3 Concepts Every Freelancer Must Understand to Price Their Services Well

Ah, yes. An age-old question here. How should you price your services as a freelancer? You’ve probably seen freelancers who make a lot of money, more than you ever thought was possible. You’ve probably also seen freelancers who are just scraping by, always complaining about working too much and making too little. The difference between the two comes down to how each one prices their services. Of course quality work and great relationships are important for long-term viability, but you’ll forever be limited by the price of your services. Let’s dive into three things to consider when pricing your services, so you can find a sustainable rate that makes you rich. 

Understand the Time 

First, you need to understand the time it takes to do what you do. This is what killed me when I started freelancing. I was so stoked to not have to be in an office from 9-5, that I never kept track of my time. After a few months, I wasn’t making as much as I needed, and I realized that I was working way more than 9-5. I was working nights, early mornings, weekends, holidays. 

My initial mistake came when I decided to undercut the market to be competitive. I called a few firms in my industry (I was managing social media accounts at the time), and asked for quotes. Then I took those numbers, slashed 40% off of them, and started pitching. Landing business was pretty easy with these low rates. But I had a hard time keeping it, because I was spread so thin. I didn’t stop to ask how long the work would take to do well, so I ended up working all the time and delivering poor work. 

If I could go back in time, I would have started by understanding how much time my tasks would take. Then, I would have divided my ideal monthly income by the hours my work would take, and priced my services that way. Even if I had only charged minimum wage, I would have made more than I did. If you don’t understand how much time your projects will take, you’ll end up working way too much for far too little. 

Understand the Value 

Second, you need to understand the value that your work brings to an organization. For an organization to survive, it needs to make money. If it’s not profitable, it’s only a matter of time until the funding runs out, and the organization closes its doors. With this principle mind, an organization must receive more value than it pays for in return from the freelancers it hires. If they hire a marketing freelancer who costs $2,500, but only delivers $1,500 worth of value, that’s unsustainable. Ideally, this company would be gaining $10,000-$25,000 worth of value from their $2,500 investment in a freelancer. 

So once you come to grips with the fact that a healthy business will profit 4x-10x of what you charge, that gives you a better idea of the value you provide to that business. I had a contract with a production company for a year and a half that delivered about 5x the value of what it cost them. After I did the math and realized this, I had all the confidence in the world to pitch a drastically higher rate. Over the course of one negotiation, I was able to double the rate of my contract and still deliver a quality return to the production company. 

Understand the Market 

Finally, you need to understand the market that you work in. It’s unlikely that you are a one-of-one. There are probably others who can do what you do. This means that you don’t have a monopoly on the market, so there is a cap to how much you can charge. If you go over that cap for too long, your clients will start to seek out other freelancers who can do what you do for cheaper. 

The principles of supply and demand are in effect here, and they fluctuate in real time. In 2015, my friend was one of the very few people in LA who was proficient with a drone. He made the investment in a DJI Phantom 2, and became a go-to vendor for big artists like G-Eazy and The Chainsmokers. By the end of 2017, DJI released their Mavic model, which was more accessible and affordable. Virtually every videographer had one in their bag by then, and my friend started losing business. The market got too saturated. 

Understanding the current state of the market is essential to pricing your services well. Keep your ear to the ground. Ask your network what they charge, and base your rates off of that. The worst thing you can be is ignorant of the market, because eventually, you’ll either be too expensive to get hired or too cheap to survive. 

If you can understand the time it takes to do a job, the value you bring to a company, and the current state of the market, you’ll have all the tools you need to price your services well. I hope this was helpful. For more resources on how to pitch these services, check out my free Photo + Video Pitch Deck Template.