Adobe-full Adobe Behance arrow-down arrow-right LineCreated with Sketch. close-tablet-03 close-tablet-05 comment dropdown-close dropdown-open facebook instagram linkedin rss search share twitter
waterplants

Personal Branding

What Should I Charge? How to Justify Your Freelance Rates

Your clients don't pay you for what you make, they pay you for results—a subtle difference that can help you dramatically increase what you charge.


When I first started freelancing, I thought I knew how to price myself. I charged $50 an hour because, well, it’s what my equivalent hourly rate was before I went out on my own. It was easy to justify — I could point to any number of other rate sheets, pricing calculators, and other resources to make it clear why I should be paid what I was asking. It was the “market rate” of somebody like me. 

But almost 10 years later, I now charge upwards of $20,000 a week. This is nowhere near market rates, and I haven’t come across any freelancing pricing calculator saying that this is what I should be charging. But I can justify it. My clients know they’re getting a deal, even though they’re paying me exponentially more than the other guy or gal. The key to getting a killer rate is to quantify the value you bring to the table, and how you can use this value to price or anchor your rate. How? Let’s dive in:

Go Beyond What You’re Given. 

When most of us are brought in to a new project, we immediately become technicians. For something like a website, we start asking questions like, “What should the site look like?” or “How many pages should it have?” 

It’s important, though, to realize that no client in the world wants to spend money on what you “technically” create. Whether you’re a web designer, a coder, or a writer, clients don’t pay you because they want a website, an application, or copy.

No client in the world wants to spend money on what you “technically” create.

Instead, clients pay you because they’re hoping that the results of your project will warrant the investment. If a company asks you for a website, what they’re really asking for is more customers. But most of us ignore the customers, and focus entirely on the website and how it will look and function. When you focus on the why behind a project instead of just the what, you’ll win more projects. Clients want you to know what’s at stake and why they’re willing to spend thousands on you. A freelancer who gets the why is less risky, but you’ll also be able to charge a lot more as clients will wager more money on a sure bet.

Here’s how you can figure out the pain behind a project:

  1. Listen. This is what we all do now, but you want to make sure you hear your prospective clients out. What do they want you to do for this? Note that this is the step that often leads into the technical aspects: the design of the logo, the font faces and colors of the website, and so on. But before we get there, we want to learn a bit more about the project. I just like to lead with “So tell me a bit about this project. What is it, and when are you looking to have it done by?”
  2. Identify The Trigger. We want to know what made them decide that they needed this project done. What “spark” led them to determine that it was time to draft up a project request and bring it to someone like you? Try something like “ Tell me how you came up with this project — what changed, or what happened, that made you realize, ‘I need to do X’?”

  3. Highlight The Problem. “OK, so [TRIGGER] happened and you decided to seek someone like me out. You wanted something fixed… Could you tell me more about what that something is? What is this project solving?”
  4. How Painful Is The Problem? After you learned what business problem (e.g. a lack of customers, inability to open up a new location, etc.) lies behind their project, you want to try to figure out how painful it is. How is it impacting their business? Are they stressed out about this problem? Are they anxious to get their new business off the ground?
  5. What’s The Cost? If this problem goes undiagnosed, what effect does it have on their finances or reputation? Not every client accurately knows this or is willing to share it at this point, but you want your client to vocalize to you that this problem, left unfixed, will adversely affect their business.
  6. How Should Tomorrow Look? Now that we’ve dug into the root of the problem behind their project, you want to figure out what would happen if this problem were removed. What would a sizable increase or more customers do for their business? We want the prospective client to dream about tomorrow.

One thing to note is that by doing this, you immediately set yourself up as something beyond just a freelancer. You’re a consultant. You don’t want to simply build, you want to architect

You don’t want to simply build, you want to architect.

You want to have a stake in the direction of the project. We all want creative freedom in our projects, and the single best way to achieve that is to become a trusted expert in the minds of your clients.

What Would it Mean to Solve Their Problem?

