Service that Scales: Pricing Guidelines, Tips, and Strategies for Freelancers

Take a look around any online marketplace and you’ll see the labor of designers, writers, and digital artists severely undervalued. In a short-sighted shoot for ultra-low prices, online entrepreneurs are aiming to spend less and less on services, and unfortunately many online providers are following suit with their pricing.

One element of the issue is an ignorance of the value of great design. Since Photoshop became a standard installation on a lot of high school PCs, everyone under 18 with enough time on their hands could pretend to be the next big designer. The prevalence of basic design abilities has lead many people to think that great design is easy.

We’ve all heard the horror stories about clients demanding infinite revisions and 50-page websites for under $150. They’re not particularly nice to hear, but in many ways designers effectively bring them upon themselves. By not setting clear pricing and a long-term marketing and business strategy, a lot of designers, writers, and other online workers push themselves into a corner with their business.

Being a successful designer isn’t just about your design ability. In the end, it’s the designers with the best marketing abilities, the best client management skills, and the best abilities to find great clients that end up on top. These strategies can help you expand your design expertise into scalable business and an income that you deserve.

Marketing On Price

Don’t do it. For those that don’t know, marketing on price is essentially the strategy that many big-box retailers take to bring in customers. They offer the lowest prices on their goods, and make up for the reduced margins by selling a much higher quantity than their smaller competitors.

Not only does price-based marketing not work for long-term online workers, but it effectively devalues the time and skills of everyone in the industry. When you’re selling a service – in this case a design service – there are no margins to think about. The only non-monetary currency is your time, and devaluing it to take on more clients isn’t a good strategy.

Would you rather work 60 hour weeks at $20 per hour or 30 hour weeks at $40 per hour? Taking on more projects isn’t always a good way to increase your income. Instead, you need to start marketing yourself according to value. There will always be ultra-cheap, low quality providers around. Let potential clients know that you’re worth your time, and not the value of other providers.

Taking On Per-Hour Projects

Another poor strategy taken by some designers is the per-hour pricing model. This is quite common on websites like Elance and other freelance marketplaces. In exchange for the potentially larger per-hour income of a performance contract, many designers choose a per-hour pricing model, essentially securing their rates and work commitments before they begin.

From an income security point of view, this isn’t a bad position to take. The security of a wage means that even if you get very little done, there are still earnings coming your way. Of course, few per-hour contracts end up being lucrative for the designer. Instead of steady work, they’re assigned far too much work to be completed in far too little time, significantly dropping the value of their time.

Whenever possible, take on projects that pay for performance. If you have the skills to complete their project quickly, a performance-based position can bring in significantly more income, and also free up your time to focus on your own projects, acquiring and refining skills, and enjoying life outside the office.

Bidding For Clients

Bidding websites may be good for filling time between major projects, but they’re not a long-term work platform for designers. When you find contracts through bidding websites, you’re forced to compete on price – other designers bid low, and the artificially low prices skew the entire marketplace. While it’s possible to find some good clients through bidding websites, they’re largely overwhelmed by low-cost, low quality providers.

The best investment for any online freelancer is their own web presence. With some simple promotional efforts, you can have clients coming to you instead of you having to chase them. When you control the stream of opportunities, you’re able to decide what you’re time is worth, how you’ll manage contracts, and what projects to take. Bidding websites are short-term; your own web presence is a scalable strategy.

If you’re an absolute beginner and want to get up and started quickly, even a free WordPress blog is enough to attract prospective clients. The focus of your first few months online shouldn’t be taking on as many clients as possible, but creating a web presence that allows you to take on worthwhile clients. Endless grunt work brings in income straight away, but it also robs you of the time required to expand your business, develop the connections that are necessary for worthwhile contracts, and focus on refining and developing your goals.

Your Turn To Talk

I hope you enjoyed this post! Please feel free to chime in and share your thoughts by leaving a comment below! Any points you’d like to add or discuss or stories you’d like to share? Please do! :)

Comments

  1. Kieran says

    Very well written and some useful information in there. I never really understood the term ‘freelance’ but after reading this I’m fully aware on what it is all about now. :)

  2. says

    What you have read is so true and I see many people on places like Digital Point offering services for cheap prices which means other people lower their prices to compete which ends up with people working for little money. I have actually done some work before where the client said it would take 10 minutes but ended up taking 2 hours and I only got paid $10 for it :(

  3. says

    Very well written article. I agree, on about being a web designer isn’t just about having great design skills. It’s about being a well rounded web designer, internet marketer, web developer all combined into one. The webdesigners that interpret these skills, are the the most successful in this field.

  4. says

    Great work, I really liked the paragraph about beginners. I’m starting out and being still a student of graphic design, marketing has to be the hardest part of it all…and the least fun.

  5. Siddharth says

    This is a very good Summed Up article. I Totally agree with the Author (Mathew) that “The best investment for any online freelancer is their own web presence”. Online Entrepreneurs is good if one has the Right way to tackle it and This article Explains this art Successfully. I recommend this Article to all Beginners

  6. says

    Great work! I specially like the sentence “Whenever possible, take on projects that pay for performance”… Because this gives the opportunity to bring in more income…

  7. says

    When I price a project I take my time and consider a few factors. The sizes of the company, how long are they in business, how strong is their brand. All this and more. I also do some community work (free design) and for smaller businesses I tend to be a bit more considering, my way of giving them a burst to enter the on-line market. The real money is in the maintenance.

