The Freelancer’s Pricing Model - Superorganizers - Every

In my experience, the cheapest clients are also the highest-maintenance clients. When they see how willing you are to bend over backward for their endless requests for out-of-scope favors, they will pile them on. Why wouldn’t they? It’s their job to get the most for the least. On the flip side, great clients with healthy budgets tend to understand quality and pay accordingly without too much fuss.

You have to know your value and believe in it enough to quote a respectable price, and be ready to walk away if the client can’t afford you. How you walk away is important. Be friendly and cool and express interest in staying in touch.

You have to know that those clients who can’t afford you will at least respect your professionalism and your price, and they’ll remember how pleasant and excited you were. They’ll come back to you in the future when they have money, or they’ll recommend you to someone who already does

If you want to make proper money as a freelancer, it’s important to not avert your gaze and say “Uuuuhhhhhh” when someone asks you how much you charge.

Professionals know how to field this question: with a calm smile, they say, “Sure, tell me more about what you need and I’ll get you a quote by noon tomorrow.”

If you’re an experienced freelancer, take the total amount of money you made last year (or whatever was your best year to date) and divide it by 2,080 (the number of business hours in a year). This is now the minimum value of one hour of your time.

Let’s say, hypothetically, that you made $88 per hour last year. You want to improve this year, so now your baseline is $100 per hour.

Think about what that means. It means that from now on, whenever you spend an hour on something that could have been outsourced for less than $100 (or not done at all), you are throwing away money. Instead of throwing away money, I humbly recommend that you channel that time into your art. When you show yourself that level of respect, it’s easier to expect your clients to do the same.

So, I put those basics into an Excel model which spits out a quote based on the answers to a few simple questions:

What would your annual income be if you were employed, at your current level of experience, by a healthy sized company? (If you’re unsure, I’d skip most of the online articles about this, and instead make friends with a recruiter and ask them). Add 50% to that number, for reasons outlined in the chapter “The Benefits of Freelancing.” What are your fixed and variable monthly expenses related to your freelance work? Do you have anyone working for you and what do you pay them? Toss the above numbers, along with an estimate of hours you plan to spend on a given project, into this Excel model and out comes a cost.

Here’s what that looks like, using made-up numbers for illustrative purposes:

You’re a copywriter who made $75K in your last full-time role. $75K plus 50% is $112,500 per year. Your deductible rent is $6K per year (you can consult an accountant to find this number, or estimate how much you can deduct), you spend roughly $7K on hourly assistant help, and you have $8K in additional business expenses, so your annual overhead is $21K. Your new total target revenue is $133,500. There are 2080 business hours in the year. Your base hourly rate is $133,500 divided by 2080, or roughly $64 per hour. Now you know that it costs at least $64 for you to do work for an hour.

Think carefully about what a client thinks of a freelancer who jumps at the chance to lose money. Think carefully about yourself, your training, and the quality of your work. Remember that you may not actually be collecting money for every single one of those 2080 hours you have available to work.

When you put out your first quote, it is not unlikely that the client will come back to you with a startled tone and a story about budget constraints. Don’t be mad. This is part of the dance, and now it’s your turn.

You will respond with a smile and an, “OK, well let’s revisit the scope and see what we can adjust.” Your tone is unfazed and cool, because you know that there are only two outcomes, and both are good.

Outcome #1: You remove some items from the scope and allow yourself to (scientifically, not arbitrarily) reduce your price, because now you’re doing less work for less money, and the client agrees. Outcome #2: The client can’t (or won’t) pay even your reduced price, at which point you get to evaluate if they’re worth working with.

In conclusion, your hours should be tracked and you should internally assign value to them, but keep a flexible relationship between your estimated hours and your client quote:

Prices should reflect the true value to the client. Prices should reflect your overall expenses. Smaller jobs should cost more per hour, while larger commitments earn a lower rate. Prices can reflect your other priorities and convenience.

On the flip side of the latter situation, sometimes you’ll be asked to do jobs that you simply don’t want to do, or for a client that you might not feel a strong sense of closeness or obligation to. In these cases, you can easily use your pricing model to dial up the margin for the job. Not enough to gouge them, but enough to make you more enthused about doing the job, and creating a financial cushion that could enable you to dial down the margin for deserving clients on the other end of the spectrum. Do this ethically and you can actually create win-win pricing scenarios: if they say yes, you make a lot of money, and if they say no, you don’t have to do the job.