Master the Art of Pricing Your Value-based Freelance Services

How do you know if you're charging enough for your freelance services? Are you leaving money on the table or pricing yourself out of the market? Listen in as we reveal the secrets to mastering freelancer pricing and valuation, with insights on positioning yourself in a competitive market and finding your unique value. We'll share lessons from successful freelancers on LinkedIn and discuss the importance of becoming the go-to person in your niche to secure the work you deserve.

Discover the concept of value-based pricing, where you focus on the value your work brings to clients rather than the time it takes to complete a project. Learn how to have meaningful conversations with clients to understand their goals, align your skills and experience with their needs, and demonstrate confidence in your abilities. 

We'll also touch on the importance of recognizing your worth, especially for female freelancers, and pricing your services based on value. Don't miss this essential episode to help you level up your freelance game!

Transcript

Speaker 1: 0:00

cocktail of expert tips, inspired insights and stories from the frontiers of freelancing To help you achieve success with your borderless business, whatever success means to you as you live life on your own terms. Thanks for listening to The Future is Freelance and for being part of the Future of Work Revolution. Hello there, freelancers of the present and of the future. It's me again coming at you this Freelance Friday and I wanted to do a quick follow-up, in a way, to last week's wonderful episode with Annabelle about contracts, and this recording was inspired by some messages and comments, including some private ones, that I had about the whole issue of getting paid as a freelancer and valuing ourselves and the work we put into the world, because if you don't believe in that yourself, then the best contract in the world isn't going to be as easy to enforce and live by. So I think even before we nail the contract, we need to nail the mindset and make sure that we value ourselves in the context of our work as freelancers in the world. And that's because it's a tough world out there. Actually, everything is going up in price. Wherever you're listening to this podcast from, it's highly likely that you're facing high inflation, perhaps even pushing double digits, and simply your costs of living the way you do as a freelancer have increased. Now, as freelancers, we might have some influence on that. We might be able to exercise some digital arbitrage and reduce our costs in the ways that employees don't always have the option to do. But it's still tough out there and we need to recognize our value that we're putting into the world, and we also need to recognize that it's tough for businesses, too. Getting that balance right. So, understanding how to price yourself, when to raise your rates, how to navigate those discussions and achieve pricing based on the value that you offer These are the things that I wanted to talk about today, because it seems a little bit like these things can be difficult to talk about Now. I'm British and we are stereotypically very bad at talking about money, so if I can do it, anybody can do it, and I hope to help you overcome some of those hangups Now.

Speaker 1: 2:36

Current world events have inevitably had an impact on freelancing and we've seen particularly those of us who work in emerging industries things like tech. We've seen downshifting around the world and layoffs, but this, i do believe, has created opportunities for freelancers. It's created for the more far thinking, forward thinking employers. It's opened up little pockets of value where those of us who want to work more flexibly can bring our skills to bear in new ways, things that might not have been freelance opportunities in the past. We simply have to negotiate those and dig them out and find ways to position ourselves within them.

Speaker 1: 3:21

This is the ideal when it comes to freelancing to find a niche that's so deep and so specific that you're it. You then become oversubscribed. People need what you have to offer and then you can raise your rates. It sounds so straightforward, particularly as many freelancers start out on the kind of platforms that offer freelance gigs, like Upwork and even Fiverr, which used to have gigs, or a Fiverr, and you certainly don't need to start there anymore like in $5. So I think that these platforms have good and bad sides And for a lot of people, obviously, you move beyond them. Once you start positioning yourself and building a reputation and finding clients by word of mouth, you don't need to rely on them anymore. But it's certainly where I started out many years ago now And it's where a great many people find themselves operating.

Speaker 1: 4:15

We have a fantastic episode, actually from season one, which I recommend you checking out, because it is definitely proof that there are people who still make a good Western Hemisphere cost of living living on the Upwork platform and have managed to build their reputation there to the extent that the work comes to them. And that is probably one of the big differences in how beginners approach these platforms they look at what people are searching for and then pitch, whereas when you really build your rep and build your track record on these platforms, then the work starts to come to you. And this is the big difference when it comes to creating value and getting paid what your work. And this only happens when you really are the go to person in your niche. So I strongly recommend that, in the context of the changing freelancer and business economy, you really think about that. What is your unique value? What are the skills and experiences that you have to offer that nobody else does in the world quite the same as you? because that is where you have to go all in and position yourself and really recognize the value of that specialist knowledge that any given customer might only need very occasionally or for a very brief time, and that's when you find that you can raise your rates to something that's meaningful for you. So there are lots of successful freelancers who have done this.

