How to price your freelance services (without getting screwed)

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A few months ago a buddy of mine came home from work to find out his girlfriend left him, so of course — he did what any 28 year old dude would do…

He went to the bar and smashed some brews.

Now this isn’t bad in itself, but then he decided to drive home after that..

And well, that’s when his real troubles started.

As I’m sure you can guess, the cops caught up to him a few blocks down the road, booked him for booze cruising…

And made him stay the night behind bars.

Life carried on as normal for my buddy a few days after that, but after realizing how much trouble he was in…

He decided to hire a lawyer, and after that — he called me for advice.

Why he calls me for this type of stuff, I’m still not sure — as I’ve fortunately never had to deal with anything like that…

But he did, and immediately after this — he started telling me how he hired a lawyer for $650.

Again, I’m not really familiar with this industry, but that seemed really low…

So I started asking what that all included, and he just said it was a flat fee that took care of everything.

Fair enough, maybe the “you just blew $10K” commercials were overhyped..

So we went on with our conversation after that, and I didn’t talk to him until a couple weeks later…

When I went back to our hometown (where he lives), and asked how the process was going.

His response?

That of a whiny 8 year old who wasn’t getting their way.

He started telling me that he’d made a huge mistake, as he could tell this guy didn’t care about him…

So I asked what he meant, and he rambled off a few things…

But most of it came down to the fact that every time he called this guy, it seemed like he didn’t want to talk to him.

This made sense, so I casually asked how often he called him…

And he told me it was around 2–3 times per week…

Which is when I immediately noticed what was going on, because I see this ALL THE TIME in freelancing.

In the simplest terms, it’s a classic example of where one side (the attorney) bids low, because they know it won’t take them long to do something…

But then the other side (my buddy) views flat fees as an all-inclusive event, which makes him think he can reach out whenever — and in turn, that racks up the hours…

Which just creates a tension that never ends well…

And today, I wanted to give you some helpful guidelines that’ll help you avoid this mess, but before we get to the good stuff — let’s do a quick overview of the different pricing strategies a freelancer can use.

Pricing strategy #1 — Hourly pricing

So when I first started as a freelance bookkeeper, I didn’t even know fixed contracts existed…

And due to that, I just bid on all jobs in hourly terms.

I think most of that was the mindset of an employee, where I was used to trading time for money…

So I did this for awhile and all was good, until one day when I completed a contract for a client — where I did book-to-tax reconciliation for him…

And after sending the invoice of 12 hours, he responded to my email — asking why it took so long?

Now this caught me off guard at first, as I knew the guy didn’t how to do book-to-tax reconciliation, so he couldn’t tell me how long it took…

But I decided to be nice anyway and explain why it took 12 hours.

He responded to my email a few hours later, and thanked me for the explanation — just couldn’t figure out why it’d take 12 hours…

And nothing bad came out of this as he still paid, but I’m not going to lie — it did piss me off a bit.

It was almost like he was questioning my ethics, trying to say I “milked the clock”…

But I tried to shake it off and continued on with my freelance journey after that, really not running into any issues along the way…

Until I started to increase my rates and noticed how more and more clients kept asking me how long it’d take me to do something upfront.

At first I thought it was an isolated event, so I just gave them an estimate and didn’t think much about it…

Until I started landing contracts with these estimates, and realized how bad it sucked to “box” myself in with estimated hours like this.

It just seemed like I was always rushing against the clock, and it was hard to produce results this way…

So after doing this for a little while, I started to tell clients that I didn’t like to give estimates — but I would assure them that I’d work as fast as possible.

Their response?

Well, it was nothing…

Because they stopped responding to me after that.

I couldn’t figure out why this was happening for the longest time, until I started taking courses that taught me the “business” side of freelancing…

And that’s when I realized that (quality) clients don’t mind paying high rates, they just hate the uncertainty of hourly billing.

In other words, if you tell them it’s going to take 10 hours upfront — then they’re generally cool with it (within reason)…

But if you start the contract without mentioning the hours, they’ll make up a timeframe themselves — and as I’m sure you can guess…

That’s never close to the amount of time it actually takes.

So long story short, and I’ll be explaining more throughout the rest of this article, but if you can — I highly advise avoiding hourly billing.

And don’t get me wrong, I realize there’s some industries where you’re really an employee that gets paid like a freelancer (i.e. virtual assistants), so obviously that wouldn’t apply to you…

But if you’re a contractor in the traditional sense, where you do specific work for a client — then from my experience…

You’ll generally want to stay away from hourly billing.

