Freelancer's Guide Series Part 3: Pricing

Now we come to the subject that most freelancers find difficult: the pricing. There's always this feeling of dread that accompanies the quintessential question, "How much should I charge for my work?"

If you charge too low, you feel like you're cheating yourself and the value of your work. Meanwhile, if you charge too high, you risk losing your client and source of income. But even with the looming reality of this risk, it doesn't mean you should be afraid of raising your rates. What should always be your focus on pricing is to find a good middle ground between you and your client. Find that price point where you will be able to earn a decent pay and yet is still considered value-for-money by your client.

We know that is not always the case. The scales somehow usually tip to your disadvantage, which is why we think it's important to study the pricing schemes available to ensure that your work hours are fairly compensated.

Hourly or Fixed?

In freelancing, there are two charging schemes you can explore: hourly or fixed. While each schemes have their own advocates, we will lay down the pros and cons of both for you so that you can make an informed decision.

Hourly

Hourly pricing means each hour that you spend working on a project will charge the client a certain amount, say, $25 per hour.

A good thing about hourly charging is that you're sure to get paid for each hour that you spent on a project. In the end, you'll feel that your time was more or less compensated, unless you charged way too low. Also, if you get paid by the hour, you get to exercise your judgement on your work pace. Extra work hours are also more welcome since you'll get paid anyway.

However, one drawback in hourly pricing is that a number of clients are easily intimidated with hourly rates since they can't immediately see the total amount they have to pay. At certain situations, it also limits your maximum earning potential per day to the number of hours you work. Unless you don't plan on sleeping ever and tying yourself to your computer for life. But don't let this discourage you. There are ways to work around these roadblocks. It all boils down to your estimating talents. If you think a certain project will take you longer to complete and you’re anticipating revisions from the client, then hourly might be a good option.

Fixed

Fixed pricing is when you agree on a price beforehand with the client covering the entire project. Basically, no matter how many hours you spend on completing an assignment, whether you take longer or shorter, you'll get the agreed upon pay.

For freelancers, this scheme is highly desirable because the earning potential per day is higher. You learn to work fast and efficiently without sacrificing quality because you don't feel the looming hourly pressure. You're more relaxed hence more productive.

But, like hourly pricing, the fixed payment scheme has its own challenges. For example, you underestimated the amount of work to be done and had to do overtime. If the client is not flexible on the terms, then you'll only get the amount promised and a thank you for the extra hours. Another scenario is if you didn't consider the probable changes in scope that might lead to more work. Fixed pricing needs an extra amount of analysis based on the type of project and the possible work ahead. Sometimes freelancers tend to over simplify their estimates just to bag that job without thinking ahead. Don’t fall into that trap. As they say, think before you leap.

Our Verdict

If you noticed, the examples and scenarios presented always leaves the decision point in pricing to your ability to estimate your own output. Again, in both schemes, there's "good" and there's "not so good." What has always worked for us in Anywhere Creative is a healthy mix of both. Instead of fixating on which scheme will make more money with less work time, try to look at your work efficiency. Examine the pace of your work and the quality of your output based on feedback. In the end, this will help you judge when to charge hourly or fixed in order to ensure that you get the value of your work.