12 Gurus Got 5 Questions About How They Set Their Rate

PRICING, FREELANCING, BUSINESS

We all start out the same way

When you look at some of the top performers in  our industry you quickly think that you’ll never be able to charge what they charge. And it’s quite understandable. I mean, if we look at Brennan Dunn. He charges up to $20,000 per week, that’s intimidating! But then again he’s bringing value to his clients, a lot of value.

That’s why I wanted to reach out to some the people that I look up to and ask them about how the started out with their pricing strategy. The point of this article is to show you that even the top performers started out just like you, by undervaluing themselves. They started with an extremely low rate, probably just like you. We’re talking anywhere from just above $8 an hour! Rightfully some started at around $100, but they sure as hell did not start with $20,000 a week!   They’ve spent years raising their price, fine tuning, testing, failing, doing it all over again, but most importantly not giving up.   Luckily for you they share some great advice, so that you don’t have to spend years trying to figure it out on your own.

 

The Questions they had to answer

1. What rate did you start out with in the beginning of your career as a freelancer, and how did you calculate your rate? 
 
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?
 
3. What is it that has made you raise your rates continuously over time?
 
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?
 
5. If you could give only one advice to freelancers just starting out about setting their rate, what would that be?

Brent Weaver

Brent started creating web-based businesses when he was 15 years old and never stopped. Most notably he grew a Denver-based web agency to a team of fourteen and sold it in 2012. Since then he has been building a new business, uGurus, that helps web designers, developers, and marketers build more profitable businesses. uGurus new flagship product, the $10K Bootcamp, helps web professionals sell their very first $10,000 web project through a 10-week, mentor led, online training program. The graduates of this program have had their businesses transformed: doubling or tripling their annual income in as little as three months. Brent’s focus is on growing and nurturing this community. He is actively looking to partner with other companies in this market – web experts, hosting companies, marketers, tools, or any resource that would be of value to his community. Brent’s primary focus for uGurus is on content development, expanding their network of contributors, and finding partners to do joint ventures.

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 didn’t have a rate when I started. I was only bidding fixed price projects and I was calculating my hourly rate somewhere between $10-$20 per hour. I was in high school at the time and was comparing the value of my time against the minimum wage job (~$7/hour) I had stocking inventory at a fabric store. Getting paid $500 for 20-30 hours worth of work was pretty unreal. Eventually I set a rate of $50 per hour. Carried that to about 2005 when I upped it to $65. Wasn’t until 2007 that we pushed to $100 per hour.

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?

When I pretty much went bust in 2007. We had set a $65/hour rate on what we needed to make to keep the lights on if we were working and billing full-time. That is unrealistic. Our business model was flawed. And we weren’t billing for support, updates, or maintenance. Once we realized this, we changed our pricing model and our business was profitable almost over night.

3. What is it that has made you raise your rates continuously over time?

Demand for time. Supply of value.

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?

Pass on the cheap, low-value projects. Hold out for the clients that have budgets and value your time. Every second you spend with clients that don’t have money and don’t value your time is another second you have wasted.

5. If you could give only one advice to freelancers just starting out about setting their rate, what would that be?

Whatever you think it should be… double it. Wait a year, then double it again. Then you should be about right.

Brian Casel

Brian teaches lessons in leveling up your business. Freelancers making the transition into products. Consultancy owners ready to scale up and grow. Bootstrapped founders seeking to gain traction

1. What rate did you start out with in the beginning of your career as a freelancer, and how did you calculate your rate?

My first hourly rate when I went freelance was $30/hour, I think.  I didn’t do much calculation, just kinda picked a number (which was too low!).  It didn’t stay that low for long…

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?

I think when I realized that clients don’t care about how much time it takes me to deliver the work.  They care about the end result and the ROI it brings.  When I learned that it’s all about value, then I started to re-think the way I charge for my services.

