Wether you are a freelance designer or a freelance developer, finding the right rate may be difficult. Your calculation can depend on a number of factors, like experience level, the freelance market conditions, and

Later in this article we will look at the most common pricing strategies, like minimum hourly rate, project rate, or other fixed rates. We will also compare these different pricing practices, and give a definite answer as to how much you should charge!

Here are the most common freelance hourly rates according to UpWork. The platform is the largest freelancing marketplace on the internet, and it serves as a pretty good indicator as to what kind of freelancer rates can we expect.

Treat these as indicators, suggestions, and set your rates in accordance to these! Remember, setting a lower rate is not always better, as a higher rate can indicate value, so I suggest you avoid the race to the bottom!

When you ask freelancers how they price their services, chances are they will describe one of the following pricing methods:

• Hourly rates—“I will invoice you €40 every hour worked on this project at the end of the month”.
• Day rates—“You can book my expertise for €600 a day.”
• Monthly rates—“I will commit to your project for a monthly fee of €5500.” (SIKE! You just got employed! Without any benefits, by the way.)
• Flat fees (package price)—“I’ll set up a Wix website for your business for a flat rate of $1500.”
• Retainers—“I will be on standby whenever you need me for advice on your investments. Access to me starts at €500 a month.”
• Value based pricing—“How much revenue would a brilliant Wix website generate for you with perfectly tuned conversions and whatnot? €150.000 per year? Great, I’ll build exactly that site for €15.000.”

These pricing models, when boiled down, serve as your business model. All of these are valid pricing models. There is no right or wrong approach, since many of them can work for specific business cases.

Ok, but what now, where do we start? And wait, you can get 15k for a Wix site, is this even real life?

Here's  a quick comparison of the most common pricing practices for freelancers. The more emojis we have, the better!

Daily rates

When should you choose daily rates?

• Daily rates are hybrid animals that put you somewhere between value based pricing and hourly rates. You are still pricing your time with day rates, but you can adjust that based on value generated.
• Daily rates work well for coaches and trainers who work for short yet intense periods of time.
• It works well when you know that feature creep (staying longer on the project) is not an option.

Downsize to day rates:

• When the scope is not defined, clients get the same itchiness when the costs keep on piling up.
• Day rates work to a certain level, but once they turn into monthly rates, you essentially assimilate yourself to become an employee. Maybe that was your end goal, and in that case, good for you!

Fixed and package pricing

When should you pick package pricing?

• Package pricing can work when you have a highly standardized service, small in scale, with a very well defined scope of work (photographer doing family photos).
• It can also work in gigs where your time and input are not required that much and where tasks can be automated. At that point though, you usually stop being a service and you become a product.

What are the downsides of package pricing or having flat fees?

• The difference between value based pricing and package pricing is that with package pricing you offer the same price to everyone. That may seem fair at first, but it opens the backdoor to being taken advantage of.
• It can box you in really fast. It becomes much harder to raise your rates significantly once you define yourself as somebody who does logos, any kind of logos for a flat fee of €150.
• It’s not a good fix for flexible projects (think multiple revisions, feature creep setting in, “oh can we implement search on the menu bar too?”).
• Can cause friction with the client to discuss what’s exactly included in your package, and what’s extra.

Hourly rates

When should you actually consider doing hourly rates?

• Hourly rates are the go-to choice for those new to freelancing, especially if you haven’t got a solid portfolio of work to justify a rather opaque fixed project fee.
• They’re a relatable, transparent measurement. Hourly rates also give you the opportunity to learn how long different tasks and projects take, which you can later use to decide profitable fixed fees for the same work.
• These types of rates are suitable for smaller projects, micro-projects. Think: developer who takes a peek at a Wordpress site every once in a while.
• It can be a good fit for entry level, low skill jobs, like virtual assistant, data mining etc...

On the flipside, what’s wrong with hourly?

• It can cause a lot of stress with the client. You have to constantly justify your work & feel pressure to show progress. “Why are you billing so much? Why does it take this long to finish this?”
• Hourly billing discourages efficiency and innovation. Think about it, with hourly billing you are financially incentivised to work as slow as possible. Is that right?
• You have a low income ceiling. You can raise your hourly rates, but at the end of the day, you only have about 40-ish work hours to “sell” every week.
  

Retainers

When should we have those?

• Retainers can work within the framework of value based pricing.
• A retainer is good for giving a client access to your expertise—they pay for your advice, not your work.
• But you have to be careful of what’s included in that as far as scope of service, and what’s not (“I will jump on a call with you to provide feedback on a decision affecting your sales pipeline, but I will not fix your Hubspot tracking issue.”)
• You should never sell retainers as batched hourly rates. Leave that to lawyers.

Here’s a handy chart to summarize what we learned here today.

Where does value come from? How do you determine the price of a service? And how can we establish a mindset that will make you a successful freelancer?

In pricing, a value based mindset means always keeping an eye on what kind of value you provide to the client. This can be time saved, revenue increased, or risk avoided.

Let’s look at this from the perspective of a business owner.

Providing value and solving problems usually have a very tangible and measurable impact on a business. Most of the time, business owners are quite aware of how much time you are saving them and how many dollars of revenue your work will bring in.

For them, your work equals more money and less pain in the backside.

But funnily enough, freelancers don’t always see this. In fact, freelancers are oftentimes completely blindsided to the value they create when solving a problem. Why? Because the greatest adversary of a value based mindset is the curse of knowledge.

And freelancers are so, so cursed.

A freelance developer already knows that setting up a Wordpress website is no big deal, because they have done it dozens of times.

A freelance writer already knows that writing a blog article is not the end of the world, because they have a talent for words.

A freelance marketer already knows that setting up a Google My Business account is just a couple clicks, because, firstly, they know that Google My Business exists, and secondly, how super important it is for a local business.

The freelancers know, and thus they think it’s no big deal. After all, it only takes a couple of hours to complete. They don’t see the value. For the business owner, it’s black magic fuckery.

The client is looking at a project from the perspective of value, how much money they will make, and how easier his life will be. The freelancer is looking at the project from a perspective of time. How many work hours will it take to finish the project, and how much are those work hours worth.

There is an obvious disconnect here. A disconnect that some clients like to exploit as freelancers remain in the dark, wondering why they can’t make ends meet at the end of the month.

So our first step is to join the client on the other side of the conversation and always look at projects from the perspective of the client.

From the client’s perspective, it is always about value generated.

For the freelancer, it should not be about how much effort or time is put into the project, it doesn’t matter. The freelancer should be looking at the project from the same perspective as the client, which is, again, how much value is generated for the business.