The importance of setting up a fee schedule cannot be overlooked when you’re freelancing as an independent contractor. Pricing your services well can make the difference between earning an adequate income and not earning enough.
If you don’t have an established fee schedule, you may waste a lot of time and energy struggling with pricing each job. Establishing a good fee schedule saves time in the future and assures that you succeed financially as a freelancer.
Factors to Consider in Establishing Your Fee Schedule
The primary factors to consider in establishing a fee schedule are current market prices, how much you need to make in order to adequately cover your living expenses, and finally, what value you place on your work.
Start by researching what level of pricing the current market will bear for the sort of services you provide. For example, if you’re working as an independent attorney specializing in handling divorces, if a number of other attorneys in your area advertise handling simple divorces for $200, it’s unlikely you’ll solicit much business advertising the same service for $500.
Check local advertising, both offline and online. If you look for work through a freelancing website, check prices other freelancers are quoting for various projects.
Consider how much money you need to make to survive financially. Figure out your total monthly expenses, and then examine that figure in relation to what you need to earn per hour in order to earn an adequate living. Don’t forget about paying income taxes, and remember that up to 30% of your time may be spent looking for and negotiating projects.
Think about what value you place on your work. It’s difficult to succeed as a freelancer if you’re constantly thinking that you’re being horribly underpaid, but trying to get away with charging more than you honestly think the work you do is worth can also cause problems.
How to Create Your Fee Schedule
The basics of setting up a fee schedule include figuring out an hourly rate that works for you, given the considerations outlined above, and then translating that hourly rate into rates for different projects, such as designing a website or writing an article. You can accomplish this by thinking about the average number of hours it takes you to complete various projects.
Working based on project rates is generally considered a better option than working based on hourly rates. Working on hourly rates caps your potential income at the number of hours you can reasonably work each week.
Clients looking to get a project done usually have an idea of the value of the project, but they may hesitate if you quote an hourly rate that seems exorbitant. In such cases, quote a price they can relate to the worth of the project and keep quiet about how many (or how few) hours it takes you to do the work.
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