You now know what problem your prospective client faces, and where they’re hoping to be once that problem goes away. This is going to help you create a compelling proposal that’s much more than “here’s a list of what I’ll do and a price.”

The next step of this process is to help quantify what sort of financial payoff your client can realistically expect should you succeed. You want them to demonstrate that you can give them a return on their investment (a ROI), and if you can convince them you can do that, they’re going to be a lot more willing to hire you at a higher rate. An example (which came from a student of mine’s experience):

Suppose you’re talking with a rehabilitation clinic about designing a new website. You’ve discovered that they want more than just a new website; they want more patients. Now you want to figure out what factors you can influence to help your client become more profitable. 

You’re going to want to start at what you probably can’t control (like how much money they make from each patient), and work your way toward what you can control. 

You: “What’s the average value of a patient in a bed?” 

Clinic: “About $30,000.”

(We’re not there yet, but now we know the value of a customer.)

You: “And how many people do you typically need to talk to before you get a new patient?”

Clinic: “About 10.” 

(We now know that a lead is valued at around $3,000. But we can’t control how effective their sales team is. But we can influence how many leads they get.)

You: “If I could build you a website with the sole purpose of getting you at least one new lead a month, that website would help you generate at least $36,000 in new revenue in the first year alone — right?” 

Clinic: “That sounds right.” 

Now we’ve attached a tangible value to the project. Sure, we can’t guarantee the exact results they’ll be getting. But because we’re not selling “a website”, but instead “a website built to generate more leads at $3k a pop”, we’re talking about a less risky and higher value project than the other guys. Your competition might be selling a website—which might get them new leads (and consciously or subconsciously, that’s exactly what the client wants)—but because you’re selling the client what they’re looking for, you’re now a much safer bet. And you’ve come up with a way for this website to generate $36,000+ a year. 

Now Anchor Your Cost and Write a Killer Proposal.

You now have everything you need. You know what’s aggravating your client’s business, and you know how it’s affecting them and their business. But you also know where they want to be, and you’ve helped them figure out how valuable their project is.

The last step is to ask them to hire you.

Almost all of your competition typically writes a proposal that says something like “here’s what I’ll do, here’s what it will cost, and here are some terms and conditions”. This requires the client to mentally weigh whether the list of requirements presented to them will actually solve their problem. And since all they’re doing is supplying a list of tasks with an associated price tag, why shouldn’t someone take that list and price shop? Or respond back with, “why should I pay you that?”

Your proposal should read like a story. Set the stage by describing the client and the problem their business faces. Don’t be afraid to use any juicy statistics or data point that they’ve given you to really highlight the pain (such as the cost to acquire a client).

Next, describe the ideal tomorrow to them. Where do they want to be? What will that do for them and their business? How much more successful will they be once their problem wants to be? Your goal is to pitch yourself as the best possible ferry that can get them from the problem to the solution. There are a lot of talented ferry captains out there, but you’re the only one who knows exactly where to steer.

Your goal is to pitch yourself as the best possible ferry that can get them from the problem to the solution. 

Finally, present your offer. Your offer is simply a way to connect the problem with the solution. And ideally, you’ll present multiple offers at multiple price points. Once you know where the client needs to be, this becomes easy: the offers you give are different paths to the solution, each with different degrees of completeness. Your low tier offer might get your client to only the halfway point of where they want to be, but it’s cheap. Your tier offer will get them exactly where they’re hoping to get. And your highest tier offer will go above and beyond where your client wanted to be.

With these offers, you’re going to want to supply a price. Either as an estimated cost (three to four weeks at $20,000 a week) or a fixed cost. But what’s most important here is that your price won’t be the first number they see in your estimate. The first number they see will be what they stand to make off this project, and ideally it’s quite a bit higher than what you’re asking. 

If you offer a lead generating website for a hospital clinic at $15,000, and they stand to bring in $36,000 in the first year alone off it, suddenly that number becomes a lot more palatable. You’ve price anchored your cost against the payoff. You’re now an investment, rather than just an expense.