Speaker 1: 5:44

Have a look on LinkedIn. Follow the people whose work you admire, the people that you see as adjacent to your niche and your positioning, and look at how they put that value out into the world, how they demonstrate it, the social proof that they use, and those are. Obviously you won't copy them because you are you and your unique story is going to be slightly different. But if you simply look at the people who are most influential in the industries that you are knowledgeable in, you will see how they've defined themselves, how they cooperate and collaborate with other people, how they give and share their expertise with others, because once they're that specialized and unique, they don't have any fear about competitiveness. They know what they do, they know what they don't do, they have very clear edges on that and they're able to refer work and network on to others. So that sounds ideal.

Speaker 1: 6:42

But if you're just starting out and maybe your profile and up work hasn't got much feedback, maybe you don't have many linked in testimonials, or maybe your linked in testimonials aren't focused enough about the value that only you can create, then what can you do? So I would start by trying to really rethink your own mindset about money. Not everybody will need to do this, but I know that I did, particularly six years ago. It was now that I was transitioning from being essentially an employee an employee director, on a fixed wage, through to having to make every cent myself, and that included, obviously, complete control over what I spend in order to do that The software and the training and the travel and all the other things that I have to spend money out on my business. You have to start shifting your mindset to think in terms of profit rather than fees. This is the first big mindset change for a freelancer. You can't start thinking about what I want to earn an hour and what I want to charge an hour as being the same thing. You have to move away from that immediately, because it simply doesn't work like that any longer.

Speaker 1: 7:52

When you were an employee, somebody else paid your social security. Somebody else may have contributed to your retirement fund. Somebody else is going to pay you to take a holiday to be off sick. Somebody else may even have been paying a proportion of your pension or your taxes. You really need to factor all of that in when you're figuring out your rate as a freelancer. It's something we see in Spain in remote work Spain community. A lot People say nobody can make a living in Spain because the social security is too high or the taxes are too high. It's the case of flipping that mindset and saying, okay, if I'm going to need to pay this much in tax and this much in social security, then what do I need to be charging? How do I set my rate? to take account of all of that? because you can't control what the state is going to take from you, so you have to build it in, you have to charge it to your clients. If your business, your value, isn't worth enough to charge what you need to charge, then you need to rethink your entire business model, because if you're not making a profit enough to pay yourself a living wage, then you don't have a business, and I'm afraid that is the harsh reality. So you can only actually figure that out once you factor everything in.

Speaker 1: 9:08

There are some great tools around to do this. There are also spreadsheets and things you can figure out for yourself, and you need to do this work in order to get to your true value. And then you need to be able to talk about it. You need to be able to have conversations with your customers, with your prospects, about your rates and what you need to earn. You need to understand your own value sufficiently that you can position in the marketplace and get paid for it. It's no good saying to a client I need to charge you this much because my taxes are really high because of where I live. That's not their problem. But what they need to understand is the value you're going to bring to their business, to their objectives, to their goals. You do this by bringing your soft skills, your humanity, your personality to the service that you're providing. You bring them your expertise, your knowledge, but also your care, your love, your support for what they're doing.

Speaker 1: 10:10

If somebody's hiring you as a freelancer, they don't want to just buy an hourly service. They will come back to the person that really adds value. That's great to work with All of those things. you can't price them indirectly, but they will help to overcome the time that you spend as a freelancer on prospecting, because people will come back to you and they will recommend you. And you've got to remember when you're doing that hourly price calculation what do I need to earn Then? that applies to what you need to earn across the board after you've factored in all the work that you can't bill for And we can't bill for our business development time, our sales process, we can't bill for our admin. These are all the things that you have to cover off in your hourly rate because they're simply never going to be billable, and it's essential that you include all of that as well when you're trying to work out what on earth is you need to earn and charge to your clients for the time that they're purchasing from you. So the more you can do to reduce that by getting repeat work, by getting recommendation it not only means you can charge more in the first place, it means that you spend less time on the hunting and the farming rather than the cooking and eating phases of operating your business.

