Estimating what your effort is worth is definitely not an easy task and there are many things to bear in mind when putting a price on your services.

Therefore, like with any important decision, we need to go back to the basics before we make any big moves. If you’re asking yourself, “What are the basics again?” don’t sweat it. media update's Lara Smit is filling you in on all the fundamentals right here.

Freelancers, let's get pennywise:

Unique selling points

Your unique selling points refer to any specialised skills, expertise or offerings that you have that help you stand out from the crowd. This can include attributes like your:
  • personality
  • experience in a particular area or niche field
  • turn-around time
  • qualifications
  • clientele, and
  • personalised services.
How does this affect your pricing?

As a freelancer, your unique selling points give your services added value and are exclusive, allowing you to charge more than your competitors. Therefore, when you are determining your price, it is essential to consider how much your services are worth when taking your unique selling points into account.

When evaluating your unique selling points and how they influence your pricing, it's also important to consider whether you would like to stand out compared to your competitors in relation to the standard of your services or their affordability.

Competitor / Industry pricing

When calculating how much you should charge, it is also crucial that you consider how much your competitors are charging for the same services. This will give you a good ballpark figure, which you can refer back to or that can set the groundwork for determining your prices.

These figures will also give you an idea of what monetary value your competitors have assigned to their unique selling points and whether these attributes have placed them at the bottom end of the market — or if it's helping them make that bacon.

A great place to look to review a range of industry prices in the freelancing field is The South African Freelancer’s Association.

Target market

Another important aspect to consider when setting your price is who your target market is. Why?

Well, answering this question will give you an idea of how price sensitive they are. For example, if you aim to do freelance work for small businesses, this market will probably be more price-sensitive than large companies.

Pricing strategy

Once you have considered how the above factors influence how much you will charge clients, you need to decide what pricing strategy you will use. There are two main pricing strategies that freelancers can implement:

1. Hourly pricing
2. Project-based pricing.

1. Hourly pricing
This pricing strategy involves charging clients based on the time you spend working on a project for them.

It is essential that when freelancers estimate how much time a project will take them that they factor in how much time it will take them to do all the added nitty gritty like:
  • performing research
  • sourcing materials
  • drafting
  • editing, and
  • any added time spent applying client changes after reviewing.

A big advantage of charging hourly rates is that the amount you are paid is directly linked to the time you spend working on a project. However, a disadvantage of this pricing strategy is that the faster you work, the less you get paid. Therefore, it is essential to take your experience and pace of work into account when setting your rate per hour.

2. Project-based pricing
In this pricing strategy, you don't charge a client based on the hours spent on a project. Instead, you evaluate your price according to the entire project. This price is often determined by considering the project's end result and the time it will take you.

When determining what price you will charge for a project, you can consider whether you would like to implement a cost-plus pricing or value-based pricing strategy.

Cost-plus pricing refers to when you value your services in relation to the end result and add a profit margin to this price. Value-based pricing, on the other hand, refers to when you evaluate how much your services will cost with a consideration of your unique selling points — such as your experience and skills.

Fixed and variable costs

When drawing up a price plan, you should always factor in your expenses so that you at least take home a bit after making all your payments. These expenses include things like:
  • electricity
  • rent
  • marketing
  • equipment
  • software subscriptions
  • insurance
  • tax services, and
  • WiFi or data.

Basically, anything you have to pay to do your freelance work should be considered when you formulate your prices. This will ensure that you always profit from your work and don't just make ends meet.

What else do you think freelancers should keep in mind when figuring out their prices? Let us know in the comments section below.

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Still not completely sure how much you should charge as a freelancer? Then be sure to check out our article, The South African freelancer conundrum: How much do I charge?
*Image courtesy of Canva