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  • Diana Schneidman

Freelancing and consulting: Overcoming pricing paralysis

There’s a nuisance out there called reality. It totally complicates rate setting for your freelance and consulting services.

The problem is most acute for those who are new to self-employment or for those technically in business for awhile but with few to no clients.

These people have no meaningful personal experience from which to work. The more they read on the internet, the more confused they become.

So they stall on setting rates.

While you don’t need to publish your rates on your website—in fact, I generally recommend against it—you must have a figure in your head to feel comfortable discussing your services with prospects.

If you don’t feel comfortable offering your services, you become paralyzed. Not only can’t you offer your services, but you stall on any marketing activity until you make your big decision.

The key to setting right rates

Common sense for the unemployed or underemployed freelancer / consultant can mean selecting a mid-range rate and going for it. Allowing pipe-dream prices or ultra-low rates to substitute for judgment can paralyze you and prevent you from marketing your services effectively.

Charge what we are worth

We should all be filled to the brim with self-confidence, charging “what we are worth” with ease and conviction. Apparently everyone else on the internet is doing it without hesitation. Why are we the only ones hanging back?

For starters, it’s because we didn’t play grade-school soccer in California and we’re kind of trophy deprived.

But it is more than that. Reality whispers in our ear: that number we are supposed to state with confidence and the project prices derived from that initial figure are too high.

Charge ridiculously low rates

On the other hand, there is a temptation to go with absurdly low rates. It’s easy to find sites where you can apply for such work, and as long as you are paid something, you can tell yourself that you are a professional.

It may be better than doing nothing at all. It may give some initial experience in doing the work. It may be fun if you don’t need the money. On some websites, it may even give positive evaluations that can lead to better paying assignments in the future.

Why not charge in the middle range?

A good common sense route is to start by charging somewhere in the middle. Then, as you get paying clients at those rates, ask for somewhat higher fees.

How to raise the fees on existing clients

Good clients deserve careful, considerate handling, especially advance warning so they can make alternate plans if they desire. They usually will accept modest fee increases if your work is reliable and excellent.

Still, it is easier to raise rates with new clients than existing ones, and this is the starting place for increases. If you already have work, raising the rates for new prospects is simple. Just use your new number in your calculations.

The very lowest-paying clients are the most difficult to raise rates on. They are accustomed to seeking bargain-basement workers, testing people out and fixing the work themselves while they continue to try out additional people. They found you through this trial and error process, and they’ll continue with it until they find someone else who works out for awhile.

A second argument against charging too little

The first argument is obvious. If you charge exceptionally low rates, you will not earn enough money to survive. You will be too busy with low-paying work to market yourself for higher rates.

The second argument is that you may get so angry that you explode and quit.

Happened to me.

I never walk off the job . . . except once.

A long story but here’s a summary. A daily, somewhat tedious assignment turned truly exploitative. It was a situation that could not have been limited by contract because it was a matter of degree, not a new responsibility. A frustrating situation that was dumped on me because it was convenient to dump it on me with no additional pay, assistance or even sympathy.

I finished an especially horrible day of work and resigned that very day, effective immediately.

What is an in-the-middle hourly rate?

Obviously, it depends.

It depends on the service you offer, the industry in which you work, the size of clients’ businesses, measurable value, etc.

Still, I like to see actual numbers so I’ll throw some out for your consideration.

Low: $15 per hour and below. Got this from McDonald’s-worker demonstrations. If it’s too low for fast-food employees, it’s pretty darn low.

High: $100 and up. Truly an arbitrary figure. Notice that I didn’t say “too high.” I’m simply calling it a pretty good rate. But for some work it may be insultingly low.

In the middle: Probably $50 or $60.

Note: Many freelancers / consultants charge a flat rate for the project rather than quoting an hourly rate. That’s fine. Still, it is often helpful to work with an hourly rate in mind when calculating the project fee.

So pick a mid-range rate and go for it.

Originally posted 6-22-15

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