While almost all freelancers know that they have a valuable skill set to sell, some of them still struggle to set an appropriate rate for their services or how much they should charge. 

When you set the price way too high, it only takes a few seconds for potential clients to find another freelancer with cheaper rates. If you set it too low, then you could leave the money on the table– and you wondering why your income isn’t growing.

The pricing strategy should be a delicate balance that requires understanding your value, the complexity of the project, and the larger competitive market. Thankfully, you can have the freedom to set your rate and change it over time. 

The perfect freelancer rate isn’t written in stone. You don’t have to pick a rate and have to stick with it for the rest of your career.

We’ll learn how to negotiate freelance rates without burning bridges, to ensure that you can attract more clients and get paid what you deserve as your experience and freelance business grows.

Understanding Common Freelance Rate Models

Before we get into the negotiation part, it’s important to understand different types of freelance rate models. Two of the most popular options are hourly pricing and project-based (or flat rate) pricing.

Hourly Pricing

The majority of freelancers charge their clients by the hour. It is an easy way to track the time you are working on a project and then generate an invoice based on the number of hours logged. You can set a minimum or maximum hourly rate, depending on your experience and what services you offer. 

Freelancers who use this pricing model are more likely to face scope creep, which is when the scope of a project keeps expanding, and you can end up working more than anticipated. That’s why the negotiation process for this type of pricing is particularly important.

Customer service and technical support are some of the common examples of projects that often work well on an hourly pricing model.

Project-based Pricing

For larger projects or longer engagements, some freelancers prefer to use project-based pricing.

This rate model works by estimating the amount of time and effort needed to complete a project, then set a fixed fee for it. The negotiation process often includes the amount of time expected to complete a project and the features that need to be included in the final deliverable.

Since you’re more likely to say an estimated price and agree to a particular scope of work, there is less chance for scope creep. 

But, make sure that you stand by the scope of work and timeline you’ve set, then calculate the total cost ahead of time. You never want to find yourself working on a project for much longer than expected without getting paid extra.

This pricing model works well when you have a good understanding of a project’s scope, timeline, and deliverables, like web design, video production, or mobile app development.

Negotiating Freelance Rates without Burning Bridges

Now that you understand the different types of rate models let’s go into the negotiation process. 

Both the hourly pricing model and the project-based model have their own pros and cons. Depending on the nature of the job, either of them can work well. 

But negotiation is an essential part of freelancing, especially when it comes to setting an appropriate rate for your services without burning bridges with clients.

Here are some tips on how to negotiate freelance rates without burning bridges:

1) Know Your Own Worth

First, you must determine the value of your services. The best way to do this is to have an honest reflection on the quality of your work and how much time it would take for a client to complete the same project without using a freelancer.

Consider the following factors to help you understand your own worth so that you can figure out the initial rate:

• Your previous job. Breaking down the salary from your previous job and dividing it by the number of hours you worked can give you an idea of what a reasonable rate would be.
• Your experience. Are you a newbie that is just graduated? Are you a seasoned professional with an extensive portfolio? Your experience will help you put a value on your service.
• Your pricing model. The type of pricing model you use will affect the rate you set.
• Your resources. Some tools you use can affect your rates. For example, when you use advanced software for web design to create a more streamline project and a quick, better result, it would take a little bit extra cost.

2) Research the Market Rate to Understand the Minimum Rate

Once you know your own worth, find out what the market rate is for similar services. Use job boards and research groups to compare your skills with other freelancers in your field. For example, if you’re a freelance animator, take a look at some YouTube animation channels, find some portfolios from other animation studios or freelancers to make sure you remind competitive.

Find freelancers that have a similar style, experience, and background, then use their rate as a benchmark to set your minimum rate. Doing this will help you set a clear minimum rate upfront as well as determine whether or not it’s worth negotiating with a client.

3) Avoid Stating Your Price Upfront

This is for the hourly pricing model. If a client asks your rate, avoid stating it upfront. In some cases, they may not know what your services are worth or how much they should cost. Instead, ask them about the details of the project, how much budget they have, and expectations for the result.

Use those details to create a custom proposal that outlines your services, timeline, and rates. This way you can adjust the rate according to the scope of work without seeming too demanding or rigid in your negotiation process.

4) Vet Your Prospects Carefully

When negotiating freelance rates, it’s important to do your research. I recommend you vet every prospect carefully before entering a discussion about money. Make sure they are reliable and capable of paying what you have agreed on.

Read reviews, ask for references, and check out their portfolio. It’s also a good idea to ask for a deposit before you start the project.

5) Give Headroom in Your Price

It’s not always possible to get what you asked for, so make sure you give yourself some headroom when setting your rate. This means that even if there is an unexpected change in scope or timeline, you’ll still be able to cover your costs without compromising the quality of your services.

6) Learn to Say No

This is for project-based pricing. Sometimes clients might try to negotiate your rate and ask for a discounted price. Or, they can pay the price, but they have too many requests that go beyond the scope of work.

In such cases, it’s important to know when to say no. Don’t be afraid to walk away if you feel the project isn’t worth your time and effort. If the project doesn’t fit within your price rates, don’t be afraid to say no. It’s important that you stick to your guns and maintain control of the negotiation process. 

7) Document Any Changes to the Project

If a client does agree to your rate and you decide to work together, make sure you document all changes in the project, including any adjustments in rates or timeline.

This will help protect both parties in case there is a dispute over payment or the quality of work. Remember that transparency and clear communication are key to a long-term relationship.

Freelance Rates Misconceptions

Now that we understand how to negotiate freelance rates like a pro, let’s address some of the most common misconceptions about freelance rates that sometimes make you feel like you have to lower your rate to close a deal:

1. “Everybody with the same expertise should charge the same” – No. There are many factors that can affect your rate, including experience, demand for your services, and the type of project. 

2. The client is always right– This is not true. You have the right to negotiate and set your own rate based on your experience and worth. 

3. Lower prices equal more clients–: It’s not always true that lower prices will result in more clients. In some cases, clients may be willing to pay more for a quality result. 

4. Asking for higher rates equals fewer jobs– This is also not true. If you are confident in your abilities and have set the right rate, clients will be willing to pay it if they perceive value in your work.

Over to You

Negotiating freelance rates can be tricky, but with a bit of research and practice, it’s possible to find the right balance between making sure you get compensated fairly for your work and not burning bridges with potential clients.

No matter what pricing model you use, clients often negotiate, so it pays to understand your worth and be flexible when needed. Remember that negotiating your freelance rates should be a two-way street, and both parties should come away feeling satisfied.

After all, it’s not all about getting the most profit, but it’s also about building meaningful relationships with clients so they can come back for your services.

Bio:

Andre Oentoro is the founder of Breadnbeyond, an award-winning explainer video company. He helps businesses increase conversion rates, close more sales, and get positive ROI from explainer videos (in that order).  Twitter: @breadnbeyond Email: [email protected]  LinkedIn: Andre Oentoro