It just opens the doors for too many issues, and if you ever find yourself in a position to where you have to do an hourly contract — then always try and give them a guesstimate upfront…

But here’s a pro-tip, always try and add a couple hours of padding on top of it.

In other words, if you think it’ll take you 8 hours — then guess 10…

Because if you finish in less than 10, then you’re an all-star…

And if any snags come up, then you’ll be right on track with your estimate.

Plus, I know a lot of people get scared to bid high — as they think this will hurt their chances of winning the job…

But from my experience, if you’re working with quality clients — then they don’t care about pricing too much…

They just want quality service and no surprises, which is why it’s good to mention a (padded) estimate upfront.

Okay, that’s pricing strategy number 1…

Which takes us to:

Pricing strategy #2 — Fixed pricing (based off hours)

So after realizing how much clients hated hourly billing, I started to refine my approach and bid on every job from a “fixed” standpoint.

In other words, instead of saying how much I billed per hour…

I’d look at their job, calculate how long it’d take me in my head — then (most of the time) add a couple hours on after that to account for any miscellaneous items.

This worked amazing at first, as clients loved how I was mitigating all uncertainty — and seemed to send contracts over a lot quicker…

But then one day I landed a client who told me he’d been in business for 8 months, so I thought he would be a good fit…

Until we started the contract and I realized he’d been “playing business” for 8 months, so in other words — he’d never actually made money…

And was essentially a new entrepreneur who thought he knew what he was doing, because well — he had an LLC for 8 months.

At first I thought about ending the contract right there, as I could sense it was going to be trouble…

But I decided to push forward with it anyway, and a couple weeks in — my life was a living hell.

I was constantly answering emails from him, and felt like I spent half of my day serving as his personal consultant…

Which killed my profitability, so finally — I decided to reach out to him and ask if we could put some restrictions in place.

I mentioned how this would work best for both of us, as I was starting to get burnt out and that was killing my work…

So he agreed at first, saying he’d only email me with important issues — which worked great for about 3 days…

And then he went back to his old self.

Needless to say, I finally finished up that contract a few weeks later…

And after I did, I told myself I was never going to deal with that again, as I’d essentially lost money…

So I decided to take a different approach, which was really just a “hybrid” format.

I did this in a few different ways, but one of my most popular packages was where I’d grow email lists for companies…

And in that package I’d charge a flat fee for:

  • 1 landing page
  • 3 weekly blogs
  • 2 weekly emails (support wise)
  • And one 60 minute call every month

Then if anything happened after that, I’d bill my standard rate of $75/hr…

And I’m not going to lie, this worked out great.

Clients understood what they were getting so there was no surprises, and they understood they couldn’t bug me all the time — so I wasn’t losing money…

But there was just one slight problem with this, it almost created a weird “tension”.

And it wasn’t terrible or anything like that either, it was just…

I don’t know, almost uncomfortable.

It almost felt like being in the same room with your ex, where you acted like everything was cool — but deep down you were walking on egg shells…

And I remember one specific client where he’d almost be passive aggressive about it, especially when he’d send me a quick Skype message — then at the end of it, he’d say how he hoped this didn’t count as an email…

Which at the end of the day, wasn’t terrible — but it wasn’t ideal…

And that’s when I eventually moved onto:

Pricing strategy #3 — Fixed contracts (value based)

So by the time I reached this point, I’d heard a lot of people talk about value based pricing…

But I never understood exactly what they meant.

From what I could see, most of the people who were doing “value based” pricing were just billing inflated hours in the form of a fixed contract…

Which was cool, but then one day I landed my first sales letter — and understood the definition of true value pricing after that.

Now I won’t bore you with all the details now, but let’s just say…

This first sales letter happened to be for a big name fitness celebrity (how I landed this contract, I’m still not sure)…

And knowing they could pay a lot of money, I decided to throw out a high number.

At the time I think I was charging $75/hr, and I knew the sales letter wouldn’t take me too long (as it was really a sales email)…

But I also wanted to give them the best damn sales letter there was, so I decided to bid $850 and see what they’d say.

Now I’m not going to lie, after I bid $850 — I immediately regretted it…

Thinking I’d ruined my only chance of landing this gig, but I received an email from him a few hours later — and to my surprise…

He had zero questions about it, and just said “sounds good, let’s get started”.

