How To Price Your Services At The Startup Phase

Wave Your Salary (and Benefits) Goodbye!

If you are just starting out as a freelancer, you are probably wondering how to price your services. When you worked for Big Box Inc., you received a salary, benefits, and a fixed number of paid vacation days. Now you need to find a price point, either an hourly rate or a flat fee, that will provide you with enough cash to pay your bills, to manage your business, and, hopefully, to put something away for the future.

Determining your rate of pay is in one sense a very personal decision. Your reputation as a solopreneur will be based in part upon what customers and clients perceive as your value. If you have a solid reputation and valuable experience in your field, then you might be able to charge more for your services as a freelancer.


But if are willing to accept a lower rate of pay, then your “perceived value” might increase if you can convince potential clients that they are getting a great deal for the money. In the early stages of your freelance career, this can be the best way to attract new business, to build relationships, and to garner goodwill.

And gradually, you can begin to raise your prices once you have established a reputation for delivering contracts that satisfy demanding customers.

On the other hand, you may not have much choice when it comes to pricing your services. The limitations of your industry, the market, what your competitors charge, your region, and your level of experience will define a relatively narrow window of acceptable rates. And even after you have decided on a rate of pay, it might be in your best interest to bid below your “settled” rate in order to win a contract.

Where do I fit in?

In order to determine how much to charge and where you fall on the freelance pay scale, ask yourself these three questions.

What Is My Expertise and Experience Level?

Yes, you’ve left the corporate world behind, but that does not mean that you need to start again from square one. Your experience is your most valuable asset. Do some research to determine your level of expertise relative to other freelancers in your industry.

If you feel that your previous experiences place you above the majority of your competitors, then don’t be afraid to ask for more money.

Do I Have Any Special Skills or Knowledge?

When you are pricing your services, focus on the on the positive qualities that make up your unique skill set. Chances are, as a freelancer you will work on a wide range projects. New assignments may fall far outside your sphere of experience, but every solopreneur possesses a set of skills that makes them distinctly attractive to employers. Focus on your strengths.

Am I Willing to Do More For Less?

Are you willing to do jobs that other freelancers in your industry might avoid? Are you a full-service contractor who can manage multiple tasks and multiple projects at the same time? Can you offer anything that will help your customer save money? Especially in the beginning, you will benefit greatly if you can offer something that sets you apart from other, more experienced freelancers in your area.

What is the competition doing?

Simply put, it is unlikely, especially at the beginning of your venture, that you will, or should, charge more than the going rate for the competition. After all, they have experience and they charge X. Without experience, you probably cannot charge X+.

Choosing between flat fees or hourly rates

Another of the most difficult decisions that a new freelancer has to make is whether to bid with a flat fee, also known as a project fee, or to charge an hourly rate. An hourly rate might look more attractive to potential clients (even though the total charges are the same, customers who find your $30 hourly fee perfectly reasonable might balk at your bid of $3,000 for a project that will take at least 100 hours to complete), but an hourly rate can be hassle for freelancers. It can be difficult to determine the number of hours you will need to finish a project.

Furthermore, as you gain experience and learn to work more efficiently, you will essentially be punishing yourself for speed and expertise unless you raise your rates with every new project.

In the end, your fee should reflect your total value to a customer—the product of your expertise, your level of professionalism, your talent, and your reputation. If you believe that you are being underpaid, and therefore undervalued, then you should never be afraid to ask for more. Clients respect a freelancer who is assured of his or her worth, and demands a price that reflects the “total value” of the service.

Steve Strauss is a senior small business columnist at USA TODAY and author of 15 books, including The Small Business Bible.

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