3. What is it that has made you raise your rates continuously over time?

One thing that made it a bit easier was not charging by the hour, but charging flat project quotes.  This allowed me to price based on value.  Every few months I raised the bar in terms of the minimum project fee that I would quote.  I remember how surprised I was the first time a client accepted a proposal for $1500.  Then again at $5000.  Then $10k and $20k.  Each successful project gives you more confidence to ask for more on the next one.

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?

After a few years, I transitioned to building a productized service and that really allowed me to scale my business and build an asset that grew in value (rather than just selling my time).  I wish I had started this process earlier in my career, but you live and learn.

5. If you could give only one advice to freelancers just starting out about setting their rate, what would that be?

Focus on value.  Also, remember that you don’t have to be the one delivering the service (if you don’t want to).  You can design your business to run without you, so that your income is not tied to your time.

Einar Vollset

Einar runs AppAftercare.com (his productized consulting business) and have done things like co-found a YC startup and teach at an Ivy League University.

1. What rate did you start out with in the beginning of your career as a freelancer, and how did you calculate your rate?

$75/hr I think. I honestly kinda just looked around and saw what someone who was a crappier developer than me was charging and charged that. Not much thinking went into it, which I suspect is typical for most freelancers starting out.

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?

The fundamental shift for me came when I realized I could re-frame what I was offering in terms of a fixed price product instead of simply charging by the hour/day/week. It’s what lead me to start AppAftercare.com and what i teach how to do at ProductizedConsulting.com – it’s put an end to feast & famine for me at least.

3. What is it that has made you raise your rates continuously over time?

Before the productized consulting approach, it was simply asking for more money. I rarely got pushback, and find that when there was pushback it was usually something that was much larger than I could accept. So for example, when I still consult, I do it by the week for $10,000/week. I have had some pushback on that, but not to where they say “well, can you do $7500”, but more like “eh.. we can afford $1000/week”.

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 wish I’d had productized sooner. I also wish I had accepted the offer of building Airbnb’s iPhone app for equity when there were only 3 people in the team.

5. If you could give only one advice to freelancers just starting out about setting their rate, what would that be?

Productize! Or if you refuse – at least change to charging by the day or week (ideally). Charging by the hour is death.

Jonathan Hinshaw

Co-founded EBWAY Creative with his wife in 2006. As managing director of EBWAY Creative, Jonathan gets to split his time between running the business, developing new business, consulting and helping his team push the boundaries of website design.

1. What rate did you start out with in the beginning of your career as a freelancer, and how did you calculate your rate?

$65/hr, I just charged what I saw others charging.

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?

I saw a website proposal inside a client’s basecamp account. I wasn’t supposed to see it. In that proposal, they outlined a $15k website – I’d never heard of such a thing!

3. What is it that has made you raise your rates continuously over time?

I hired a consultant and did what they told me to do – it worked! Each year we get more valuable, we get more busy and we can take on less and less projects – so we raise our rates now to simply slow the amount of sales needed to keep our profit margins.

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’ve said it all in Bootcamp! LOL!

5. If you could give only one advice to freelancers just starting out about setting their rate, what would that be?

Charge whatever the MARKET CAN BEAR!

Justin Jackson

Justin likes to make stuff. He has written quite a bit about building software and digital products. He also runs two podcasts, “Build And Launch” and “Product People”.

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 freelancing back in 1998 when I was 18 years old. At the time, the minimum wage was something like $8 / hour. So initially, I was just trying to make more than that.

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?

For me it was talking to other freelancers. Talking to other people and sharing information brings you power. When you know what other people are charging, ti helps you refine what you’re doing. Here’s another story, about two meetings I had in the same week. The first meeting was an administrator from the city. He said he wanted to talk to me about their website. I thought there was a potential contract with them, so I took the meeting. I he asked me all sorts of questions for an hour and a half. At the end of the meeting I realized he didn’t want to hire me, he just wanted free advice. That same week a consultant from a big ad agency called me up and asked if he could take me out for lunch. He said: “I’m happy to pay you for your time.” I told him my rate (which at the time was $150 / hour). He gladly paid me $150 to meet him for lunch. Two different people, two very different approaches to how they valued my time.

