(Radical) Ways to Rethink Your Pricing

It’s common for freelancers to struggle with setting their rate. Often their current rate is some mix of what they’ve heard from other freelancers and what they charged past clients. This isn’t exactly wrong, but you can certainly do much better.

The most successful freelancers eventually discover value-based pricing, and it changes their business. Value-based pricing is based on the value (or benefit) you provide the client. It sounds simple on the surface but can take some practice to master. At first, most freelancers struggle with value-based pricing because they still think of themselves through the lens of full-time employment. They mistakenly assume that the client is paying an hourly rate (often calculated from an annual salary) to “do stuff.” Not moving beyond this mindset, however, can be costly.

Remember, as a freelancer; you’re not getting paid for your employment. You’re not even getting paid to produce some code or a logo. No, you’re getting paid to solve a problem for the client. Let that sink in. What is the value of their problem being solved? The client isn’t hiring you to build a landing page because they want a landing page, they want to convert more of their visitors. They’re not hiring you to build an Android app; they’re hiring you to help grow their user engagement through new platforms.


So what does that mean for your pricing?

Well, first, you need to find your minimum price. This price is the bare minimum amount of money you’ll need to survive. We’ll cover this in a separate lesson, but this is essentially what you need to make in a given period to pay your rent/mortgage, tuition, healthcare, food, etc. Everything above that is “profit.”

So, how much above that can you charge?

To answer this question, we’ll need to get back to the value-oriented mindset. Through conversations with the client, you should ask questions to understand the project’s context: what problem are they trying to solve and why, and how does it fit into their company’s priorities. While this value-focus can be your little trick, it can also be helpful to make the client aware of it. Remind them, for example, that you’re not just building a landing page, but helping them to convert more visitors to users.


Ask them to consider how valuable the problem you’re solving is, and to think of your rate in the context of that.

Keep in mind that this won’t work for every client. Clients who get this value-based approach are generally the good ones that you want to establish a close working relationship over the length of your career. A client not understanding this approach will generally raise a red flag since what they’re looking for is cut- rate work.

Just like your business itself, your pricing should constantly be evolving through a series of experiments. Don’t be afraid to try to test a rise in prices or a new structure you think could bring in more or steadier income. The worst case scenario is that a client says “no”. Each piece of feedback from a client, whether positive or negative, is a piece of data you can use to improve your business in the future – and possibly ask for more money!

Should you work for free?

You’ve probably asked yourself this question before, either because you really wanted a project, or because a client asked you. So, should you work for free (or close to it)?

You’ve probably heard strong opinions for both sides. As with most aspects of the freelancing lifestyle, there’s no black-and- white, right-or-wrong answer. It’s important to understand both sides and make a choice that works for you. Don’t be ignorant about the consequences, but don’t let someone else dictate what you do. What works for someone else may not ever work for you.

Why you shouldn’t work for free

First, the key argument against working for free is one you’ll hear a lot in your career. Those who hate it argues that it devalues the work that you’re creating and it can also devalue the work of others in your freelance niche. Why would a client pay for a 500-word blog post if people are willing to do it for free? By setting your rates to nothing, you can make it difficult to earn a living in the future, while dragging down the industry at the same time.

Essentially, freelancing for free devalues your time and talent. It’s like unpaid overtime, or — at its worst — turning up at the office every day and not getting paid at the end of the month. You’ll find that your time can often be spent much more productively, whether it’s taking care of admin tasks, learning new skills, or pitching for new clients who are prepared to reward you for your efforts.


Why you should work for free

Although it’s not often, there are times when freelancing for free is about more than money. It might give you valuable exposure to a particular audience, to develop skills in a type of work you want to do more of, or to get your foot in the door with the promise of paid work to come. It’s just important to be clear that working for free is the exception rather than the rule, and be very upfront with yourself about why you’re doing it.

If you’re just getting started, taking on a limited number of unpaid projects can be a useful way of initiating relationships, getting your name out there, and building up a portfolio. Have a look online, and you’ll find plenty of examples of people who have benefited from taking on free gigs.

Free projects can also give you the opportunity to work on something you’re particularly passionate about doing. Contributing your skills to a charity organization, for example, can be just as fulfilling as volunteering in other ways. And, of course, if your brother or sister wants help with wedding materials, there’s no reason to demand the going market rate.


These are just a few brief examples, but judge each situation on its own merits. As always, make sure both you and your client are clear on the parameters of the project, because unexpected additions to the job are even more galling when you’re not getting anything back at the end of it.