  8. Skyrocket Labs says

    I agree with most of the points in this article. In my own experience, it is better to go with an hourly rate to ensure you’re actually paid for the time spent on a project. I’ve rarely encountered a situation where, due to the back & forth in the planning & production phases, projected hours were bang on.

  9. says

    Nice post. A buddy of mine and I were just talking about this very topic. You summed it up well. My most recent snafu was charging for 5 hours when it actually took 10. Don’t charge by the hour! If you think it will take an hour at least double it to be sure. But I’m getting off that pricing structure this year anyway.

  10. rg says

    You pointed very important thing. Not being paid per hour. I considered this pricing model (hour * my own ratio) but now I’m sure I should put it away.

    So how do you prove yor clients cost of website?

  11. uki1985 says

    I agree with you, it’s a good idea, with a market value of us, we get more save time, and get more profits. I specially like the sentence “Would you rather work 60 hour weeks at $20 per hour or 30 hour weeks at $40 per hour? ” we would prefer to work 30 hour weeks at $ 40 per hour, because it provides many benefits for us and we can save a lot of time. Good article Mathew. I hope to see more articles from you.

  12. says

    Well, some aspects of your post sounds quite obvious and most of them are right, but as far as it concerns me, I can tell that most of potential clients get scared when they see the amount of money they need to spend to get a well working, good looking website. Maybe this depends on the country where I am living in but it seems that most of the people rather trust in the cheap/free skills of a related person than to invest money in a professional designer.

    Cheers

  13. says

    As with the other comments I completely agree.

    Since I changed the way I worked in terms of finding work and billing, I have definately made more money.

    Actually getting paid for the value of a project and my expertise is a lot more rewarding than a per hour arrangement. The only thing I ever bill per hour is website maintenance and minor uptates etc.

    Great article Matthew :^)

  14. says

    Great article!

    I just start my personal branding as freelance designer & illustrator a few month ago.
    So what you write here will very usefull for me.

    Thanks,

  15. Tracey says

    Thanks for a really informative article Mathew.

    Do you think web designers are cannibalising their own industry by publishing some of the quick-fix web design ads on their own websites? I see those BuySellAds – cheap PSD to HTML, free Flash websites, etc – on most designers’ sites and feel we are shooting ourselves in the foot for a few extra bucks in revenue.

    What do others think?

  16. says

    This article gives us very valuable information.
    I liked this quote: “Being a successful designer is not just about your design ability.”
    Thank you …

  17. sarroora says

    Thank you so much for this article! It’s useful and I learned some wrong strategies that I can now avoid falling into! I’m an aspiring artist and I want art and design as my career for the rest of my life, so thanks again for all the heads-ups!

  18. Noor says

    Very well written article. I’ve spent some time digging into freelance websites (I’m a web developer) and I couldn’t believe how low some coders can bid.

    However, low bids don’t necessarily always mean a bad quality service. As we all know, the value of American dollars varies from region to region. For instance, 100$ in India has a lot more national worth than 100$ in the USA. This is why the international competition is not fair and is falling victim to the messed-up global economical system.

  19. says

    I was just in the middle of this decision: which horse to ride now, Elance or re-design my web-site? So, web-site it is, both showcase of skills & trial by web-fire of the design thus produced. After 5 years dedicated to a single client, it’s time to show the world what I can do: cadre of applications & matrix of experience. No pressure there, yikes!

  20. says

    Interesting post. Didn’t find much new here. My own two cents. Charging by the hour works if you estimate accordingly and leave a cushion for unexpected issues, since they always arise. Charging on a project basis also works, but charging by performance is the most preferable. If it takes me one hour to complete a task that takes you two, should I charge for one hour or for two? Logically it’s about raising the rate, due to expertise and proficiency, hence performance. And here’s the secret, performance is based on experience plus perceived value. Key word: “perceived”, something that will always be subjective, and here’s where the sales skills do the work. And as a final note there will always be asymmetries in the marketplace(now more than ever since we live in a global digital environment), and people going to the cheapest vendor for work. But in the end its about knowing your client very well and knowing how to communicate with them effectively. Step 1) Find the clients you want to work with; Step 2)Offer them value; Step 3)Communicate constantly.

  21. says

    Great post. Lots of excellent tips here – especially about marketing yourself based on VALUE and not price.

    In fact, low prices can often turn clients away! The assumption is clients seek a bargain price, but very often clients equate low prices with cheap, amateaur, low quality work (and they’re often right about that).

  22. says

    Hi Mathew,

    Love your sharing! Bottom line is – always set your rates… the way you truly deserve ( not anything else ). Know your worth as an independent professional. Thanks for the tips.

Trackbacks

  1. Service that Scales: Pricing Guidelines, Tips, and Strategies for Freelancers…

    The prevalence of basic design abilities has lead many people to think that great design is easy. We’ve all heard the horror stories about clients demanding infinite revisions and 50-page websites for under $150….

Leave a Reply

Your email address will not be published. Required fields are marked *

* Copy This Password *

* Type Or Paste Password Here *