Setting the right rate as a freelancer is a multifaceted undertaking. How do you know your worth? How do you know when to adjust your desired rate? What’s the best pricing approach? According to Wripple’s 2024 Team Up Survey, 18% of businesses believe the cost of talent is too low to be taken seriously, while 20% think it’s too high.  

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Clearly there is potential for misalignment between what freelancers think they should charge and what clients are willing to pay. This article offers a suggested approach to setting rates that narrows that gap.  

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Step 1:  Set your break-even rate

Every freelancer’s situation is different. Some are full-time solopreneurs; others are side hustlers looking to pick up extra cash for that dream vacation. Geography also plays a part. Covering costs in San Francisco or New York is not the same as living in Phoenix or Charlotte.  

Whatever the case, it’s helpful to start the process by setting a break-even rate that accounts for expected annual costs and available billable hours. Here’s how:

• Account for living and business expenses you need to cover on an annual basis.

• Determine the amount of time you have for billable hours. There are 2,080 hours in a year, but you won’t work 100% of those hours. Maybe you’re billable 70% of that time.

• Divide your total expenses by available hours to get a break-even rate.  For example, let’s say you have $70k in annual costs and you plan to bill 70% of your time (1,456 hours). That’s a break-even rate of $48.

This rate becomes your starting point. You will calibrate it based on other factors (see steps 2 & 3).  

Step 2:  Take stock of your experience and key selling propositions.

It’s crucial to identify all the skills and experience that set you apart as a freelancer.  Consider the following:  

• Specialized skills: Do you have in-demand, specialized skills or niche expertise? A clear example of an in-demand skill today is familiarity with AI.    

• Experience level and recognition: How many years of professional experience do you have in your field? Do you have any certifications or awards you’ve received over the years? Have you worked with major brands on high-profile projects?  

• Unique selling points: What sets you apart from others in your field? This could be a unique combination of factors. Maybe you have depth in multiple areas. Or perhaps you have the ability to both set strategy and drive deep into implementation?

Step 3:  Increase your break-even rate based on your experience and market rate insights.

Understanding what the market is charging is important for setting a competitive yet fair price for your services. Here are some helpful resources to understand what the market is paying for your services:

• Freelance Platforms. Platforms like Upwork, Wripple, Fiverr, and Freelancer provide insights into what others in your field are charging. Where accessible, check out profiles of freelancers with similar experience and skills to gauge a typical rate. For example, on Wripple, when a freelancer submits a proposal on a project, the platform shares what the average market rate is for the relevant service.  

• Industry Reports and Surveys. Several organizations and websites publish annual reports and surveys on freelance rates. Some notable sources include:
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  • Freelancers Union which provides insights into rates across various industries.
  • Payoneer’s Freelance Income Report which offers a global perspective on freelance earnings.
  • Thought Leadership. Platforms such as Upwork, Wripple, and Fiverr publish detailed data on freelancing trends and rates. ‍
• Professional Associations. Joining professional associations related to your field can be valuable. These organizations often conduct member surveys and publish rate guidelines. Examples include:
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  • ‍American Society of Journalists and Authors (ASJA) for writers ‍
  • Graphic Artists Guild for designers ‍
  • Freelancers Union for a broad range of freelance professions ‍
• Networking and Peer Discussions. Engage with other freelancers through online forums, social media groups, and local meetups. Websites like Reddit (r/freelance) and LinkedIn groups can be excellent resources for discussing rates with peers and getting real-world advice.   

• Job Boards and Service-Specific Sites. Examine job postings on sites like Indeed, Glassdoor, and specialized freelance job boards. These listings often mention budget ranges or hourly rates, providing a benchmark for what clients are willing to pay. Service-specific marketplaces, such as 99Designs for designers or WriterAccess for writers, also provide insights into current market rates.  

After gaining real-world insight into market rates for a freelancer with your capabilities and profile, you can determine how to mark up your base rate to be competitive and fair. For example, if your research shows that the average market rate for your services is around $63/hr, you could decide to mark up your base rate of $48/hr by 45% for a client rate of $70/hr because you are highly seasoned with deep experience in the field.

Step 4:  Consider a project’s unique factors to price accordingly.

Every deal is different, but you should go through a consistent process to appropriately price the project. First, ensure you have adequate information on the project. Key questions to ask include:

• What types of skills/activities are required to drive desired outcomes?

• Are there defined deliverables?

• What is the expectation for collaboration and onsite work?

• Has the client set a budget or budget range for the work?

• Do you need to budget for 3rd party expenses (travel, software, etc.)

• What’s the expected timing?     

With the answers to those fundamental questions, you can determine the best way to develop a proposal. There are 3 primary types of contracts:

• Fixed Scope / Fixed Fee. For projects with well-defined deliverables, charging a flat project fee (time required to complete each deliverable x your rate) can be an appropriate option. Typically, fixed-fee projects have higher price points because you take on the risk of any unforeseen issues or additional work that may arise. As a guideline, price with a 15% risk factor on top of your rate.

• Hourly Rate. Setting an hourly rate is common for many freelance engagements. In this case, you use your calibrated hourly rate for however many hours the client wants to hire you. This approach is often the least risky for both the freelancer and the client. Hourly rates are often used for staff augmentation and where scope is not defined as specific deliverables.  

• Retainer Fee. For ongoing client services, setting a monthly retainer fee (the client uses it or loses it) can provide you with a steady income while allowing clients to budget for your services. Retainer rates are typically lower than other rates because they offer the security of a guaranteed amount of work and payment over a set period.   

Regardless of contract type, when negotiating with a client, it’s important to emphasize the value and benefits they’ll receive from your involvement in their project. Explain how your skills and experience will address their needs and contribute to their goals. Within reason, be flexible and open to negotiation. Clients may have budget constraints, but flexibility can lead to long-term relationships and more opportunities.  

Step 5:  Regularly review and update rates to stay in line with the market.  

Freelance markets and personal circumstances change. Periodically reassess your rates to ensure they remain competitive and reflective of your growing experience and skill set.

By taking a thoughtful, informed approach to setting your rates, you can ensure that your freelance business is both sustainable and profitable.  It’s good practice to reassess on an annual basis.

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