1. What rate did you start out with in the beginning of your career as a freelancer, and how did you calculate your rate?
I started with a rate of $15/hr (ouch!) and quickly moved to $20/hr for a longer term contract. I had absolutely no clue what the going rate was for freelance work, so I accepted the first rate that was offered to me. (I quickly learned that this was not a sustainable income!) I think my first salaried position after graduating from design school was ~$30k. At the time it was not a lot, but what I lacked in income I definitely made up for in experience. I’ve always been willing to take a hit on finances if it meant working on something cool, challenging or meaningful. I also did a lot of free and really cheap work while I was building up my portfolio (I even worked for trade with a hairdresser and a personal trainer)!
2. What was your defining moment when you realized you were worth more than what you were charging and how did it change your business?
There were a few a pivotal times in my business when I realized this. One of those lightbulb moments came from a client who said, “I don’t know if you know what your ‘gift’ is, but it’s definitely the big picture strategy stuff!” I realized that a lot of what I had been doing was strategic consulting, but I was still charging as though I was a “freelance designer.” I also realized that by charging hourly instead of by project, I was leaving a lot of money on the table. Once I had a chance to work with a number of bigger names in the online marketing space, I realized that I was in demand, and so there was a lot of room to experiment with my pricing. With each new project I increased my rates slightly, and realized that within a year I had doubled my rates (and yearly income). Increasing my rates only made me more desirable, and honestly, brought me a higher calibre of client. More income, more awesome clients!
3. What is it that has made you raise your rates continuously over time?
I’m always learning something new and bringing it into my work with my clients, so the value I can bring to a project is always increasing. Excellent testimonials, case studies, and lots of repeat business tell me that I can bring tremendous value to my clients, so increasing my prices over time is a no-brainer! Also every project is unique, so I don’t put a fixed price on a specific service. I would much rather work with fewer people in a deeper way, and the only way to really do that is to make sure that I work with less clients at a higher price point. I think it’s really important to know under what conditions you work best, but for me reducing my clients and increasing my prices has brought a lot more freedom to explore personal projects for example.
4. Is there something you wish you could have told the younger you that you know now, but didn’t back then about setting your rate?
I probably would have told my younger self to charge more, and be willing to experiment (value based pricing vs project pricing vs retainers, etc). If you get every single job you quote and you’re working days/evenings/weekends, you’re charging too little. Don’t be afraid to ask, and do some research to find out what others are charging, and what the market can bear.
5. If you could give only one advice to freelancers just starting out about setting their rate, what would that be?
No one is paying you for your “time,” they are paying you for a result, so stop charging for your “time.” Be willing to do research and discover not only market value, but how much value you can bring to a client. It’s trial and error, honestly, and you have to be willing to try new things with each client. Sometimes a retainer works well, other times, hourly makes the most sense, or sometimes a project rate is ideal. Your clients are unique, and your pricing can be unique too. The key is being confident and standing by the value that you know you can provide. Read about money. Learn about managing it. Don’t avoid money conversations; talk early and often. The more comfortable you get with money, they easier it gets to attract more of it.