Mark and Dan are highly skilled freelance writers. Both of them make $5,000 per month on average. Their skill levels and the quality of their work are at par.

Yet, there is a huge difference in their lifestyles.

Mark works 60+ hours every week, with his time divided between several clients.

He barely gets time to spend with his family. The last vacation he took was three years ago. There is simply no time for such things. He knows he has to sacrifice such luxuries in order earn a decent income.

Dan’s lifestyle is the complete opposite of Mark’s. Mark only works 25 hours each week, with his time divided between just two clients.

Working only 25 hours a week, he has ample time to spend with his young kids. He even has time to take a one month long vacation every year. Dan is actually living the freelancer’s dream!

How is it even possible for two freelance writers with equal skills and equal quality of work to have such different lifestyles?

The answer lies in their pricing strategies. Mark believes that freelancing is a competitive industry, and therefore his charges low rates in order to attract more clients. This means that he has to put in a lot of time in his work in order to earn a decent income.

Dan, on the other hand, knows the value of his work. Instead of pricing his services competitively, he charges premium rates for his services.

With his higher rates, he gets higher quality clients and only has to work a few hours each day to sustain himself and his family.

In the last couple of years, freelancing has become an attractive working model, and a huge number of people are ditching full time employment in favor of freelancing.

By 2016, 35% of the US workforce were freelancers, with the number set to hit 42% by 2020. Freelancing gives you the freedom to choose your own schedule, be your own boss, and choose the kind of projects you want to work on.

Despite its benefits, most professionals who switch to freelancing find themselves with one huge challenge – how to price their services.

With freelancing, there is no guaranteed monthly income. You can make thousands of dollars one month and make nothing the following month. You are responsible for costs like your health insurance, taxes and licenses.

You are also responsible for other costs associated with running your freelance business, such as purchase of equipment and materials, marketing, and so on.

All these are factors you need to put into consideration when coming up with your freelance rates, and if you are just starting out, it can all be a bit confusing.

Because of this, most new freelancers experience a moment of dread and anxiety when a client asks the following question: “So, how much do you charge for your services?”


As a freelancer, there are two major pricing models that you can use for you services – hourly pricing and project based (fixed) pricing.

Hourly Pricing

This is the most common method for freelancers who are just starting out, because this model is quite simplistic. With this method, you come up with an hourly rate for your work and then multiply that by the number of hours you will spend doing the work.

You can use different methods to come up with your hourly rate.

My preferred method for setting an hourly rate is to first decide the amount of money you want to earn in a year and then divide it by the number of billable hours you will spend working.

For instance, if you want to earn $60,000 dollars a year, that means you should earn $5,000 each month. If you intend to work for 40 billable hours each week, then you need to charge $125 per hour.

In this case, if a client gives you a project that takes you ten hours, you would then charge them $1,250 for the project. A good way of making the hourly pricing model work well for you and the client is to use time tracking software to track the amount of time you spend working on the client’s project.

Hourly pricing is a good model you do not know how long the project is going to take you. For instance, if the client is not very sure of the scope of the project, meaning that there will be change of plans and numerous revisions, the hourly pricing keeps you protected.

Even if some work is halted midway and has to be redone, you still get paid for the work you put in.

Similarly, if you are offering a new service and cannot make an accurate estimate for how long it is going to take you, hourly pricing is the best option for you. This is why most freelancers who are just starting out might prefer using this model.

Unfortunately, the hourly pricing model is limiting. As you become more experienced and better at your work, you will generally become more efficient. You start utilizing better tools and systems, you learn a few shortcuts here and there, you learn new tricks, and so on.

As a result, you become faster in your work.

You start doing in a few hours something that would initially take you a whole day. The quality of your work also improves. With the hourly pricing model, this becomes a disadvantage for you. Despite becoming more efficient in your work and producing a higher quality of work, you start earning less because you spend less time doing the work.

In addition, you need to realize that clients don’t generally pay you for the amount of hours you work. In most cases, clients pay you for the value you provide. They don’t care if something takes you thirty minutes or ten hours, so long as it is done by the time they want it and that it satisfies their needs.