Speaker 1: 11:28

Again, this is about the mindset shift of becoming a business rather than a freelancer going from one gig to another. It's also about the mindset shift you need to move through when you change to being a self-employed person as opposed to an employed person with somebody else. Does this thinking for you? One important thing is to shift to a perception and a conversation about value, not about early rate, not about what you need to earn, not about what a particular service is worth. The freelancers who sell themselves by the hour are literally selling themselves. They cannot scale, they cannot increase their value, they cannot increase their earnings.

Speaker 1: 12:20

This was something that took me a while to understand and appreciate in my business. How much of the value I bring to my clients isn't the time I spend with them, it's the years I've spent honing and developing the skills that I have, the experience I've acquired, and that's what I'm bringing to the table. It is not about the hours on the clock. Don't let anybody force you into charging by the hour when that's simply not appropriate to what you're doing. It might be appropriate if you're consulting or if you're on a day-rate to cover something like breaking news in a journalistic setting or so on, but then that day-rate reflects your level of experience. Don't let somebody try to charge you hourly for work that you might do very quickly simply because you're good at it. What you need to do instead is pitch everything you do around the value you create, and that means that you need to actually truly understand the hirer's objectives, their goals, their business plan. You might need to have a conversation with them above and beyond the brief in order to understand that.

Speaker 1: 13:26

Where does this piece of content fit into your strategy? Where does this fit into your business goals of the year? What outcome are you expecting from this particular piece of content? I'm talking about content because that's what I do, but whatever you create, you need to think about how it aligns with what the client's trying to achieve in the first place. Why would they be hiring somebody to create it? What would be the difference between a high value or a low value solution to that problem?

Speaker 1: 13:57

If I write a fantastic white paper for a software company that's going to drive downloads and that could drive the acquisition of customers whose lifetime value is measured in seven figures, every single new lead that that white paper brings in has great value to the client. Therefore, it's not about. This white paper is X thousand words, it's going to take me Y hours and therefore I'm going to come up with an amount based on that. Instead, i need to understand that the role of this particular download is to acquire this particular customer and what that's going to be worth to the client. And that knowledge, that conversation which might not be in the brief, about what the content has to cover, is the thing that's going to help me create content that really has the greatest possible value, that really speaks to the motivations of those people who are the ideal target for it.

Speaker 1: 14:54

Taking the time to have that extra conversation at a more strategic level enables me to price that piece of work in terms of the value it will create, the lasting value, the lifetime value of that customer acquisition, and therefore it increases the importance of that piece of content in the eyes of the client. It allows me to do my very best work because I'm totally aligned with what they need, and it allows me to price based on the value, not about the physical output. So this is something that I would encourage everybody in any kind of knowledge, work, industry or creative sphere to think long and hard about. What's the value of this work that I'm doing? The client must have some output in mind that they want to achieve with this piece of work, because they figured out they can't do it internally. They've advertised or they've been recommended to you as a freelancer that you can fill this gap and that you are the go-to person for this.

Speaker 1: 15:50

Then it's up to you to truly pull out that need and figure out a way, a proposition whereby you can bridge the gap and you can create the value, and then you will be in a position to negotiate your rate based on value, and then they won't be able to compare you to anybody else, because your proposition is going to be unique. It's not a case of saying, well, i've got this other developer over here whose hourly rate is $20 an hour less than yours, so I'm going to go with them, because that means they're comparing two things that aren't equal. Two solopreneurs are bringing completely different skill sets and attitudes and experience levels to the table, and they need to understand that. You need to get away from being in a marketplace where you're compared with other people, because nobody is you, nobody can offer what you do, and once you're completely clear about that and confident about your value, then, and only then, you'll be able to charge that value with confidence and clarity. One of the things you might need to overcome when you're trying to figure this out and shift to value based pricing is simply speaking about it in a way that demonstrates that confidence. Without question, you need to overcome any imposter syndrome that might be lurking and you need to be able to understand that, and then you need to be able to understand that And then you need to be able to understand that Imposter syndrome that might be lurking, and I think any freelancer let's face it, anybody in life can get this from time to time, particularly if you're lucky enough and I really do regard myself as incredibly fortunate to have carved out the life that I've created for myself, where I get paid to learn and write and talk about things that I find absolutely fascinating anyway, and this is the kind of work that I would want to do for free if I didn't have to earn a living.