3. What is it that has made you raise your rates continuously over time?

Again, just talking to other consultants.

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?

Hmm. It’s tricky. When you’re starting out, you need to charge a lower rate, because you still don’t have the experience or the connections. But once you have a year under your belt, I’d try doubling your rates to see what happens.

5. If you could give only one advice to freelancers just starting out about setting their rate, what would that be?

Try pitching your clients on the value you’ll provide, as opposed to your hourly cost. For example: “I’ll build you a website that will deliver you 25% more leads.”

Kai Davis

Kai is an Outreach Consultant in Oregon.He help product creators and store owners get more traffic and increase sales.He shares his notes about growing my consulting business: tips and tricks, emails that he find useful, or tactics and strategies that he’s testing.

1. What rate did you start out with in the beginning of your career as a freelancer, and how did you calculate your rate?

When I started out, I charged the princely rate of $25/hour. I picked that because that’s what I was making at my day job — and that’s what I’m worth, right? Wrong. Eventually, I drew up a budget (using You Need A Budget) and made some assumptions about how many hours I would be able to work (25-30 billable/week) and set a new rate.

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?

I was in a Hacker News thread / conversation with Patrick McKenzie and said “Man, I can’t wait until the end of the year when I’ll be able to justify charging $50/hour instead of $40/hour.” He said something that stuck with me to this day: “Kai — absolutely nothing will change between now and then that will make you worth $50/hour instead of $40. Not a single thing. There’s no merit badge or award that ‘justifies’ a higher rate. So just start charging $50/hour today — heck, make it $400/day!”  And it finally clicked. I had been waiting for permission instead of setting the expectation. And from that moment on, I realized that the concept of {value} is decoupled from the {cost} of the work. I think of it like this:

  • Value — For any project, the value is the benefit (qualitative or quantitative) that the client receives from the project’s completion. This could be quantifiable value (more sales, more visitors, more revenue) or qualitative value (better image, prestige, less worry). This is what they see.
  • Price — The price for the project is whatever you’re charging for the project.
  • Cost — The cost for the project is how much it costs you to complete the project.

I had been thinking about everything in terms of my cost and using that to set my price. With this in mind, I realized that I needed to price on the value to the client, have the value exceed the price, and have the price exceed my cost.

3. What is it that has made you raise your rates continuously over time?

Scarcity. There’s only one of me. If I’m in enough demand — a waiting list, multiple projects, multiple prospects — I’ll add 25% to my rates and see what happens. Also, the subtle realization that for the same product, the value that a prospect sees in the product can go up based on circumstances outside of the deliverables. If I’m featured in an article, the value someone feels they receive from a Website X-Ray SEO Audit can go up even if the deliverables remain the same. And because the value has increased, I can raise the price.

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?

Charge more. Price on value. Charge weekly, not hourly. Don’t get ‘one-itus’ with your clients and think they’re the only ones out there for you. Instead, realize there is an abundance of clients.

5. If you could give only one advice to freelancers just starting out about setting their rate, what would that be?

Your rate is a function of your authority. And your authority, in part, is derived from working in public. If people know who you are, what you do, what you’re working on, and what your successes are, they’ll see you as an authority and you’ll be able to charge a higher rate. So start working in public. Write up case studies on your site. Write articles answering the most common questions clients and prospects ask. The more you work in public, the more of an authority you’ll be — and the higher rate you’ll be able to set. After all, as a prospect, who would you be more willing to pay $800/day to?

  • Joe, the SEO consultant, with a 5-page website?
  • Jane, the SEO consultant, who has been writing 3 articles about SEO for eCommerce a month for the last 3 years?

The educational content you share adds to your authority. I can point to one article I’ve written that’s responsible for $10,000 of revenue because prospects found it, read it, and wanted to work together.