By charging an hourly rate, you limit yourself – there is only so much you can justify charging per hour.

However, by switching to a project based pricing model, you can charge much higher rates, not based on the amount of time spent on the project, but by the value you provide.

Most clients won’t have a problem paying higher rates so long as the quality of your work is proportionate to your rates.

Project-Based (Fixed) Pricing

With this model, the freelancer charges a fixed rate for the entire project. With this model, instead of basing your fee on the number of hours spent working, your fee is based on the end result that you deliver, which is what the client cares about anyway.

This is my preferred pricing model, because with this model, you don’t have to worry about earning less by becoming more efficient. This model allows you to earn more while working less.

When coming up with a fixed rate fee for your service, there are two things you need to consider. The first one is the amount of work that needs to be done. It is good not to confuse the amount of work that needs to be done with the time spent doing the work.

For example, if you are a web designer, your client might need a website with a number of features. Setting up some of these features might be an automated process that takes you no time, but you should still factor it in your pricing since it is a service that actually needs to be done.

In this case, you would be charging for your knowledge, not for the time spent doing the work.

The second thing you need to consider when setting your fixed rate fee is the actual value you are delivering for the client. To do this, you need to be aware how exactly your service helps your clients.

For instance, if you are a freelance copywriter and you know that your copy will help the client bring in $100,000 in sales, it would be very easy to justify a $1000 fee for creating ad copy. By showing clients the potential ROI for your services, you stand at a better position to command higher rates for your services.


Over the course of my freelancing career, I have come to the conclusion that the best approach when it comes to your freelance rates is to remain flexible. Regardless of the pricing model you opt to work with, you stand to gain more by adjusting your rates to the client and their specific project.

It doesn’t make much sense charging a huge multinational company the same rates you would charge a one man startup.

Similarly, it doesn’t make much sense charging the same rates for an overly creative project that requires specific knowledge as you would charge for a general, straightforward project that can be done by anyone within your industry.

In spite of this flexibility, there are a number of factors and criteria you need to keep in mind when coming up with your rates. These include:

Your Living And Business Expenses

When on full time employment, most of the costs of running the business are taken care of by your employer. Once you decide to freelance, you will have to cater for all these costs and expenses from your pocket.

Therefore, you have to put these costs and expenses into consideration when setting a rate for your services. In particular, you need to think about costs such as hosting for your website, subscriptions for any business tools and services you are going to use, internet, telephone and other utility costs, travel expenses if your work requires traveling, office equipment like computers, business insurance and licensing fees, and professional membership fees, taxes, and marketing and advertising costs.

In addition, you should make sure that your rates allow you to earn enough to cover your living expenses.

How Much The Client Is Willing To Pay

I mentioned earlier that the best approach is to charge different rates to different clients. For you to do this, you have to be able to evaluate how much the client is expecting to pay for a service.

Let’s consider a situation where you have two clients with similar projects.

However, there is a difference between the two clients. One client is the proprietor of startup. This client funded the startup from his own pocket, and therefore does not have a huge budget to play with. His budget for the project is $4,000 – $5,000. After discussing the project with the client, you realize that you can do it profitably for $5,000.

The other client is the executive of a huge multinational company with deep pockets. Their budget for the project is $10,000 – $15,000. Since the two projects are similar, should you charge both of them $5,000?

Charging the multinational the same figure you charged the startup can be bad for your business, and here is why.

The executive from the multinational did not just wake up and randomly pick the $10,000 – $15,000 budget. They probably did some research about the project and concluded that the kind of service they require is within that price range.

Such clients know the kind of work they want and they have no problem forking out a large sum of money to get it. By giving them a quote that is way below their budget, you might be unwittingly sending the message that your work is not worth what they have in mind.

The multinational might pass you over, not because you are not qualified, but because they don’t want to take their chances on a cheap freelancer who might end up delivering subpar work.

A good way to find what the client is willing to pay is to simply ask them if they have a budget for the project. This provides you with a rough idea of what the client might be willing to pay for your services.

However, some clients will not be so willing to disclose their budget.

Another way of estimating what a client might be willing to pay is to find out as much as you can about the client. What kind of organization does he or she represent? Is it a startup, a non-profit, or a larger organization?

