Knowing Your Worth

You’ve demonstrated that you understand your prospective client’s problem, have the experience to get the job done right, and that you’re available to take it on. Now comes the question few are prepared for, the answer to which often makes or breaks a deal:

“What do you charge?”

Gulp.

Even if you have more than a few jobs under your belt, pricing can be tricky. There’s no formula that’ll give you the perfect rate for every project. But like a maze, this is a problem that’s easier solved backwards. What your time is worth becomes much clearer once you know more about your client’s business and what you want to get out of the job.

What’s your work worth to your client?

Your first step in any business is to know the market you serve, and freelancing is no different. Are the companies in your market well funded or bootstrapped? Are they trying to grow rapidly or at a modest pace? Where are they investing their time and resources?

Ultimately, your work is worth it’s impact on your client’s business. Revenue is the first metric that comes to mind, but impact can be measured in other ways: time saved not searching for a full-time hire, less paid in employee benefits, fewer customer complaints, and equity saved, for instance. These are important to consider when determining your rate.

Think about it this way: if your work improves their most important metric by 1%, what would that do for their bottom line? This isn’t to say that’s how much you should charge, but it puts your rate in perspective; you’ll be invoicing a business, not your next door neighbor. Never feel guilty about charging the amount your work commands.

What’s your time worth to you?

It’s not just how much you value your time, but how you want to invest it. You can choose projects that optimize for revenue, quality of work, quality of life, or growing your network. You can even choose the projects that you believe will make a difference in the things you care about most.

What’s important is that you establish what you want to achieve. Once you’ve done that, you’ll have a way to measure the pros and cons of each opportunity. It’ll also help you determine which companies you want to work with.

Finding your sweet spot

The right rate will make prospective clients want to negotiate with you. If they don’t try to talk you down then you’re either leaving money on the table or turning down work without knowing it.

If you’re new to freelancing, avoid committing to long term projects. This will allow you to adjust your rate more quickly. After a few projects, you’ll have a good understanding of where your starting point should be.

Getting approval for a new project is exciting. It shows not only that people believe in your abilities, but how much they value your work, and can be the confidence boost you need to value yourself just as much. So much so that you just might ask for a bit more the next time around.