After that, I spent the next few days really honing in on this copy, doing a crazy amount of research and producing the best sales letter I could…

Then finally sent it to him, and nervously awaited his reply for the next 24 hours.

To be honest with you, that was one of the most nerve-wracking moments of my life — as self-doubt kicked-in and I thought he was going to tear my sales letter apart…

But then I received his email 24 hours later, and guess what he said?

“Holy shit, this is amazing! Great work, no edits — I’ll let you know how it goes!”…

And that’s the moment when I realized how much better it is to charge high rates for something, and always provide quality work.

In other words, there’s so many people out there that are constantly battling for “low prices”…

So if you take a different approach and target quality clients, ones that don’t mind paying high prices as long as you produce quality work…

Then it’s a win-win for everybody as you make more per hour, while also having less stress (as they’re busy and don’t have time to email you all day)…

But then on top of this, once you get a few results under your belt — you can start “selling” your services based on ROI.

To give you an example of this, that sales letter I just mentioned rang up over $10K in sales during the first month alone…

So when I bid on my next contract a few weeks later, I said something along the lines of:

“I just finished up a similar contract for $850 and was able to create $10K in sales during the first month, so if you’re interested — I could handle your project for $850 as well”…

And as I’m sure you can guess, this was never a tough sell.

In other words, hourly pricing is cool — but when you can do “ROI based” pricing…

Showing them how they’ll be able to recoup their investment, then they never care how long it takes you.

As I mentioned a few seconds ago, this works great as you’re dealing with quality clients that way — so since they don’t email you all day long…

I always make these contracts “all-inclusive”, and never put any restrictions on how often they can reach out, because that’s really included in the “value based” pricing.

So what I’m trying to say is…

As weird as it sounds, the right pricing strategy goes way beyond lining your pockets — because when used correctly, it’s also a helpful tool that helps you stay away from bad clients.

In other words, quality clients don’t want low rates…

They want quality work, but here’s the one caveat — they don’t just pay high rates to pay high rates…

You have to have an “outcome-based” skill that can show a high ROI.

This is the same reason why I always shake my head when I see people complaining about how they don’t get paid “their worth” for being a freelance writer, and trust me — I get it…

But here’s the thing, nobody pays high rates for writing — they pay high rates for what the writing does for them.

In other words, if you write blogs for companies and position yourself as somebody who drives traffic to their website — then you’ll get paid alright…

But since clients really can’t see a lot of value in that, then you’ll never be able to charge high rates.

On the other hand, if take an outcome based approach — where you tell clients your writing helps them achieve a goal their looking for, such as:

  • Growing their email list
  • Setting up an automated marketing funnel that sells at all times of the day
  • Helps them get more clicks on their Facebook Ads and in turn, lowers their rates…

Etc, etc, etc..

Then you’ll be able to charge high rates, and that’s the same reason why it’s extremely important to target the right market as well.

To give you one last example of this…

I do all my work in the copywriting field anymore, so that’s where most of my examples come from…

But from my experience, a lot of new(er) copywriters like to work with e-commerce companies.

I guess I don’t know why, but if I had to guess — I’d say it’s because they think selling products is the easiest form of sales…

Which is somewhat true, but here’s the thing — since most e-commerce companies have really low margins…

Then they’re usually not willing to pay a lot of money for freelancers, because they can’t see a huge ROI in the work.

Now obviously that’s a gross generalization and there’s always outliers, but something to keep in mind…

And on the other hand, when you work with companies who have high profit margins — such as service providers or people who sell digital products…

Then they’re able to see a higher-based ROI, and in turn — more likely to pay higher rates.

Long story short…

Whether you like it or not, the amount of money you make as a freelancer is always going to be related to the outcome you’re producing…

And that always comes down to 3 things:

  • Making sure you’re able to show clients what you can do for them (as some simply don’t understand how your skill can help them reach their goals)
  • Making sure you have the right target market (because if they’re unable to pay a lot of money, then it doesn’t matter how good you are)…
  • And lastly, always trying to go for the “all-inclusive” packages

In other words, it doesn’t matter if you’re charging $650 or $6,500…

Clients always look at fixed prices as “all-inclusive”, and since they view freelancers as “working consultants”…

Or people who can not only do the work, but also provide advice when needed…

It’s important to plan accordingly, as that’ll save both parties trouble down the road.

P.S. Want to learn more about getting clients? If so, Check this out


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