Kenn Schroder

Kenn started out coding games on the Commodore 64, way back when. Then throughout school he was always dabbling on computers, programing, designing, and messing around.   he left his corporate insurance job back in 2001 to freelance as a web designer. Things have evolved quite a bit then, but he’s still building websites and loving it.   Today, he’s more about creating sites that serve a valuable purpose. Sites that work. That generate an income. That get some sort of clear result. He does that through his niche market, coaching websites and he helps freelance web designers get more clients with his guide Get More Web Design Clients Galore.

1. What rate did you start out with in the beginning of your career as a freelancer, and how did you calculate your rate?

When I first started out, I had no rate. I no clue. I just said $500 for your site and I was willing to work my fingers to the bone for it. Nice cause the client felt like I had his back. Not nice cause it’s not sustainable over time. You must earn a good rate. Again, I had no rate.

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?

I think us humans are worth more than all the money in the world. Life over money. But our world works on currency, so you need to earn it to live how most people live. You could just go to a forest and fend for yourself which is probably not easy. I realized I could earn more when I saw others earning it and when I spent more time understanding what a client is willing to pay for. They are the ones who decide how much they will spend – and what they value.

3. What is it that has made you raise your rates continuously over time?

I wouldn’t say continuously. I teach web designers to know the rate they need to survive, but to package their services in a valuable way so that clients are happy to pay while you’re able to get the work done lickety split. That’s profitable.

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?

Find a guru, follow them, learn from them. I’ve a bad habit of trying to figure it out myself.

5. If you could give only one advice to freelancers just starting out about setting their rate, what would that be?

Figure out what you need to pay for your basic life needs. Start writing that down and how much you ear each month so you know if you’re surviving or not. Get that habit going then use some more formal way to compute how many hours you’ll spend on income, and that won’t count marketing. In addition, get out there and talk to people often – be very visible so work can come in.

Kurt Elster

Kurt began his career in the tech scene in 2009 when he quit his job to co-found a self-funded startup. While it wasn’t the brilliant million dollar idea he promised his family it would be, it did set him on the course to become one of Chicago’s tech elite. He’s one of the few Shopify Experts with both design skills and business acumen (and some serious opinions on what it takes to succeed online.)

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 out with a rate of $80/hr. I think I used one of those goofy “calculator your income!” things. Later I set my rate based on competitors, and eventually I assigned based on supply & demand. Each time I got overbooked, I would raise my rate on each subsequent project until I was 80% booked. It was a slow, steady, and rewarding process.

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?

The defining moment was when someone in my MasterMind group saw what I was charging for a project and said, “Kurt, I love you, but you gotta love yourself, man.” That was an eye-opener.

3. What is it that has made you raise your rates continuously over time?

Booking myself solid over and over told me that demand for my time was exceeding my supply of time, so I just kept raising rate to meet demand. This is an incremental and continuous process. As my marketing gravity increases, demand increases, and subsequently so do my rates.

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?

To charge more than the competition, you can’t be a commodity. Generalist web designers are a commodity. When you have a specialization, you’re perceived as an expert authority within that niche, and you’ll always be able to command a higher price than your competitors.

5. If you could give only one advice to freelancers just starting out about setting their rate, what would that be?

Set your rate based not on your own needs, but on the perceived value you provide your clients. Value-based fees are the best thing you can for yourself and your clients.

Marie Poulin

Marie works with passionate business owners, organizations, and entrepreneurs who want to take their business to the next level. She started ake your business to the next level by moving from Designer to Digital Strategist. She alsoCo-founded We Are Oki Doki where they help business owners launch online programs and courses.

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.

Philip Morgan

Philip helps your development shop get more leads without hiring a salesperson. He uses education-based content marketing, marketing automation, and digital outreach to make that happen. He’s also the author of The Positioning Manual for Technical Firms.

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 out with a rate of $60/hour, and I calculated it based on the 100% irrational fear that if I charged a penny more than that, I’d have no work. There was probably some post-hoc mental justification involving math, but trust me, the real reason I chose that rate was fear.

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?

