One of the challenging parts of being a freelancer is how to set up a pricing structure.
A search on Google shows a thousand results that can be overwhelming.
There are so many ways to go about this. But first, let us look at several factors that could affect how you set your prices.
First off, your level of experience is the most important to consider when setting your rates.
Think of how many years you have been honing your skills in your field, including the number of certifications and other training. All this should be reflected in the prices you quote.
Of course, you incur expenses as you work. Some of the expenditures you might want to consider are utilities, software subscriptions, rent, taxes, legal and accounting fees, equipment, etc.
When you add these charges to your overall rate, you can cover your overhead costs.
One way to figure out a good rate for your services is to ask your fellow remote workers how much they charge for theirs.
However, if you don’t have access to a wide network of freelancers, research will have to do. Look into blogs with freelancer-focused content to get an idea of how much to charge.
While many types of pricing structures exist, we have listed the three most commonly used ones. Let’s discuss each of them.
Time-based Pricing Structure
The most common pricing structure is hourly as it is the most straightforward. You charge your client for the number of hours you work in a day.
How do you set an appropriate minimum hourly rate? It can be based on the factors (experience, expenses, and industry standards) previously discussed.
When it comes to bigger undertakings, a time-based pricing structure can work in your favor. This is especially true when you have no idea of how long it will take to complete a project.
This pricing model is also more attractive to clients who may be wary of paying a high cost upfront.
However, one of the disadvantages of charging by the hour is that you have to do your own timekeeping. Clients can potentially dispute your work hours otherwise. Thus, to cover your bases, you can use monitoring software that both you and your client can trust.
Project-based Pricing Structure
Also known as fixed pricing, this essentially bills the client for the full cost of the project.
This pricing structure also best works for tasks that rely on the results instead of the hours worked.
Furthermore, this model may be one of the more lucrative options.
Still, a project-based pricing structure can have its pitfalls. One of which is the lack of incentive to boost your productivity. After all, the client pays a fixed amount regardless of whether you complete the project early or not.
Value-based Pricing Structure
This type of pricing structure may be the trickiest out of all three.
With a value-based pricing structure, you are charging the client depending on the potential profits you can produce for them.
A more concrete example of this pricing structure would be in cases where some tasks may take you only a couple of hours to complete compared to a beginner who may take longer.
Yet, it does not mean you will only be paid for the hours you rendered. Your price should take into account the years it took for you to hone your expertise and get things done fast and well.
Regardless of which pricing structure you choose, never lowball yourself. Make sure you understand the value you bring to the table. It also helps to be confident when marketing your skills to your potential clients.
On that note, if you are an experienced freelancer looking to work for Australian clients, consider joining Remote Staff’s extensive pool of candidates.
Remote Staff has been in the industry for over 15 years now and has helped numerous remote workers build their careers. Are you interested to know more? Check out our job postings and register with us today!