Freelancing: How to Price Your Freelance Jobs

 

One of the major concerns people have when starting out on their freelance journey is figuring out how to price your work. It’s a valid concern as charging too much will turn potential clients away, but not charging enough can cause your business to go under. Where’s the middle ground? Well, the answer depends on you and your business.

 

The very first thing you should do before calculating your own prices is to do some industry research. What is the average selling price for your product or service? What are your competitors charging their employers? Are they charging by the hour or by another unit of measurement? Finding the answers to these questions will give you a ballpark estimate that your prices should fall within.

 

After you’ve done some research, there are a few precise ways to help you calculate how you should price your freelance jobs that involve some simple math. Let’s take a look at what they are and if they’re right for you.

Keystone Pricing  

The keystone pricing method is primarily used in retail, but it can be helpful in any field that requires the purchasing of materials in order to provide the product or service you sell, such as arts and crafts supplies, hardware, etc.

To calculate the keystone price, simply double the cost of you or your employees’ labor and materials used. Meaning, if it cost you $10 to produce your product, you should charge your customers $20.

Cost-Plus Pricing

If you’re in the business of providing small goods and services, cost-plus pricing might make more sense for you. Essentially, cost-plus pricing requires you to calculate both the fixed and variable costs that will be incurred in manufacturing your product or providing your service and then adding on a reasonable percentage to that sum to get your price.

Market Rate Pricing

The market rate, also known as the going rate, of a product or service refers to the usual price of a product or service. Market rate pricing is helpful if you’re providing freelance services hourly or by an unconventional of measurement. If you’re a writer, you may charge by the word count or if you’re a graphic designer, you may charge based on the scale and length of the project. This is where the industry research suggested in the introduction will really come in handy.

Share Pricing

Share pricing is a value-driven pricing structure that is primarily used in the stock market. As supply and demand fluctuate, so do the prices of goods and services. If supply is high and demand is low, prices drop. If demand is high and supply is low, prices increase.

Share pricing is relevant if you’re involved in a startup looking for investors or are simply starting a business on your own of which you plan to sell shares. Learn more about how a company’s share price is determined here.

Now that we’ve covered different ways to calculate prices, it’s time for you to get out there and start selling!

Want more tips on freelancing? Check out our blog. 8 tips for becoming a sucessful freelancer