How to Set your Rates as a Freelancer
At the Fiscal Femme, our mission is to get women wealthy and an extremely important part of that equation is getting paid. With more and more of us going out on our own to freelance and run our own businesses, a big part of how much we earn is determined by what we charge for our services.
I was saddened but not surprised to see survey results that showed that female creative freelancers are charging 47% less than their male counterparts. The same survey showed that women were two times more likely to charge by the hour (instead of by project) and three times more likely to have a public rate sheet. Two things that result in earning 42% and 15% less, respectively.
The other frustrating piece of this is that our earnings tend to compound because we calculate price increases off of what we’re currently charging. That means the gap between men and women freelancers will grow as they get more experience.
Yes, I want to rile you up a bit because sometimes it takes us getting fed up to make the changes that may feel really uncomfortable to us. We want to be both deliberate and strategic about setting our rates and how we will increase them over time.
Here’s how to set your rates as a freelancer.
Compare rates with other freelancers.
I can’t tell you how valuable this has been for me and my business. If I don’t know the market rate for something, I’m most likely going to undervalue myself and undercharge. When you ask around, make sure to ask men as well as women. We now know there’s a 47% gap in rates, so we want to be charging what the men are!
Go after jobs you’re not quite qualified for.
An HBR study showed that men apply for jobs when they meet 60% of the qualifications. Women apply when they meet 100%. As scary (and exciting) as it can feel to get a job in a new area or where we’re not quite sure how we’re going to figure it all out, these are the jobs that stretch us, help us grow, and get us paid more (in the short and long-term). If someone offered you an interview or job opportunity, trust them. They are confident you are up for the job, so don’t let imposter syndrome hold you back.
Start charging by the project.
I alluded to this one earlier. Switching up how we charge can have a big impact on how much we earn.
Take down the rate sheet.
If you have your rate sheet up for public consumption, take it down. This makes it harder for us to increase our prices over time or adjust for projects that will be more time-intensive. This might deter some budget-conscious clients, but you want to attract clients that will pay for your expertise.
Work with your ideal clients.
A friend of mine shared a really impactful anecdote about this. His friend wanted to do website design work for larger companies, making more complex sites with bigger budgets. In order to get his name out there, he worked with some small companies on very simple websites that paid a fraction of the cost of his ideal projects. He did a great job and started to get referrals from his small company clients - yep, you guessed - to other small company clients with simple websites and small budgets. He had unknowingly built a referral business for the wrong type of client. .
Increase your rates regularly.
When you’re talking to other freelancers in your space (especially the male ones!) ask how they set their rates. How often are they increasing their rates? By how much? This will give you a good gauge for how others in your space are doing it. As you gain experience, your prices should reflect that. Don’t forget to account for inflation, as the cost of everything goes up each year. So not only do we want to account for our value to our clients, we want to take inflation into account as well.
Practice negotiating.
Results from the survey showed that women dreaded negotiating much more than men, who actually found it fun. Unfortunately, as someone setting our own rates and interacting with clients, negotiating is going to be part of the game if we are going to earn what we deserve. Remain clear of your value and what you bring to the table. It can also be helpful to practice negotiating in small stakes situations in your everyday life. We often don’t realize it, but we get opportunities to negotiate every single day. When your friend says “What time should we meet?” or “Where should we go for dinner?,” that’s an opportunity to have an opinion and ask for what you want.
We might want to just focus on our craft, but in order to earn a living and get paid what we deserve for our work, we have to take ownership of the business as well. These tips can help you set your rates so you are earning as much as your peers (male and female!) and keep them going in the right direction over time.