how much your entire services will cost, but it comes at the risk the project may take longer than you anticipated. What’s more, some projects aren’t fully defined in scope, making it difficult to project the exact number of hours something will take you to complete. 

Value-based pricing

This pricing method bases the cost of your services on the value you’ll bring to the client. For example, let’s say the advertising campaign you create leads to $100,000 in sales. A value-based pricing strategy would have you charge 20% ($20,000) upfront for this service. The benefit of this pricing structure is that it doesn’t matter how many hours you work, which incentivizes you to be efficient. However, this pricing structure can be difficult to nail down unless you understand your client’s goals and the quantifiable outcomes. 

Outcomes-based pricing

This approach to pricing is similar to value-based pricing, but pays you a percentage based on the actual outcome of the project, instead of the projected outcome. You’ll typically get paid a smaller, upfront fee. One example of this is creative work on an ad campaign — you could agree to get paid $1,000 upfront and then a percentage of whatever revenue that ad brings in. Or, you could structure the amount you earn based on the number of impressions or amount of engagement that ad gets. 

The benefits of this pricing strategy is if the project performs better than you anticipated (leading to a higher payout), but the downside is if it doesn’t perform as well. You’ll also have to wait longer to get paid (which is why that upfront fee is essential if you choose this pricing strategy). 

Add on your premiums 

There are additional factors you can consider to boost your hourly rate, or premiums: ‍

• Additional expenses: These can be costs incurred from tools, interviews, or any other activities you need or do to complete your job. 

• Your expertise: Consider how your unique experience and skills can contribute to a higher hourly rate. This includes your education level, degrees, industry, certain skills, certifications, network value, how much other clients trust you, etc. 

• Fluctuations: The amount of work you have will fluctuate, which means your income will fluctuate. We already mentioned factoring that into your income before, but consider if you need to boost your rate to take into account these fluctuations.

• Client value: What specific value do you bring to your client? If you have a skill or service that isn’t offered by many other people, you may want to consider factoring that into your rate. 

• Client return on investment (ROI): The work you might do for a small startup will have an outsized impact on the company’s bottom line, more so than the work you might do for a corporation.

• Rush jobs: There may be times that the client needs you to complete something ASAP. These jobs should be priced higher because you’ll be shifting around your schedule to accommodate the task. 

• Any other add ons: It’s really up to you and the work you do!

Let’s try a pricing exercise

You need to scope out an hourly price for two different clients — both are asking for a 2,000 word blog post that would likely take you ten hours to write. 

Use your own billable hourly rate as a jumping off point to figure out what an hourly rate, project rate, values-based rate, or outcomes-based rate might look like. Use your workbook to practice the exercise and get comfortable trying out different pricing models. ‍

• Client A: A large software company 

• Client B: A local bike repair shop 

How much should you charge each client? 

Let’s say the blog post requires an interview with an industry executive. ‍

• Does your rate change? 

• What is your new rate? 

Let’s say you need to purchase a keyword research tool in order to write the blog post. ‍

• Does your rate change? 

• What is your new rate? 

Recap

• You remembered why you became a freelancer.

• You learned about different pricing approaches, such as project, values-based, and outcomes-based.  

• You considered premium add-ons to boost your hourly rate.

• You practiced calculating different pricing models based on different variables.