* Contribution by Gusmar Sosa, freelancer HERO
Something I found very interesting in the Workana Report is that “the majority of freelancers are still taking their first steps in their professional career”.
The report states that “some decide to do it as their full-time job and others as a supplementary part-time job. Nevertheless, a small segment (about 7%) of the top freelancers earn more than $1,500 USD”.
Some of the questions asked by those taking their first steps are:
- How much do I charge so I do not “scare away potential clients”?
- How do I compete with other freelancers that earn so many projects?
- Can clients understand that my price is really not that expensive?
- If I keep my prices low will I earn more projects?
These are questions that I myself asked on various occasions, however, after some years of experience I could see the light. Therefore, I want to guide you towards the light regarding prices that are convenient for you and your clients.
Keep reading and you will find out how to price your projects.
Let’s start with the foundation: your mentality
Many freelancers think that the cheaper their price, the more clients and income they will receive. They also think it’s easier to earn a client by charging them lower prices rather than higher prices.
My experience has taught me that these beliefs are more effective for positioning yourself in and growing within the market, rather than finding valuable clients. A valuable client is one who will become loyal to your services, which means constant income for you and whose relationship with him or her will allow you to grow and feel good.
The reasons we become freelancers are to feel good about what we do, have freedom, develop our best talents, have time to continue growing our skills, among other things. So why do we undervalue ourselves with prices way less than what we should really charge?
#1: Describe who you are and why they should hire you
It’s like training to enter the ring and doing more than just lasting each round – it’s training to win. So, don’t give up before the bell rings.
What am I referring to?
Clients are not going to deny you based on the price of your service, they will do so because they feel you’re not the appropriate professional for the project they posted.
Keep in mind that your benefits specific to them are part of your unique and valuable proposal. Here is a list you can use as an example to explain why they should hire you and to strengthen your mentality:
- Why you are a professional in what you do
- You are dedicated to achieving perfection and complete client satisfaction
- You have experience
- You can advise your clients to achieve more clarity regarding their projects
- You are responsible and deliver everything on time, and even before deadlines
- You have great communication
#2: Find your differentiating factor
Competing on price is like competing in a red pond rather than in the blue ocean. In a red pond everything is more violent, and the reward is minimal. In the ocean it is more peaceful, and you can enjoy the breeze while you compete.
To go from the red pond to the blue ocean, you must find your differentiating factor.
A differentiating factor is “that something” that sets you apart from the competition. And “that something” is what the type of clients you need to attract are looking for – those who will also pay whatever to have it for the sake of their projects.
#3: Long term perspective
What happens with freelancers is that they get tired of valuing their services and give up, giving them away with very low prices. After just two or three declined proposals they can feel like failures.
The truth is that you are not a failure by not getting hired by clients who do not know how to value your services. It’s actually a victory.
The formula for knowing how to price projects: Time + Energy + Money
Studying the competition is the base for establishing a price. So, I will list some ways explaining how to go about this study:
- Identify your competition (according to your characteristics as a freelance professional and the quality of services you offer)
- Investigate how much the competition charges for a typical job
- Compare what the previous competition charges against what freelancers charge within your category
These steps should provide you with a standard price for your services in the market. The question now is: is that standard price more or less what you should charge?
The answer is NO. It’s simply a base measurement.
The best way to know how much to charge is by calculating how much time, energy, and money will be invested with respect to the specific services you will charge your clients for.
#1: Investing time
Time is the most valuable resource we have. That is why you must calculate how much time you will invest into your potential client and include that in the price.
You can calculate this based on the number of hours of operational service and include additional time for advising your client.
#2: Investing energy
There are clients that will warn you they need to make some adjustments as the project develops, or who require you to always be available for directions.
Therefore, you should calculate the energy, effort, attention, and dedication that you must invest into the project.
#3: Investing money
You might ask yourself “Investing money? I’m not investing any money, the client is”. You need to consider the money that you have invested into your training to acquire the skills that allow you to provide your client with the perfect solution.
Similarly, it’s important that during negotiations you explain to your client that the price of your services includes:
- Guaranteed attention to details, quality of the project and client communication
- Your availability to work the hours needed to deliver on time, availability to make adjustments during the project, and focus on the client’s objectives
- Your efforts to obtain the best result possible in their favor
- All of your acquired knowledge and experience, for which you have invested time and money, at their disposal
As a result, your client will recognize the value of your work and know that the price really is fair and reasonable.
Negotiation techniques: Choose your best option
Now that you know more about how to price projects, I will briefly mention the best negotiation techniques:
- Proposal technique: Center the negotiations around the price. This only works when you clearly state your benefits and differentiating factor. You can offer a better price, keeping in mind the discount taken from the standard price as a percentage.
- Package technique: It’s a summary. You present your services, their benefits, and at the end you summarize everything along with the price, as if it were a unique package.
- Prize technique: This technique revolves around you. Upon presenting them the benefits, features, and price, you talk about your responsibility and commitment.
- Intrigue technique: With this technique, as you’re negotiating with your client, letting them know your skills and whatnot, you can ask them questions about their project that allow you to demonstrate your expertise and at the very end provide a price.
Out of the techniques I showed you, you can choose on that best fits your profile and personality. In fact, you can apply all of them and see which one provides the best results.
What’s important is that now you know how to price your projects, begin to value your work, and educate your clients.