Of all the things involved in setting up a business as a freelance digital marketer, working out pricing that will net you a profit but won’t send potential clients running for the hills is often the trickiest of the lot. So how do you come up with that elusive figure?
Four Types of Pricing Options to Consider
1. Hourly Rate
Simple! Put a dollar figure on an hour of work – your rate x the number of hours you’ve worked. This is a fair way to get paid for the work you’ve done, but some clients get put off by hourly rates as they think they may overpay. As you get more efficient in your work, you may also lose out by using an hourly rate as you’ll get the job done quicker. An hourly rate can’t disguise that but a project fee can. Hourly rates are usually good for a new freelancer digital marketer who is still getting established. It can also be good for those working with clients whose workload varies from month to month.
2. Per Project Fee
Instead of charging by the hour, you decide on a fee for the whole project and charge that as an agreed rate. The rate is fixed no matter how much time it ends up taking you. If you choose this method, make sure you have a good idea of the complexity and scope of the project and keep good control of it so it doesn’t end up taking longer than planned. It’s a good idea to agree on a contract and scope of work before starting the project so you know what’s expected. Project rates work well for an established freelancer digital marketer who’s more efficient in their tasks and knows roughly how much time they take to do things. It’s also easier to sell the value you offer when you have more experience and examples under your belt!
3. Set Packages or Fixed Fee
This concept puts work into packages with fixed prices, or charge a fixed price for each week or month of work. For example, you might offer 3 blog posts and 5 social media posts for a package price. You might also offer a certain number of social media posts and one results report each month. Packages are good if you know you can complete tasks efficiently. They can also be a good way to attract new clients because they can clearly see what you’re offering for the money. Fixed fees can be useful for planning because you know how much money will be coming in and what you need to produce each month.
4. Retainers
In this scenario, you agree a set number of hours or projects per month for a set fee with the client. You agree to set aside the required time each month and they agree to pay you the fee each month regardless of whether they use any or all of the assigned workload.
Things to Think About When Setting Your Rates
- Are you reliant on the income for bills etc or is it extra money?
- Do you need to have regular income or can it ebb and flow?
- What sort of clients are you aiming to work with and what are their budgets likely to be?
- How efficient are you at what you do?
- How happy are you in setting the scope of a project and keeping the reins on it?
- What are other people in your field and location charging?
Key Steps in Setting Your Prices
Before you set a price you need to think about what your minimum income and your desired income is.
- Minimum income is what you need to earn in a year to cover all your expenses.
- Desired income is how much you’d ideally like to earn – that will cover expenses and give you a bit extra for spending or saving.
Remember that as a freelancer or contractor, you won’t get sick pay or annual leave, so you want to factor in some additional income to cover days when you may not want to or be able to work. You’ll also need to consider things like insurance, additional equipment and utilities to do your job at home.
Be Realistic
You need to consider how many hours you can realistically work each week or month. Think about this carefully and don’t overcommit yourself.
When you know your income and your available hours you can calculate what your hourly rate needs to be to achieve your desired income in the time available. You can work out two figures here if you like – the minimum hourly rate you need to cover your bills and the hourly rate you need to achieve what you’d like to earn each year.
If you’re going to charge hourly, then use this rate when you quote.
Your Time is Worth Something
To charge project fees or package rates, you need to consider how much time each project or package is likely to take. Then come up with a total figure using your hourly rate. Your project rate should include time for all parts of the project and some extra as an allowance in case things change.
If you’re registered for GST, clearly state whether your price includes or excludes this. If it is exclusive then list this separately on your invoice.
Once you’ve set rates for yourself, decide how open to be about them. It can be help to show clients upfront how much you charge. Listing them on your website is a good idea, but high prices can put some clients off before you’ve had a chance to talk to them and convince them you’re worth it. Conversely, low prices can put some people off because they equate them with low quality.
Another reason for not showing your prices is if you work for a variety of clients and you are happy to negotiate different prices with different people.
Prove Your Value
One of the keys to setting any price as a freelance digital marketer, whether it’s hourly or project-based, is to clearly articulate the value you are bringing to the client. Get them to focus on the value of your expertise and experience and the results you will bring.
Lastly, remember rates aren’t set in stone. You can review them each year, or even review them before you take on a new client if you think you’ve gained experience since last time and want to raise them. Or you might consider a one off lower rate because you really want to work with a client.
If you’d like more great tips and a solid grounding to set you up as a freelance digital marketer, take a look at our courses run by expert tutors.
