Conversations about money are never particularly comfortable, so when it comes to valuing your service and expertise (and ensuring you can pay the rent!) many freelancers find it a nerve-wracking experience.
Getting it wrong can come back to haunt you, either when you’ve committed to a project paying peanuts, priced yourself out of the market, or left the client feeling short-changed. So, what’s the best approach on how to charge for freelance work?
Perhaps the simplest option is to invoice your clients based on the time you work, using a set daily or hourly rate. If you work with agencies, quoting your day rate is perfect, as this is the language they understand, and the majority will expect you to work this way. From the freelancer perspective, it also has its benefits as there is no danger of overservicing and you can be sure you’ll be fairly compensated for any overtime or additional work you take on.
On the flipside, billing based on time doesn’t tend to work so well with brands, who are usually concerned about spiralling costs. In many cases, particularly where start-ups and small businesses are concerned, taking on an external consultant is a big financial commitment and they want to know they have control over the budget and output. Smaller businesses also have less understanding of how long activities take, making it difficult for them to calculate the value they’re getting for their money.
In our experience, taking a ‘pay as you go’ approach with brands usually ends in one of three ways: either you’ll fail to win the business, you’ll get pushed down on price by a client who is nervous about the cost, or the relationship will end prematurely with a dissatisfied client who feels they haven’t got value for money. There are exceptions of course, but these are pitfalls to watch out for.
Having said that, your day rate doesn’t need to go completely out of the window when working with brands, as it is still a useful tool for calculating and communicating your project and retainer quotes. Read on to find out more…
The alternative to ‘pay as you go’ is to agree a fixed budget upfront, based on the client’s objectives and the outcomes that they would like to see. If a client wants long-term, ongoing support then this would come in the form of a monthly retainer fee, while a distinct project, such as a product launch or one-off copywriting project, would more likely to be quoted as an individual chunk.
As mentioned above, your day rate still forms an important part of this process, as it enables you to calculate the cost based on how long you anticipate the activity will take. You can even be transparent about this with the client, explaining that you have calculated the costs based on a day rate of £x. Many clients like to understand how you’ve arrived at a particular figure, plus it gives them an idea of the time involved and what any additional work may cost them on top.
The one big potential downside of agreeing to a retainer or project fee is that it increases the risk of overservicing, if you don’t carefully agree the scope of activity at the outset, or underestimate how long the agreed activity is likely to take. To avoid this situation, always agree the scope of work in writing at the start of the relationship, including plenty of detail to avoid any misunderstandings, and making it clear that additional work will be costed and charged separately. When it comes to calculating your time, it’s always better to be over generous with how long you need, as there’s nothing worse than clocking up excess hours for nothing!
Every client is different, but these are some good rules of thumb to guide you when broaching costs with any new business prospects. And if you’re ever unsure, you can always give the client the option between the two and see which would work best for them. The most important thing is to stay flexible and you’re sure to reach an agreement that suits everyone.