How much to charge for a project can be a daunting question for many freelancers. It is one of the crucial issues when submitting a proposal to a client as it can make or break a deal. There is a balance to be struck when charging for a project and this article will try to give you some tips to do just that.
Standard Rate/ Market Rate
As a freelancer you should always have standard rates that you can provide to people enquiring about your services. This will give people interested in hiring you a sense of how much you charge and will save you time in the long run by screening out “bargain hunters” … unless you like to work for nothing, or close to nothing.
As you set your standard rate, take into consideration your level of expertise, how much you think your time is worth, your fixed costs, but also what the market rate for the services that you provide is. Other circumstantial factors may include the economy, competition in your industry, etc.
One of the most important factors when charging a client relates to the work that you will be doing for that client. That, in turn, depends on the specifics of the project that you will be asked to undertake. Before giving out a quote, make sure to ask enough questions to understand the scope of the project and foresee how much time and effort you will need to spend on it.
In addition to the energy that you will spend working on the project, you also have to factor in fixed and variable costs that you will need to incur to bring the project to completion. It may be a good idea to ask the client who should bear some of the costs associated with the project.
As you discuss this with the client, you can also venture in asking whether he or she has a budget in mind. This way, you can tailor or modify the scope of the project to meet that budget.
How Large Is the Company?
Company size can be important in determining how much to charge a client. A larger company usually will not flinch at higher fees as long as you have the expertise they need. With those clients, your effort might be better spent impressing them with your credentials and worrying less about your rate. Smaller companies, on the other hand, are usually on a limited budget and will be more stringent in terms of what they can afford.
Hourly or Fixed Rate?
Review the scope of the project and determine how long it will take you to complete each phase. Break down the project into different components and then decide what you will charge for each. This way if there are extra costs involved you will not underprice the project. Multiply the total number of hours by your standard hourly rate and then charge a flat fee for the project.
You can also charge hourly, depending on what the client prefers. Normally, if you charge hourly, however, the client will monitor you more closely to ensure that you are not wasting your time. Even if you charge hourly, that doesn’t prevent you from giving the client a sense of how much time you expect it will take you to complete each phase of the project.
Network with Other Freelancers
Talk to other freelancers that are working in your industry to have a sense of what they consider when charging their clients. This is a good way to learn good practices from others which you can incorporate in your own decision-making process.
What You Stand to Gain
As you undertake a project, you may stand to gain more than just how much you will charge the client. For instance:
- If you know that the client has a steady flow of projects, you stand to gain a relationship with that client.
- If you’ve been looking to gain practical experience in a new line of work, you stand to gain the opportunity to build your portfolio.
- If you know that the project will attract a lot of exposure, you stand to gain publicity from the project.
The above are real considerations that you should factor in when you discuss work with a potential client. Looking at your freelancing business from a strategic standpoint and aiming for long-term benefits will strengthen your standing as a freelancer.
Last but not least, you have to be mindful of how much your competitors will bid for a project and keep your quote within an acceptable range. If the client wants you to justify your rate, you need to be able to explain how you came up with your fee structure, including how your fee structure compares to that of others competing for the same project.
There is no magic formula when it comes to determining what rate to charge for a project. Even experienced freelancers make mistakes when they submit a quote. It really comes down to how much you think your time is worth, what will land you the project and what you stand to gain from the project.
by John Sylo