Getting to a fair and sustainable price for your services requires much more consideration than you may think. We'll help you get creative and be ready to identify and seize opportunities to earn more. You'll also learn that your hourly rate impacts much more than just your paycheck.
How much can you ask?
Monetarily appreciating your work is always a fun exercise. If you can't entirely depend on your judgment, there is a simple rule consultants use to set their hourly rate. They take the hourly rate they used to have as employees and multiply it by a number between 2 and 3. If you weren't employed, take the average rate from salaried positions that best reflect your expertise and experience. This difference between the salaried and consultant's hourly rate covers everything the employer used to cover, including administrative work and taxes.
If your sessions are shorter or longer than a full hour, you can opt for per-session pricing, where you will set a price for the whole session, not for the hour.
It's also helpful to research and see how much your competing solopreneurs charge. Trying to undercut others price-wise may not be as beneficial as you think - especially if you have corporate clients or even individuals who aren't very price-sensitive. Paying a little extra isn't a big deal if it means they get a much better service. Ultimately, it will all come down to the value you provide to your clients.
If you'll be working on more short-term projects, you don't have to worry about setting the wrong price too much. Experiment a little and you'll very soon find out the highest amount your clients are comfortable with. Fortunately, a price set too low has a nice self-correcting mechanism - you'll get a sense that clients are perhaps too eager to choose you, and they'll give you more work than you can handle.
Be more careful if you're about to work on a more significant project. If you realize later that the hourly rate you asked for is vastly inadequate, you may become resentful of the client and the project itself, which will certainly affect your performance. Most clients won't be happy if you come to them during the project and ask for a raise.
💡 Keep in mind
Your price will also reflect the clients you'll attract. Overly price-sensitive clients are known to be the most demanding, even if they pay you the bare minimum.
Clients from wealthier areas
If you plan to work for clients from areas, states, or countries more affluent than yours, you will likely be able to charge them more. The first question you have to ask yourself is whether they want to hire you because of your expertise or to save money. It may be a combination of both, and you have to sense how much one motivation dominates over the other. Some freelancers make the mistake of charging clients from more well-off areas the price they would pay for an equivalent service in their home country. The problem is that if they wanted to pay this price, they would hire someone local - unless they want you mainly for your expertise.
Not all clients and projects are the same
You don't have to charge all the clients the same. After a while, you'll see that clients sort of fall into a few categories - some will be bigger, some smaller, some very budget-oriented, and others more oriented on quality. Your price can also vary depending on the difficulty of the project.
Session packages
You can also offer session packages with tiered (bulk) discount pricing:
1 session - $50
5 sessions - $230
10 sessions - $450
You don't have to start with your desired rate for one session and then discount the others. You can do it the other way around, too. The client will get that rate only when he buys the biggest package - in our example above, it's $45/session. Otherwise, he'll pay extra per session in smaller packages.
Selling the session package is a preferable option because it will help you quickly fill up your calendar, and it's also much easier to work with five clients/week instead of 10 clients/week.
To give your clients multiple options they can comfortably choose from (this feature is coming soon), we recommend creating an account on Flowlance where you can add multiple types of sessions and session packages (this feature is already available) and then track their completion session by session once the client orders them.
What exactly will you bill?
Some sessions require substantial preparation time from you. While the initial research to understand the client and an exploratory session to see whether you're a good fit is usually free, you must be careful not to unintentionally work for free beyond that.
There are two ways to approach this: You can track and charge the time you work outside the session, or you can set your session price at a multiple of your basic session price - for example, by default, you charge $50, but for the sessions that require extra work, you can charge $150.
💡 Keep in mind
Don't corner yourself by labeling some work "nothing" and suggesting you won't charge for it. There's a chance the client will expand his requirements and the "nothings" will add up, or it will take you longer than expected.
Managing expectations and upselling
Always describe the nature of your sessions in a way that gives clients a proper and complete understanding of what to expect. If you are aware of some terms in your industry under which different people imagine different things, address them and specify what exactly you provide.
Naturally, topics and things come up during the sessions that were not specified beforehand and the client may want you to handle them, or you can offer it yourself. Don't forget to make sure the client is aware of the cost. If you have a profile on Flowlance, you can add these extra services to your offering. Be careful about this "upselling", though - you don't want to sound like a low-cost airline that provides basic service for cheap and then jumps at every opportunity to sell something extra separately.
Time off
We left this section for the end because it partly overlaps with the next lesson's topic. Not being employed also means no paid time off. You'll have significant flexibility in choosing when and how much time off you want - the only limit will be how much you can afford. If you'll be living paycheck to paycheck and would like to take an entire week or two off, it can make a big hole in your next month's budget. That's why your hourly rate should also account for any time you'd like to spend away from work.
Remember
👉 Your hourly rate should be 2-3 times the equivalent employee salary.
👉 Ensure it covers your insurance, time off, equipment, taxes, and other work-related expenses.
👉 "Cheaper" clients are often a pain to work with.
👉 Make sure you're comfortable with the rate you quote for bigger projects.
👉 Session packages will help you fill your calendar and have fewer clients.
👉 Be prepared for opportunities to do (and bill for) extra work.
Homework
1️⃣ Get a basic range of your hourly rate by multiplying the salary from your former employment by a number between 2 and 3 (it can be a decimal, like 2.6).
2️⃣ Set up a throwaway email address and find out your competitors' hourly rates - they're rarely public.
3️⃣ Consider whether clients from more well-off countries may want to work with you because of your expertise or expectation of a lower price (or the ratio of the two).
6️⃣ Think through how much time off you'll want and account for it when setting your hourly rate.
4️⃣ Put together session packages that will motivate your clients to get the biggest one.
5️⃣ Make a list of additional services your clients may need and put a price on them.
👏 You’re making waves!
Next lesson
Time management →
There's so much work that goes into our Academy. To ensure that everyone has an opportunity to learn, we'll always keep it free. Can you help us to spread the word?