Most freelancers fail to significantly raise their prices because they don’t justify their price. They don’t offer any context around what they’re asking for. So the client needs to reason, “is this worth the price?” You don’t want clients doing that, because then they’re liable to either try to drive down the cost (to mitigate their risk) or shop around. So if you want your freelance career to truly takeoff, avoid the price calculators, market rates, Google searches, or other forms of justification for low-ball, commodity rates. Instead, share the end value you provide by working side-by-side with your client. It’ll end up being much more enjoyable, and your wallet will thank you.

How about you?

What’s been your process for figuring out the value you bring to the table?

Comments (57)
  • Adam

    Nice stuff. Great perspective. But I do disagree on one point. Some clients ARE only interested in what you “technically” create. In my experience, it’s been people who have a vision in mind and are set on it. They have money to spend, but need someone to execute rather than strategize. I would agree that all clients all interested in the results, but that many get too caught up in the day-to-day. They don’t take a step back to see an overall vision. It’s just, “I need this and I need it ASAP.”

    • https://doubleyourfreelancing.com Brennan Dunn

      Hey Adam, so there are always going to be some clients who want a “resource” — they know what needs to be done, and just need someone who can swing the hammer on their behalf. Unfortunately, this also means they’re going to treat you like a commodity.

      My approach really works best when you’re working with a client who has a need, but not necessarily a clear path to solving that need. It won’t really work for staff augmentation projects, subbing through agencies, and responding to spec work on job boards. It’s going to require positioning yourself and sourcing clients differently. I have a 5 part series on this over at my blog, here’s the first: http://doubleyourfreelancing.com/high-value-clients/

      • Callum

        I agree with Brennan re. being treated like a commodity. In this case you essentially become a ‘outsourced employee’ and in the mind of the client they immediately put a lower dollar value on your skills and expertise. Bottomline is you end up agreeing a lower rate than you think you’re worth (or you walk away).

  • http://www.flauntmydesign.com Tomas Fransson

    I’m all for talking about value. However, as a buyer, I’m a bit wary about “value talkers.” I might agree on everything a designer says about sales funnels, increased conversion rates etc. – in theory… However, to be fully convinced I also need to see real world proofs of your ability. If you can back up your claims with an impressive track record of successful work in my industry, glowing testimonials and/or references… Now you got me interested!

    Brennan, what’s your advice for a newbie designer/developer with not much to show for yet..? You talk the talk but don’t walk the walk yet… How do you compete with more experienced designers/developers who also know to talk value?

    Thanks for a great article!

    • https://doubleyourfreelancing.com Brennan Dunn

      Great question. Let’s start by talking about risk… Going into any transaction, there’s always a degree of risk involved. Is this person/company capable of solving my problem? (The answer of which is much more than just “they’re technically able to build a website” or whatever). The more you can reduce that perceived risk, the more likely someone is to hire you.

      Forget about the value/ROI or whatever else for a second. If you know WHAT a client needs and WHY they need it (“new customers because if they don’t get these customers they can’t expand like they want”), you’re setting yourself up as less risky… because the client KNOWS you understand what they need done. Obviously, case studies that demonstrate your capacity to have done this in the past are great and really help reduce the risk you present. But at the end of the day, the client is wagering money. If you can present a plan for using that money to get them where they need to be, vs. just “uhhh I’ll build a website for you”, you have the upper hand — often even against people with a stronger portfolio than you have.

      But if it’s a “developer who understands value with a strong record of success” vs “developer who understands value with no track record”, the former is often going to win out. But the good news is that most developers/designers are completely clueless when it comes to selling on the value/outcomes, and instead sell “websites”🙂

      • http://www.flauntmydesign.com Tomas Fransson

        Thanks, Brennan!

  • http://www.gnarlydigital.com Oliver Bannister

    A really interesting article Brennan and fully understand your point. So say you charge $15k for a website, how much of this is allocated to marketing spend to get the 10 leads and what recurring costs would be associated with it?

