When it comes to pricing freelance projects, there are a couple of different strategies that you can use. Which strategy you should use depends on the project you're working on, the client you're working with, and you're level of expertise in the field.
Here are some common pricing strategies used by freelancers:
Using an hourly rate for freelance work might be the most common pricing strategy for freelancers. In essence, you are trading your time for money. If you spend 20 hours on a project and your hourly rate is $50, by the end of the project you should have made $1,000.
This strategy can work if you are not yet an expert in your field and still learning how to be more efficient in your work. Because you are still relatively new, you may run into some unexpected obstacles that can take some time to solve. The good news is, with the hourly pricing model you'll still be getting paid for this work.
If you're someone who has become an expert and mastered your craft this strategy may hinder your earning potential. The better you are at something, typically the faster you're able to get it done. With an hourly pricing model for your freelance projects, you will end up making less. You are essentially penalizing yourself for becoming better at your craft.
A flat rate simply means that you charge a flat number for a project. You may charge $1,500 for a project, regardless of how long it may take you.
This is great if you are efficient in your work. If you're able to get the work done in a short amount of time, you'll be able to allocate more time to finding more projects. So the more efficient you are, the more money you can make.
However if you are not so efficient in your craft yet, this strategy may not be for you. If you end up spending more time on the project that you originally anticipated, you don't get more money. Instead you are stuck with the amount you agreed on before.
Receiving equity or revenue share from a company in exchange for your services is a great way to build and maintain strong long-term relationships with your clients. There may come a point in your freelance career where you come across a small startup or business that you really want to work with. You really like the products/services they sell, and the people behind it. There's a match you and the company because you like them and they need your services. The only problem is that they do not have the budget to buy your services.
If you like the potential client and project enough, you can consider an equity or revenue sharing deal. This means that in exchange for your services, instead of money they give you equity in their business, or a percentage of their revenue every month/year.
If you are in a position where you can afford to make long-term business plays, these types of deals are a great way to secure long-term recurring revenue. This only works if the business you are working with is successful. You may not see any financial return for some time, so if you are in a position where you need money in the short-term, this type of deal may not be for you.
Just like equity and revenue sharing, retainer contracts are also a great way to build great long-term relationships with your clients. If you offer a service that requires regular updates or maintenance, retainer contracts may be perfect for you. You can offer to set aside a certain amount of hours every month for your client in exchange for a fixed dollar amount, that they can pay monthly or annually. With these allocated hours, you can work on updates, regular maintenance, A/B testing etc.
One of the biggest challenges for freelancers is the fluctuations in revenue month-to-month. Retainers are a great way to ease or lessen those fluctuations because you are guaranteed a certain amount every month or year.
As a freelancer, you are in control of how you want to operate your business. You may prefer one pricing model over the others listed above, or you may choose to use a combination of all of them. It's completely up to you!
