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It's possibly the most baffling question that faces new freelancers: What in the heck am I supposed to charge for my work?
You don't have a sense of market rates yet. Your prospect doesn't want to tell you their budget. Figuring out what to charge for your freelance services is intimidating.
If you've been freelancing for content mills, or on bidding sites, or responding to Craigslist ads, you've probably seen loads of offers at rates that wouldn't support a hamster. It's confusing to know what fees are appropriate for what type of gig.
You don't want to bid too low and essentially rip yourself off. But you don't want to bid too high and lose the gig, either.
Maybe you have a dim sense as a new freelancer that you should charge a bit less than experienced pros in your field. But how much less?
The way to solve this pay-rate question is simple: research. There are tools and resources out there you can use to get a good idea of what freelancers in your line of work charge. Here are seven of the best types of resources for discovering what freelancers are getting paid:
1. Market Guides
Books such as The Writer's Market and The Photographer's Market are doorstop-sized compendiums of freelance markets in their particular niche, complete with info on what they pay. These are quality sources because the pay data is disclosed by the editors of those markets, so it's dead-on accurate.
I'm most familiar with The Writer's Market, which publishes a big "What to Charge" guide at the front of each edition, based on the publication's own survey data. Two other common sources of pay information for writers are the Wooden Horse Magazine Database and Media Bistro's How to Pitch guides. These are all resources you'll need to pay for, but this kind of data can save you tons of time pitching low-paying markets, and help you ask for the pay you deserve.
2. Survey Data
Be on the lookout for any recently released studies of what freelancers make. A great recent example is the International Freelancers Academy's 2012 Freelance Industry Report -- more than 70 pages of detailed data on rates for freelancers of all types.
For copywriters, coach Chris Marlow has a detailed survey down to types of projects and going rates. Her report, "What Business Writers Earn: A Statistical Analysis of Yearly Income," is free for subscribers to her site.
For designers and visual creatives, Coroflot has a Design Salary Guide resource section online. It collects up to date survey data on a few key points, such as common hourly rates per state for freelancers.
New studies like these come out now and again -- keep your eyes peeled for fresh data that might update your knowledge of going rates.
3. Hourly Rate Calculators
Doing these calculations can be a real wake-up call to charge more
Another approach is to be less worried about market forces and what others are charging, and to simply figure out what you need to earn to pay your bills -- and charge that. Right here on the Switch, for instance, we've got a handy rate calculator where you can plug in your business and personal expenses, number of available billable hours, and income you want to, which will be used to calculate the hourly rate you need to make.
We recently reviewed MyPrice iPhone app as well, which has a few more handy options for calculating your freelance expenses and setting your rate. If you own an iPhone, then this is an app well worth checking out. It's currently free to download.
Doing these calculations can be a real wake-up call to charge more. I'm constantly meeting freelancers who explain to me that they're excited to be getting $20 an hour, because they used to make minimum wage in their day job.
Unfortunately, while that may sound like you're doing better, really you're not. The many expenses you have to cover yourself as a freelancer -- equipment, utilities, healthcare, and so on -- generally mean you need to earn a rate many times higher than you might need as a staffer.
Remember to calculate all the new expenses you have to cover as a freelancer when you use those calculators, to come up with an hourly rate that will truly give you the earnings you need to support the lifestyle you want.
4. Search Engines
Simple search-engine research may not get you exact rates for a market or a type of work, but you'd be surprised what you can turn up. One thing you can try is to search on "<your prospect name> sucks" or "pay rates at <prospect name>" and see what stories or complaints you might turn up.
If anyone's venting, they may complain about the low pay rates, too. Seeing this sort of thing in a blog post is always a red flag that this prospect is a low-payer (and maybe also the kind of difficult client you don't want). If you're considering working for any major company, it's worth Googling around and seeing what might be out there.
5. Freelancer Networking Groups (Online and Off)
Social media is a real boon for freelancers looking to check rates. On the writer side, I see these questions asked all the time on LinkedIn Editors & Writers, and usually other freelance pros will offer several useful answers. There are plenty of similar groups on LinkedIn for photographers, coders, designers, and other freelance types, too -- do a quick search and you'll turn up many.
Most towns have quite a freelancer grapevine, I’ve found, and you may well run into freelancers who’ve worked for the exact client before that you’re targeting now.
You can also ask freelance rate questions on social-media question forums such as LinkedIn Answers, Quora, Yahoo! Answers and many others to see who might respond. Quora can be a gold mine for any technical freelancers...I'm always surprised by the caliber of responses you can get on there from techies.
Using social media allows you to tap the knowledge of freelancers in your niche all over the country and the world, so you've got a good shot at getting some useful advice.
If you're dealing with local clients -- and most new freelancers are -- it really pays to know a few other locally based freelancers in your niche, too. Most towns have quite a freelancer grapevine, I've found, and you may well run into freelancers who've worked for the exact client before that you're targeting now.
Barring that, they'll have a sense of what local markets pay. How low do small businesses want you to go? What kind of rates will the bigger industries pay you? Who takes forever to send a check? These are questions your local network can best answer about local clients.
Look into locally focused online and in-person networking groups in your town to start connecting with other freelancers. For instance, I've hit live events put on by Media Bistro in my city to connect with other freelance writers. Don't view other freelancers as the competition, but as part of your network. Remember, they could refer you gigs, too.
6. Books on Freelancing
Not all the rate-setting information is floating around online. Don't overlook books such as What to Charge: Pricing Strategies for Freelancers and Consultants by Laurie Lewis. Our sister site Rockable Press also has the helpful book Freelance Confidential that pulls together freelance pricing data and professional advice on how to set your rates.
Search Amazon and see what new releases might help you set your freelance rates.
7. Ask the Prospect
There's a lot of worrying and wondering that goes on when new freelancers prepare a project bid. Many never consider the obvious: Why not just ask the client what they'll pay? You'll be surprised how many will give you at least a rough ballpark of what their budget is for the project.
Setting Your Freelance Rate
In the end, remember that there is no one "going rate" for anything in freelancing. There's just what you want to earn and what the market will bear. Where those two meet, you have a gig.
It's all negotiable -- so don't be afraid to ask for more. You'll rarely if ever lose a gig for simply inquiring if there's wiggle room in the budget.
If all else fails and you discover after starting a freelance gig that you bid too low, just chalk it up to experience. Look to raise your rates with that client as soon as you can, and bid higher on the next gig.
Got another great resource for finding rates? Post it in the comments and add it to our list.