    • https://doubleyourfreelancing.com Brennan Dunn

      So how you package and sell these sort of things is a whole ‘nother can of worms🙂 I was just giving an example of a $15k start-to-finish site. One piece of advice I’d give to anyone who builds websites: offer “optimization” services to your clients. We all know the first cut of any website isn’t the best, no matter how experienced we are. So, in this case, if the goal is to help the client generate more leads, by running A/B tests and other forms of experiments on their behalf, we can increase the number of leads they generate. Once you know what that goal is (“more leads”), you could then price the active engagement (“building the lead generation platform”, e.g. the website) and then offer ongoing optimization services (“fine tune that platform”)

      • http://www.gnarlydigital.com Oliver Bannister

        Thank you and great answer.

    • lillubbites

      This old chestnut…

  • http://j-design.tv/ Andrew J Dicharry

    Great article and certainly an ideal I want to implement in practice. In a situation where you are competing with other businesses or freelancers who also understand how to represent ROI with their solutions to their client’s problem, but are willng to execute the project with similar results for $10k instead of $15k, how then do you justify your higher cost? Do you have a particular strategy to combat those type of situations?

    • linlin29

      there has to be something different to justify your higher price, so search for it. What clients see as valuable isn’t always what the freelancer sees as valuable. It could be something as simple as presentation, but overall if you two truly are identical then your price needs to be lower. I think a smart way to set yourself apart is by maybe changing the name of some items you offer. For instance, i know for CPA firms they changed ‘auditing’ to ‘risk advisory services’

  • Boško Škrbina

    Pretty nice article Brennan, I found it very useful. Tx a lot! Already
    reading your blog. BTW this guys have too interesting articles about it: thenuschool.com

  • http://www.paocollection.com Paola Bueso Vadell

    Excellent article! Thank you

  • Amie Baker

    Very much appreciated your thoughts in this article, thank you!

    • Amie Baker

      Actually, one more thing. Any thoughts on how to apply this value based approach to selling logo design?

      • Passenger

        A good logo (or rather a complete identity) would help enlarge the recognisability of a brand.

  • Nataleyna

    Although I am not a website developer but a freelance translator and a voice talent, still this post seems very interesting and useful for my sphere. It’s given me the whole idea of how to deal with clients regarding rates and added value. Thank you!

  • Julien

    Thanks for sharing, always like to read about the value based pricing approach. I’ve got a question though. All this implies that your client is ready to share a lot with you. Let’s say I redesign his old e-commerce site. I charge a setup price plus a variable indexed on the sales growth (generated by my design). It’s very risky because he may not want to share his results nor admit that the growth is a direct result of my work. How to apply that in real life ? (without having a battery of lawyers)

    • http://mattriopelle.com/ Matt Riopelle

      The first problem: If a client isn’t willing to share information crititical to you delivering the results they are paying for, then you don’t want them as a client.

      The second problem: Never tie your price to performance. There are too many variables outside your control that can impact results. You only control the design, the client still controls the business.

  • Tarci

    Ok Brennan Dunn now i follow you

  • http://www.chocolateandcaviar.com Julia Melymbrose

    Enjoyed this greatly, Brennan! Very clear way of explaining how to actually prove your value (rather than simply claim it)

  • http://be.net/taylorcs Taylor

    Great Brennan, best article i’ve read this year. Thanks!

  • Halucinated Design

    Magnificent article.

  • tomango

    Great article, Mr Dunn – what price this piece I wonder?

    BTW, did I spot a typo in your paragraph starting “Next, describe the ideal tomorrow to them…” This sentence didn’t make complete sense to me: “How much more successful will they be once their problem wants to be?” Course, it might just be me being incredibly dim, in which case I apologise…

  • johnTnash

    Interesting article. I know my clients can’t pay that much. I have justified my value to them multiple times over, but the bottom line is that they can only pay what they can pay. If I price myself out, they have no choice but to find someone else. At that point I have to make a decision. How valuable to me is the work that I do for them? Is this work that I believe in? Am I making a difference? Will I have left this world a better place as a result of my choices and efforts, or will I have a few more bucks in my pocket? You can’t always have both.

