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Of the many challenges faced by people new to freelancing or running their own business, the issue of setting prices and getting paid rank among the most common.
But, with a little guidance, it’s possible to remove the fear from getting paid properly for your time. Here’s our guide to pricing, quoting, and invoicing for beginners.

 

How do I work out how much to charge?

The first step in getting your financial ducks in a row is to figure out how much you should be charging for your services. There is always going to be some guesswork involved in this (welcome to the world of freelancing!), but with some research you can get to a workable figure which should be in line with the standards for your industry.

Firstly, consider your experience, knowledge, and skills. These will be key drivers in dictating your fee. It should be no surprise that a client will be willing to pay more for someone with ten years’ experience in a niche market, than a graduate with no portfolio.

Next up, speak to other freelancers in and around your industry to get an idea of what they charge. You might not get pounds and pence figures from them (you are the competition, after all), but ballpark ideas will help you to get a feel for the landscape in your sector.

Remember that your location is key, too. A UX designer based in London, who can get to team meetings and huddles on a day’s notice, is likely to charge more than a remote worker in the Ukraine.

Finally, always keep your quality of life in mind. If undercutting the market means you’ll be working 50-hour weeks just to keep your head above water, you’ll burn out quickly. Set your prices at a workable level for your own circumstances.

 

Should I charge hourly, daily, or on a fixed rate? 

When it comes to the question of how to charge, there is no strict right or wrong answer. Instead, let’s take a look at the pros and cons of each:

Hourly:

Charging hourly is the method a lot of freelancers use when they’re starting out, mainly because it’s so simple to keep track of how much you’ve earned on a project.

Unfortunately, there are some downsides. Hourly rates aren’t generally favoured by clients, as it can be difficult to cost a project without a fixed fee. Also, managing your bookings by the hour can get complicated as you get busier.

 

Daily:

Charging a day rate is the preferred method of many freelancers. It offers the same simple logic of an hourly rate and it’s easier for clients to forecast costs, too.

That said, day rate fees can fall short on occasions. When it comes to quoting, it’s easy to undersell or oversell when calculating by day rate. Also, the client might challenge you on your definition of a full day.

 

Fixed fee:

Fixed fee pricing (where you stipulate the entire cost of your services in one figure) is very popular for freelancers. You have the chance to earn more in less time if you work fast, and your client will have a clean, clear fee for their project costings.

Fixed fee pricing can be really complex to figure out, though (do you include time for amends? who has the final say of when the project is complete?).

At this point it’s worth pointing out that, although many freelancers have a preferred charging method, you should be at least willing to consider changing it out for whatever best suits the project.

 

What happens if a client challenges my fee?

Although the majority of clients will be willing to accept your quote, it’s an unfortunate fact of life that some will try to reduce your price.

The first thing to do is stay calm. Remember that, whatever their reasons, your client probably won’t have requested a reduction just for the hell of it. So, instead of getting angry, follow this three-step approach:

 

Try to put yourself in the client’s shoes:

Take a candid look at the proposed work and, considering the outputs, ask yourself whether you might be overcharging. If a client thinks they’re not getting good value, it might just be true.

 

Calmly state your case for not budging:

If you feel that your quote accurately reflects the work involved, then definitely stand your ground. Go back to the client highlighting how your quote meets the brief, and reiterate your suitability for the project.

 

Assess whether the reduction is worth it: 

If the client is refusing to move, then it’s time to assess whether the project is worth your effort. Is the project a stepping stone to more work? Is this a prestigious client that’ll improve your portfolio? If not, it might be time to walk away.

 

How should I track my time?

Even when you’re charging a fixed fee, it can be beneficial to track your time on every project. Not only will you get an accurate view of how long you have spent at the coalface, but it could also come in useful if a client demands to see a breakdown of your time when it comes to submitting an invoice.

There are a number of tools to help you track your time. From intuitive apps such as Everhour and Clockify, to all-encompassing project management suites like Asana—there are plenty of options to suit every need and budget.

 

What’s the difference between a quote and an invoice?

The difference between a quote and an invoice can catch out many freelancers—but it’s quite a simple distinction. A quote is a formal estimate that shows how much your services will cost should the project take place. The quote will usually contain a breakdown of services and fees, and tends to be valid from 30 days after issue.

An invoice is a list of services or work already carried out, along with relevant dates and costs of those services. The invoice tends to get sent to the client at the end of a project, or at agreed periods throughout the project.

 

What information should I include on my invoice?  

It’s important that your invoice contains information such as your business name, address, and VAT number if you have one. On top of that, it’s worth including details of the work you’re charging for, and the date it was completed. Not only will it clarify things for the client, it might also be useful if any disputes about payment arise.

To help you get your invoicing in good shape, we’ve put together a rather nifty invoice template. You can download it for free, and tweak it to your personal requirements.

Have you found our guide useful? If so, you can sign up to our mailing list here, to get more tips and insider info straight to your inbox

 

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