Visit their website and do some research about the organization.

In most cases, I find that the larger the organization, the more likely they are to be willing to part with a higher amount.

Finally, you should also consider the type of work the client requires. The bigger and more demanding a client’s project is, the higher the fee you should demand for it.

What Value Are You Providing To The Client?

It does not make much sense to charge a client $100 for a service that will help them make or save $10,000, does it? To make sure you are getting the most out of your work, you should consider its value to the client. What does the client stand to gain from your work?

Value is directly tied to a problem.

What problem is the client trying to solve using your service?

To use value as a factor in your pricing, it is good to try and gain as much information as possible about the client’s problem. Is the client trying to make or save money? If so, how much will they make or serve once you provide your service?

You should keep in mind that value differs from client to client, which further justifies why you need to adjust your rates depending on the client and their project.

Let’s go back to our earlier example to see how this works. Let’s assume that the project that both of them wanted was a website where they could showcase their products and respond to customer enquiries.

The first client, being a startup, might be trying to get their first few clients. They figure that with a website, they might increase their revenue by $15,000 – $20,000. In this case, charging them $5,000 is sensible because they know they will recoup their money. This client would not be willing to pay $10,000 for the website, since the ROI on the website would not be much.

On the other hand, the multinational company might have realized that they are losing over $100,000 in potential sales because they don’t have a website. Therefore, this client will have no problem forking out $15,000 for the website because it will bring in a lot more value for them.

The more you can emphasize the value of your service to the client, the higher your earning potential.

Your Experience

Another thing you need to consider when setting your freelance rates is your expertise and experience. As a freelancer, clients might not have the same confidence in you as they might have in companies or agencies.

Clients do not know what you can do and might consider working with you as a gamble. Therefore, if you are just starting out, you might need to charge lower for your services as you build a portfolio and find your first few clients.

However, once you have built a persuasive portfolio and increased your expertise, you can charge higher fees. With a portfolio, you give clients the confidence that you will actually deliver since they can already see examples of your work.

You should also keep in mind that, as a freelancer, you are selling your specialized skills and knowledge. It therefore makes sense for you to charge higher rates as you continue improving your skills and expertise.

Don’t Use Price As A Marketing Strategy

One of the biggest mistakes I have seen freelancers make when deciding what to charge for their work is using price as a marketing strategy. They assume that clients go for the cheapest freelancers, and they therefore price their services competitively thinking that they will attract more clients.

Spoiler alert!

This strategy does not work.

Using low prices as your key strategy for attracting clients is ineffective because there will always be someone charging less than you. Freelancers who follow this route find themselves in a quick race to the bottom.

With this strategy, you won’t earn enough to sustain yourself, and you will end up slaving all the time to make ends up, taking you further away from the freedom you were seeking by becoming a freelancer.

In addition, clients know that they get what they pay for. Good clients avoid cheap freelancers because they know the quality of work will be cheap as well. This is why freelancers who try to compete based on price end up with the worst clients who are trying to get the most for least.

The best clients who value your work are not primarily looking for a good deal. They are looking for a competent freelancer who will do what they want and do it well. They have no problem paying high prices to get the quality of work they want.

By pricing yourself too low, you are basically signaling to these clients that you are not a high quality freelancer.

Look at it this way, if you went to buy an iPhone X and found one going for $250, would you buy it?

At that price, you would assume it’s a knock off and leave it. The same counts for your work. This does not mean that you should charge an insanely high figure for your services either. Your freelance rate should not be about how much money you can get from the client.

It should be about how much value you can offer your clients. The quality of your work should be able to justify whatever amount you decide to charge for your services.


There are no hard and fast rules about how to figure out exactly what to charge for your freelance work. The best approach is to have flexible rates depending on your client and their project.

There is nothing wrong with charging different rates to different clients.

However, before you answer the question “how much do you charge for your services?” make sure that you have considered all the factors discussed above.

Finally, you should not be afraid to experiment a bit until you figure out a price point that works best for you and your clients.

How to Figure Out Exactly What to Charge for Your Freelance Work

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