When you’re just starting out as a freelancer, it can be difficult to know how to set your prices, or what action to take next. How do you go from interested client to a signed deal?
In this tutorial, learn effective methods for developing your price points, techniques for landing warm leads, and how to pitch your freelance services successfully. Then jump into details on how to write a winning proposal, along with tips on closing a deal. Put this step by step process into action, and you're on your way to working for yourself—experiencing more freedom and flexibility every day in your freelance business.
1. Set Your Prices
Traditionally, freelancers charge by the hour. They total up their business and life expenses and divide that number by how many hours they are willing to work.
If you choose to price your services out hourly, then start by analyzing the factors that go into determining your rate.
Some benefits of pricing by the hour include:
- Clients are accustomed to receiving quotes that cover a time estimate and hourly rate.
- More freelancers charge by the hour so it is easier to research the competition’s rates.
There are a few setbacks, however, to pricing by the hour:
- You put a cap on your maximum earning potential because there are only so many hours you can work per day.
- If you take longer than you estimate, your clients may question your motives; if you take less time than you estimate, you make less money.
- You are more likely to land clients who shop around for the best price and compare your services to your competitor’s.
- Your clients have to make a business decision (“do I want to pay for 15 minutes?”) every time they want to give you a call.
An alternative to hourly pricing is to offer products, which are services, properly packaged.
An example of a productized service is Kudu. They package their services, AdWords consulting, in four price tiers based on the client’s AdWords budget. When a new client signs up, they are paired with a consultant who provides the services.
Another example is Correlation by Jane Portman. She offers monthly design services at a fixed price—once a month, she has a Skype call with the client and goes over goals. Then she puts together deliverables within a day. If the design services are outside of one day’s worth of design work, she offers two options: postpone the task until the next month, or book an extra day of her work (at her normal daily rate, depending on availability).
The benefits of productized pricing include:
- The focus is on the value of the services versus the cost, on the results instead of the time.
- You can more easily set yourself apart from the competition by putting together specific packages based on your exact target market’s needs.
- You can manage scope-creep very easily.
If you decide to put together productized services, you can decide what to include (and what not to include) by interviewing the types of client you want. Drill into their pain points, consider what are the most frequently asked-for services? Then bundle them together and test pricing.
However you choose to set your prices, the next step is to pitch your services (and their cost).
2. Land Warm Leads
It is best to pitch your services to warm leads, which are potential clients who are familiar with you and what you do. Warm leads have already considered purchasing your services, and simply need more information before deciding to buy.
An added benefit of warm leads is that you typically do not have to “sell” them very hard. In most cases, they have already connected the dots between their problem and how you can solve the problem.
Warm leads have generally found you via your online presence or they have been told about you and your services by a mutual connection.
As a result, you want to:
- Maximize your online presence with a website, social media, blogging, and a great portfolio.
- Expand your network by building relationships with influential people who can open doors to new leads and growth opportunities.
Both these activities will increase your number of warm leads, allowing you to build your freelancing business without hard selling or cold calling.
3. Pitch Your Services
Once you have landed a warm lead, you want to first find out what their problem is, and then discuss how you can solve their problem.
To set up this conversation, ask for a 30-minute phone call or in-person meeting. Prepare questions ahead of time by researching the lead’s business and identifying ways you can help them. While they may have specific needs they want to discuss, you can also present opportunities that you’ve found.
Analyze your client’s business, think of ways you will prove your worth, build a strong case for your rates, and prepare for possible objections.
Your two goals in this discussion are to:
- Have your potential client feel comfortable and happy with their choice to work with you.
- Get a verbal or written “yes” that they want to work with you.
It’s up to you whether to discuss the investment during this discussion or wait until you deliver a proposal. Focus on your two goals and use your client’s verbal or written “yes” as the signal to move forward.
4. Write A Proposal
The goal of a written proposal is to present: the client’s problem, your recommended solution, your fee, and the project scope or schedule.
Generally, you’ll want to deliver this information in four sections:
Section 1 - Objectives
The objectives are what you will achieve through the project. Describe the client’s problem, needs, and goals. Also, detail your recommended solutions.
Section 2 - Value
Describe the value that you will provide to the client’s business. For example, you may be giving them improved technology or design which will their increase market competitiveness and therefore impact the bottom line by increasing their revenue.
You can go into detail around what makes your solution unique from your competitor’s, but don’t focus too much on selling. By the time you’ve gotten to the proposal, you’ve already received a verbal commitment. The proposal is for providing logistical details, not marketing materials.
Section 3 - Options, Timeline, and Scope
Depending on how you’ve decided to structure your services—as standalone, hourly services or as productized services, put together a choice of options. Give them increasing value and price.
Include a timeline and scope for each option. Be specific about both by including due dates for every deliverable and putting limitations around what those deliverables include. This section is important for avoiding scope-creep, which is when clients make extraneous demands that sap your time and energy.
Section 4 - Terms and Agreement
Lay out your terms, including pricing for each option and how you will accept payment.
Ask for a deposit of 50% up front with the remainder due on project completion. This deposit will cover any up front expenses you'll incur as the service provider. It will also decrease the chances that the client will cut and run without paying you at all. You can offer an optional 10% off discount if the client pays for the entire project up front, as well.
Don’t worry about getting into the legal details, as that will be covered in the contract. For now, just disclose how and when you expect to be paid.
Include space for the signatures: both you and your client will sign and date the document.
5. Deliver The Proposal
Email your proposal to your client. Make it as easy as possible for your client to sign.
Keep your email short and simple, letting the client know that you will follow up in a certain timeframe if you don’t hear back beforehand (typically four to five business days or a week).
Because you have already gotten a verbal or written agreement from the client, there should be minimal objections to your proposal. If there are questions, keep track of them. This is so you can further streamline your proposal process next time by including a link to a FAQ (Frequently Asked Questions) page on your website.
Again, focus on keeping this step simple and streamlined, and make it as easy as possible for the client to simply sign and say yes.
6. Close The Deal
Once you receive the signed proposal, it’s time to send your client an official contract.
This document can include payment terms, scope, and information around intellectual property, cancellations, and liabilities. For more information on what a contract can include, read this post on Setting Up Contracts for Your Freelance Work and this one on 8 Contract Clauses You Should Never Freelance Without.
It is generally recommended that you get an attorney to write your contracts for you, but if you must save some money, you can always try purchasing a template from a site like RocketLawyer or LegalZoom and have an attorney modify the template specifically for your business.
After you’ve received the signed, official contract, invoice your client for the deposit! Then, congratulate yourself and start your freelancing project.
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