Setting rates can be one of the biggest struggles for new freelancers, as we’ve learned from the CloudPeeps community. What we’ve found is that freelancers have a pretty solid grasp on what their rates should be, they just aren’t confident in presenting them to potential customers. It’s communicating their value that they struggle with.
However, before you can communicate it, you need to determine where you fit in the market—what your unique selling proposition (USP) is. What makes you stand out among the crowd—why someone would hire you rather than your competitor.
Here’s a step-by-step guide to determining and communicating your value:
Research what industry leaders are doing
Research who the leaders are in your space offering freelance, consulting or even agency services that rival yours. As you scan their sites, portfolios, social media accounts (yes, you should go as far as cyber stalking these folks), take note of:
- Key terms and messaging they use. The bigger budgets they have (look at their client list), the more likely they’ve put money into researching what terms their (and your) audience is searching for. Why not piggy-back off of their efforts?
- Their image. What type of photo do they use - playful or professional? Is it high-quality? What does their overall look say about them; would you trust them?
- How they position their services. What do they prioritize? They most likely put emphasis on whatever has the highest demand or brings in the most income.
- Their pricing structure. Obviously, look at how much they’re charging if available, but also look at how they package their services. Do they price by the hour or by project? Or do they offer packages or bundles?
Determine your unique selling proposition
Now that you know how others are positioning themselves, you can start crafting your own narrative. Here are the key elements to analyze when determining how you stand out among the competition:
- Quality and experience level. Are you the best that there is at x or y? Start collecting case studies, awards, testimonials, results, stats, etc. now. If you’re good, but not the best, focus on a different element and start building your skills towards being the best today.
- Reputation and personality. Are you trustworthy and do people like working with you? You’d be surprised how many clients would rather work with someone who is likable than someone who has more experience and is a pain in the ass to work with. If you’re generally liked, use that to your advantage.
- Price. Are you the most reasonable for your experience level? Or are you priced for enterprises with large budgets? There’s no wrong answer, but either way, you have to own it and sell it as a benefit.
- Exclusivity. Are you only going to work with a certain subset of people? If you’re focused on a specific industry or even an industry niche, it’s easier to find ways to stand out among the crowd. Or, if you can only work with a limited amount of clients a time, that’s another selling point!
- Partnerships. As the saying goes, you’re the sum of the five people you spend most of your time with. Let’s say you’re a full-stack marketer who offers a range of services. If you work with the best graphic designer, best developer or best editor, let your potential clients know that!
Set your rate
When determining your rate, the standard is to set it at 30-40% more than an annual salary rate someone would be paid for the same role. For example, a salaried employee making $50,000 a year, working 40 hours/week, would gross $24/hour, minus taxes. So, as a freelancer, you should charge $31-35/hour.
You probably want to be working less than 40 hours on actual client work to make time of admin and business development tasks. So a rate of $40-45/hour is likely more sustainable if you’re aiming to make about $50k/year.
Remember, freelancers pay 30% self-employment tax, plus the federal and maybe state (depending on your local laws) tax that salaried employees pay. The freedom and flexibility is worth it, but you need to incorporate that expense when determining your rate.
If you’re still unsure what you should set your rate at, give this handy this freelance hourly rate calculator from Motiv at try.
Now, communicate your value
You now know what makes you more hirable than the last person who just pitched your dream client. Now you have to make your story so compelling, that potential clients want to take the time to learn more about what you can offer them. Here’s how to do it.
1) Know what problem your potential client is trying to solve inside and out
You may not really know what problem they’re solving until you have a call and start asking questions. Once you know what the problem is, you can start communicating in a language that speaks to the solution to their problem. Use emotional appeals. Where does their need really come from: does it involve making more money or cutting costs, is it that they’re short on resources or time and need an extra hand, or is it more intimate and personal, like a need for a personal rebrand?
If they need to save money, explain why you provide more value for less than your competition. If it’s time they’re short on, explain how autonomous and results-driven you are. If it’s a personal appeal, demonstrate that you empathize with them. And remember, actions speak so much louder than words.
2) Really get to know your audience
Understand who you’re talking to. What are their needs, wants, interests? What makes their industry different from others? How do they dress, how do they talk? Are they introverts, extroverts? What culture(s) do they associate themselves with? Do they like music, or maybe a certain TV show? Where are they from? Find a common interest to connect on. The more they feel like they know you, the more they will trust you.
3) Speak in their language
Are your potential clients data-driven, numbers people? Come out of the gate talking ROI and stats. Are they bigger-picture, long-term strategy people? Explain how you’re laying the groundwork for the team to execute on and what that will look like. Are they the type of people who want to be educated? Teach them. Do they already understand what you do? Speak to them as you would a peer.
4) Be authentic
Empty promises do nothing but set you up for a failed relationship. Follow through with your actions. Don’t only say what you think will make your potential client happy, take the steps necessary to deliver the work and experience you promised.
Be authentic in everything you do. Find people you actually want to work with (covered in a later chapter), and communicating your value will actually come easy.