    • http://www.decalmarketing.com/adwords-book/ Iain Dooley

      Hey John, I’ve found the same thing: value based pricing works for clients who have a) enough data to allow you to calculate value accurately, and b) enough money to pay. I discussed this very issue on the first edition of my new “boring business show” with Kai Davis recently, would love to hear your thoughts in the comments:

      http://www.theprocedurepeople.com/blog/2015/01/09/introducing-the-procedure-people-boring-business-show/

      • johnTnash

        I checked it out, Iain. Well done! I threw in my two cents in the comments, too.

  • http://aliciahurst.com/ Alicia Hurst

    There are so many articles on value pricing, but this one spells it out much better than the others I’ve read – it’s clearly written and not wordy or puffed up to make it seem more complicated than it is. So thanks for this! I’m going to ruminate on it!

    • https://doubleyourfreelancing.com Brennan Dunn

      Thanks so much, Alicia!

  • Mark Joyce

    Your advice has high adaptive utility across many contexts! ~ One guideline/filter I would add is to be mindful that clients/people are generally better at identifying symptoms than they are at identifying problems. Getting to the problem requires insightful questioning.

  • http://iconart.us/ Matthew

    Really smart. Thank you!

  • Guest

    hy

  • Guest

    ✚✧✚✧✚✧✚My last pay check was $85oo working 1o hours a week online. My younger brother friend has been averaging 12k for months now and he works about 22 hours a week. I can’t believe how easy it was once I tried it out. This is what I do

  • BM

    This is perhaps the best article ever written on 99u and I have read them all. As Mark Joyce said, this can be applied through so many context it’s not even funny.

    • https://doubleyourfreelancing.com Brennan Dunn

      Thanks so much BM!

  • Anita

    Great article, really created a shift in my thinking. I am considering how to apply this to my work as a psychologist. I don’t even necessarily plan to charge more, but I would like people to see the monetary value of the work we do together. Having personal problems or dysfunctional ways of relating and thinking can be costly and time wasting.

    • https://doubleyourfreelancing.com Brennan Dunn

      Anita, my background is in philosophy and the classics… let’s just say that Plato was probably the biggest influence on my career as a consultant🙂

      • Anita

        Sounds interesting – Maybe the topic for another article?

  • https://doubleyourfreelancing.com Brennan Dunn

    I agree. It does take a bit of practice to learn how to ask the right questions (though I hope the steps I listed in the article are a good start). However, even if someone were to doubt their business acumen, I’d encourage them to simply try to pinpoint (collaboratively, with the client) the problem that needs to be solved, and then weigh each and every feature, requirement, etc. against the question: “How will doing this get us closer to solving the problem at hand?”

    If you know *where* your client needs to be, and you remain steadfast in ensuring that no scope is added to the project that detracts from reaching that goal, you can help ensure a more successful project for your clients without necessarily having a mastery of business strategy.

    • Michael

      Yes I think you’re right. Even if you don’t have extensive experience in strategy, asking the more holistic questions as well as the nitty gritty, will both teach you more and encourage the client to review assumptions that will ultimately lead to a more effective solution.

  • https://doubleyourfreelancing.com Brennan Dunn

    You mean the sort that immediately want a quote before you even have had a chance to discuss what needs to be done…?

    Move on. Those clients always end up being the last people in the world you want to work with.

    • Anton

      I think the opposite is true: mention your price as soon as possible. This assures that you are not wasting your time (making killer proposals etc.) for someone who is going to say goodbye once he knows your price.

  • lilredbug

    As someone just re-entering the freelance design business the information you have given is invaluable. Thank you so much.

blog comments powered by Disqus

More articles on Personal Branding

maxx-main
style-5
DSC_6678
george-lois-main
003-alt
006