The Freelancer’s Pricing Dilemma

One of the toughest decisions for a freelancer is how to price  products and services. Obviously you want to make a decent profit, but you also have to consider factors such as expenses and your desired salary when making pricing decisions. You may be tempted to use lower prices to gain a competitive advantage but this could greatly limit your profitability. As a website and graphic designer the question of how to charge clients is very common and there is no one answer that satisfies every situation. Here are a view factors I take into consideration when creating my prices.

Billable Hours

Billable HoursThe concept of billable hours is based on how you value an hour of your work. Do you  do  $5,  $30  or $50 worth of work in an hour? This is a personal figure you decide based on your personal ability and preference. You can then use this hourly figure along with an estimation of the time it will take to complete the job to get an idea of the price of a project. If you are charging a client by the hour you should ensure that they are aware of this so that they recognize the longer the job takes and the more changes they make the more expensive it will be. You should also log your hours carefully and have documentation ready to justify your price if necessary. You can use a strict hourly rate or use this as a guide in addition with other pricing systems.

Overhead Costs

Overhead CostsIf your price does not generate enough money to cover overhead costs  you will be operating at a loss. As a freelancer you will need to ensure that you at least break even by generating income greater than expenses. This is more difficult at the early stages of a business due to the large investment costs. As the business matures though it should become profitable and self sustainable. Therefore your prices should be high enough to cover your overhead costs, including your salary. Failure to consider these costs can quickly see your business making money but still not surviving. You can also try to reduce overhead costs in order to offer customers lower prices or make larger profits.

Type of Project

Project TypeEvery job is not the same and cannot be charged at the same rate. A logo for a local club would cost significantly less than a logo for an internationally recognized  sports club. The factors that influence the price are not so much the budget of the client but the scope and complexity of the project. Larger projects usually require more detailed research and require a deeper understanding of the client’s vision. This may include multiple meetings and even travel. The longevity and range of uses of the logo will also vary by the popularity of the client. This would invariably also influence the price of the job.

Rights and Licensing

CopyrightAnother thing to consider in pricing services is who retains rights to the work and for how long. If the customer retains all rights to the work and can use it however they please then the cost of the design would be higher than if I retain rights to the project. A situation may also arise where the customer has exclusive rights to the design for a fixed period of time after which I have full rights once again. In this situation the price would be higher in consideration of the period of exclusive rights.


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