In this blog post, I'll be going over some freelancer pricing mistakes that I did or saw other developers doing, along with revealing a few lessons I've learned from them.
If you prefer to watch this, I also made a video. You can see it here:
The first major freelancer pricing mistake that I’m guilty of doing is calculating my hourly rate entirely wrong.
Thinking like an employee
Here’s what I did: I took my current weekly salary at that time and basically divided it by 40/h + increased it by an amount that I thought it’s fair to ask for my work.
I forgot about two really important things: taxes and paid time off!
During your full-time employment, your employer takes care of your taxes and paid time off.
All this becomes your responsibility when you start being self-employed. To figure out the amount you have to pay in taxes, find an accountant or contact the authorities in the country where you're conducting your business.
I learned about the importance of Paid time off when it was already too late. 😅
I was already vacationing when I realized I'm going to send out an invoice with half the money I was usually charging. So I suggest when coming up with your rate just don't expect that you're going to work non-stop 40 hours a week the entire year.
In the end, what looked like a whole lot more money turned out to be only an OK increase, and I didn't raise my hourly rate for a year, because I was too afraid I think.
Looking at other offers
Certain sites like Upwork let you look into what other candidates are offering (Bid Range).
When I worked intensively on Upwork people constantly lowballed complex tasks, as a result of that the range where the offer was moving was pretty low.
A low offer doesn't mean the one who offered a job accepted any of those low offers, it means that they just, …there.🤷♂️
The person who put up the gig can still opt for a higher offer in exchange for work of better quality.
I suggest you don’t use Bid Range as a guideline.
If you know other freelancers from your community, it's better to ask them for a range - don't expect exact numbers. Freelancers are already sharing their pricing strategies so I'm sure you'll find something.
Handling failed deals
I never did this but when I was looking for freelancing services people actually did this to me and I was shocked!
When I was backing out of a deal the contractors started lowering their prices.
At that point what are you telling me - that your services don't worth as much as you initially asked for OR
Does the lower price mean I'm also getting lower quality, both of these?
Also, clients trying to shave off a dollar or two from a price you already set are going to be your worst clients. People who understand the value of what you're eventually going to create will either accept your offer or won't.
When you find yourself in a situation that you want to charge 1250 for a project and the client goes like, ...yeah, can you do it for 1200? unless it's your first project, just leave it. Somebody else will do the job.
You can understand based on the job description or after the initial call with the client if it's a job that needs to be done in a rush - working days & nights or you can take your time.
Factor this in when setting your rates.
For example, have a higher hourly rate for hot tasks and a different one for more relaxed work.
I also suggest that later in your career try to experiment with project-based pricing. Simply because after years of experience if you don't set some ridiculous hourly rates, you'll be punished for being efficient at what you do.
The only downside is that underestimating a project with fixed pricing can punish you hard for not being accurate.
Being new on a platform - Asking too much when starting
Unless you've got some crazy references it's pretty unlikely that someone's going to hire you for the same money as they would someone else with a 5-star rating.
I think it's okay to lower your hourly rate or offer a better deal when you're just starting out on a platform.
Your first gig is going to be critical for your survival on any platform.
Be creative, remember: you're your own boss now:
This would be my advice for Freelancer just getting started!
I hope these tips will help you to create a living for you and your family by selling your services at a better price!
I write and make videos about software development and career.
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