Speaker 1: 17:50

That's an amazing position to be in And, yes, i do need to pinch myself from time to time, but it wasn't luck that got me here. It was extremely hard work and I need to remember that, and you do too. I suspect The imposter police will come knocking on your door occasionally and saying we're going to bust you. We figured out. You don't know what you're talking about or you're not as good as other people.

Speaker 1: 18:10

You have to banish those thoughts before you go into any conversations with clients, and I'm going to talk to women especially here, and I'm going to make huge generalizations, except they're generalizations that are backed up with data. The data clearly indicates that, just as in the employment marketplace, female freelancers tend to undercharge their worth compared to male ones. It's as simple as that. Not everybody in every case. I'm generalizing but I want you to ask yourself could this be a factor if you're not attracting the high paying gigs that you know your skills would equip you for? Are you pitching too low a rate in the first place? Are you thinking too much about what other people might be offering in terms of their proposal financially, instead of thinking about the value that you bring? Are you simply underpricing yourself? These are questions that you really need to have clear in your mind before you go into that discovery call or however you do that negotiation, and that will vary, obviously, according to what it is you're offering. So really think hard about this.

Speaker 1: 19:18

I know from my work with Solo, for whom I create content and who originally sponsored this podcast. they offer a freelancing platform with thousands of freelancers from around the world on it in Estonia, people who have taken the time to set up limited companies in many cases as well, and who are really serious about their freelancing. And, of course, they've got that demographic background. So they have crunched the numbers and it's true that women are underpricing compared to men. Women are not going for the highest priced advertised gigs. There is definitely a trend that has been clearly indicated in employment, rather than freelancing, that when an employment offer or an advert lists a set of skills or attributes that women are less likely to apply for it if they don't feel that they meet 100%, check every box, whereas men are more likely to think, well, i'm going to go for it anyway. I meet some of that and maybe I can persuade them about the rest, or I can learn it, and they will simply be in more hats to be picked. They will have more applications reviewed because they're going to submit more. They're not looking for that one perfect match. They're likely to just have a go anyway.

Speaker 1: 20:34

And I'm not suggesting you dilute your efforts and have a go in pitching things that you simply couldn't do or that are outside the direction in which you want to grow your business. But I would encourage you to stretch beyond what you've done in the past to really look at what your next move would be. Every freelance contract is a chance to grow. It's a chance to extend yourself in new directions. It's a chance to prove something to yourself, and it's not like you're leaving full-time employment to take another job somewhere. It's not like you're taking that risk. You're simply pitching for a gig that you may or may not get.

Speaker 1: 21:14

So why not take a chance, take a risk, try something new, explain what you haven't got to offer and then think about how you're going to approach that and what you can bring to the table, and then you can navigate that confidently and negotiate what you need to get paid. Again, a lot of this comes down to the value that you're going to create, and that's what you need to get clear about Whether you've done exactly that kind of work before. You know that the reason you can do it is because you've done something similar in an adjacent niche. You're also bringing that experience from 10 years ago, when you were doing something completely different, and your personal knowledge in another sphere that you've never written professionally about or worked on that particular piece of software or whatever. Bringing all that together, offer it up to the client as a package of true, unique and original value and don't think well, this one is not for me, because it doesn't necessarily follow on logically from what I do all the time. So these are the things that you get to bring to the table as a freelancer and that, i would argue you absolutely have to.

Speaker 1: 22:23

It's part of navigating that transition from freelancing to being a business of one, to being a solopreneur, to being somebody who's considering what they do professionally as opposed to responsively. A freelancer might just go from one opportunity to another. That's great if that's giving you what you need, and maybe this is something that you don't need to think about long term. But for most of us, we want to stay independent, we want to stay solo operators, but we do need to navigate a world in which the cost of living is going up and we want to raise our rates. We want to keep growing professionally, so we don't want to keep doing the same thing over and over again.