It was almost 5 years before my rate got above $90/hr (I have since then abandoned hourly pricing), and the realization that I was worth far more than that came about after I realized that it was OK for me to ask prospective clients about how their business makes money. This simple change unleashed a torrent of new thinking about how I could help them make *more* money, rather than just thinking about how to get the project at hand done safely and quickly.

3. What is it that has made you raise your rates continuously over time?

I realized I had anchored my sense of “lot of money” to my parents’ income level circa my childhood in rural North Carolina, which is far below what is needed to live well now in the fancy state of California.

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?

You don’t need to know everything. You only need to know about 20% more than your client does about any given problem to provide significant value. So stop doubting yourself and charge appropriately, kid!

5. If you could give only one advice to freelancers just starting out about setting their rate, what would that be?

You won’t get better rates if you don’t ask for them.

Troy Dean

Troy is an online marketing speakercoach and consultant. He specialize in helping businesses and entrepreneurs use the Internet to attract new customers and build their communities. He has worked with hundreds of clients and helped them get measurable results for their business. He’s passionate about measuring return on investment and delivering practical take-aways that can be implemented for immediate results.   He does this by facilitating workshops to help clients design and implement a digital marketing and communications strategy and he takes great pleasure in having helped many a client write their first blog post and craft their first tweet.

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 out with an hourly rate of $25 which was a complete guess. I literally made it up based in what I thought other people were charging and what i thought clients would pay.

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?

When I started seeing that the work I was doing was having a positive impact on my clients’ businesses, I knew I was worth more. I also knew I had to charge more to sustain myself and my expenses.

3. What is it that has made you raise your rates continuously over time?

My reputation, referrals and a deeper understanding of my clients’ problems. I’m always learning.

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?

You do not need an hourly rate. In fact an hourly rate will hurt you in the long run so the sooner you lose it the better.

5. If you could give only one advice to freelancers just starting out about setting their rate, what would that be?

The more comfortable you can get asking awkward questions about your clients’ businesses, like what their goals are, what their hurdles are and what success look like to them, the more you will earn.

Stefan Pylarinos

Stefan is an entrepreneur, internet marketer, life coach, professional speaker, fitness enthusiast, and world traveller. As he says, he feels extremely blessed for the life that he lives.   He also runs his company Project Life Mastery which is a source of inspiration and change for those who refuse to settle for anything less than an extraordinary life

1. What rate did you start out with in the beginning of your career as a freelancer, and how did you calculate your rate?

When I first started, I charged less than $100/hour. In many cases, I’d do whatever the person could afford because I was more focused on gaining experience and also getting testimonials. Once I had a consistent demand of people that wanted my services, I began raising my price.

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?

When I raised my price, I was always amazed to see people still sign up for my time. This validated to me that I was worth more, as people were willing to pay more to get access to me.  It changed my business because all of sudden I was able to make more per hour of my time and scale up faster.

3. What is it that has made you raise your rates continuously over time?

As my time became more valuable, I began raising my rates. Also the more demand that I’ve had.  I’m limited to the number of people I can work with.  Every time I reach a new milestone of clients, I would raise my rates as I’d become more valuable.

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’ve learned it actually benefits people in many ways by paying more for high quality service. When people invest more, they’re more willing to take your services seriously and put in the work and take the necessary actions. You also end up attracting higher quality clients.

5. If you could give only one advice to freelancers just starting out about setting their rate, what would that be?

Your value is determined by what people are willing to pay and the demand. You can think that you’re worth X, but in reality, the truth is you’re only worth what people are willing to pay and invest in you. Focus on raising your value and demand, which will allow you to charge higher rates.

So much valuable advice

So there you have it! Tons of great advice for you to start stepping up your game as freelancer and take your business to the next level. And as you clearly see, you are not alone. This doesn’t happen over night, but this will speed up things a bit.   I hope you enjoyed this article as much as I did putting it together. And if you got any other great advice you would like to share, just comment below.

And a special thank you to everyone that took their time out of their busy schedule to contribute to make this awesome article! We all appreciate the things you share!