Speaker 1: 23:06

That can be moving on from a client where you know they're going to keep you in a box because probably because you're very good at what you're doing, but they're not going to give you a chance to extend yourself, to learn something new, to move on to higher value added kinds of activities within the organization. Maybe they've got that covered in house and freelancers fulfill a very particular role for them. Those might be the ones you have to let go. Those might be the bridges you have to burn. Maybe you can go out and find the new gig first, because it's not like you have to take time off a paid job to go for an interview or something. If you see your work as a business, you can start to think well, the best way to replace that income is actually to find something that's a step beyond it for somebody else, and then you're able to say with complete integrity to your original client look, i don't have time to do this work anymore. If you've exhausted all possibilities of extending your value there, then these things come to an end. They could do it to you in a heartbeat. So you need to be absolutely sure that it's fine that you don't owe them notice or loyalty, particularly if you've served them well for a long time, you're within your contract, and particularly if you have talked to them about trying to grow and increase your professional value where you are. If they're not giving you that opportunity, you go out and find it for yourself somewhere else. Now, obviously, having these kind of conversations with clients is difficult, and it's difficult raising your rates with existing clients too. So maybe we should look at that one for a bit.

Speaker 1: 24:40

Everybody is facing cost of living increases. Other things are increasing in cost too. Taxes are rising in some parts of the world. Sometimes the tools that we need to do our work is increasing in cost even the fact that if you needed to replace a big piece of capital equipment like your main computer in most knowledge work, that's going to set you back a hell of a lot more than it would have a few years ago. So your rates need to increase to reflect that.

Speaker 1: 25:06

All over the world we're seeing workers in employment negotiating for their rights. We're seeing public sector workers taking to the streets, in some cases because their cost of living has accelerated so far beyond what their pay rises have kept up with, and particularly coming out of COVID and so on. Lots of governments are extremely strapped. That's their problem And I'm not judging that for right or wrong. But I do want you to think about how lucky we are as freelancers that we're not negotiating collectively. We can define our value uniquely. We can negotiate for ourselves. Only We don't have a trade union to come in and do it for us. But at the same time we're not saying to a customer that we actually need you to pay thousands of people A little bit more. We're just talking about ourselves, what we're worth and why they need to pay us a bit more.

Speaker 1: 25:56

So you need to raise your rates with existing clients. If you've been on the same rate for a long time, everything has changed. The cost that you need to earn have changed, their business context has changed but, more importantly, the value that you bring. If they kept you doing the same work for a period of years when, if they had an employee, they'd be obliged to provide them with professional development and growth and salary reviews, then you as a freelancer are disadvantaged by that and you can have that conversation. You can explain to them why you feel your value has increased, what you're offering to them now that you didn't before, what you could offer them in the future. If they let you loose on a new piece of work for example, how you could grow together and increasingly align your views and what that would be worth to them Can use that to increase your fees. If you really can't do that or you feel there's no scope for that that you know their budgets are so crunch. They talk about money all the time. They're questioning what you bring into the table already then start looking. Start looking for another client, another direction, some way to increase your value elsewhere, then you can use that in order to step in stone to move on.

Speaker 1: 27:09

I know some people who've never raised their rates with an existing client, because They simply look at each new gig as a chance to increase their rates slightly higher until they reach that Optimal point where they're not oversubscribed, they have enough coming in, they have a healthy flow in the pipeline and that's ideally where you want to get to. So this is what I wanted to talk about today. I want you, as a freelancer, as a solopreneur, to see this as part of your positioning as a business professional. You're not a gig worker. You're not somebody who simply responds to what people say they want, looking for the next advert or the next gig on a platform. You're somebody who's got a clear idea of their own value and you're not afraid to go out there and ask for it.

Speaker 1: 27:56

We have to get better at talking about money. This was an interesting thing that came up actually in remote work Spain community recently about the difference between job adverts for employees and the freelancing platforms, and actually one thing about the likes of up work and so on is people talk about money there, whereas often, when it comes to job ads on places like indeed or linkedin, they really very unhelpful. They might often say it's a competitive salary or something, but very rarely will you see anything beyond perhaps a vague range, and it can be very difficult. When people are looking for a job and remember, this is somebody looking to replace their entire income, do they pursue this opportunity where it might not even pay as much as the one they want to leave? So, as freelancers, we don't have that problem. Okay, we can look at exactly what something's worth we actually choose the rate that we propose to do it at. Either that or it will be transparently displayed. Say, if it's a publication and they have fixed rates for freelancers, you can look at that and say that's going to work for me or No, it's not, and I simply move on to the next opportunity.

Speaker 1: 29:02

So we want to exploit that in a positive way as freelancers, to grow our own value, to know our own value and to state it clearly, confidently, without embarrassment, without shame, without hedging around. Now, how you do that is going to depend on you, your personality, your business, what you're offering. For example, i don't publish a rate card anywhere. I view every project as a chance to really consider the value, consider what expertise I can bring and I will cost it accordingly. It might be that what you offer is you can cost it by product, by project, perhaps even by the hour. That might be appropriate to what you do, but I would urge you to give it some consideration, some conscious thought, if you haven't already. How do I package up that value and offer it to a customer so they can see exactly what I'm going to do for them and they can appreciate it and, if there's an alignment, they can see exactly why they should hire me as opposed to anybody else? If you can move away from Ali based pricing, then I encourage you to do that, simply because it encourages Those clients to compare you to other people using the same yardstick, whereas what they're getting for that hour might be completely and it will be completely different.

Speaker 1: 30:17

So simply getting your own head straight about money, hopefully, can empower you to start getting paid what you're worth, to break those barriers down and to discuss money and be aware of all the things that you need to do, and be aware of all the things that you need to do as a freelancer, which includes building wealth for the future, and that wealth might be in your retirement account. It might be wealth in your following, your audience, in your content, assets that you can repackage and repurpose over time. However you think about it, remember that it's on you as the freelancer. Your value is growing over time, so your rate should reflect that. Your wealth has to grow over time, because one day you might even want to stop doing this and retire or take things a little bit easier. So I would love to know, if this has been helpful to you, what tactics you have used as a freelancer to discuss money, to negotiate, to position your value with clients.

Speaker 1: 31:12

Please leave me a comment, leave me a review. You can leave a voice note actually on the website, future is freelance. Dot X, y, z. Depending on whether you're on the browser or on on the mobile, you'll see a little mic icon at the right of the screen. If you click on that, you can pop me a little voice message which we can use in a future episode. Or if you don't want me to use it and you simply want to send me a message that way, just let me know I certainly won't invade anybody's privacy by broadcasting anything. You'd rather not. But and I say that because I know this stuff around money is sensitive and you might have issues there, but you might have some stories that could help inspire Other listeners to really think about what they're bringing to the table and make sure they get paid enough for it.

Speaker 1: 31:59

And wherever you're listening, whatever you do, whatever your freelancing dreams are, whatever value you're offering to your clients, i really appreciate you taking the time to listen to this podcast, because your time is money And your ears are not something I take for granted. If you found this content useful, please do share it with anybody else who might find something within it that they weren't expecting or maybe weren't expecting. Not everybody finds this money talk easy. I'm not suggesting that it's going to be easy for you just as a result of listening to this, but I hope that it might have given you Some little shifts to unpack over time and start to think about how you can increase the value offer, how you can talk about that value, how you can package it up and offer it and how you can ultimately get paid what you're worth. Thanks so much for listening, and we'll be back next week with one of our interview shows. I've actually got a fantastic one coming up for you then, so please hit that subscribe or follow whatever the button says in whatever app you're listening in, and we'll see you again next.

Speaker 1: 33:05

Freelance Friday. Thank you for listening to the future is freelance podcast. We appreciate your time and attention in a busy world and your busy life. If you enjoyed this episode, please share it with a fellow freelancer. Help us grow this movement of independent entrepreneurs. If you rate and review the future is freelance in whatever app you're listening to this right now or over at future is freelancexyz, then that will help spread the word and help us reach more people who need to hear this message and join the conversation. Together, we can change the world and make sure the future is freelance. This is my middle miss, wishing you success and happiness in your enterprise until our next episode.