There are over one billion freelancers across the globe, according to the Don’t Do It Yourself freelancing site. Seventy-five percent of those interviewed said they wouldn’t give up freelancing for any other role. This statistic indicates that with profitable rates, freelancing can be well-paying and lucrative. Let’s dig deeper into some of the best ways to up your rates.
Why negotiate high-end rates?
In a 9-5 full-time job, you are usually paid a monthly salary with benefits regardless of your output. However, in the freelancing world, your monthly earning will typically depend on the volume of work or the number of clients you get.
If you earn low rates for every deliverable, you will have to increase your output volume to earn enough, stretching your capabilities too thin, and, ultimately, leading to burnout. Higher rates take away the pressure, keep your mental state intact and allow you to perform at your best.
That’s why it’s critical to know how to use the best negotiation training concepts such as:
- finding common ground
- setting your lowest acceptable position
- exchanging value for value
Let’s talk about how to apply these concepts to freelancing.
How to secure the highest rates possible
Here are some tips for landing lucrative rates.
Set a base rate
Before you start any talks to negotiate rates, calculate a minimum base rate that you can’t go below. This rate will be the baseline you will use as a starting point to build your rates.
Your minimum rate is based on your living expenses, business costs, and tax rate. So, draw up a cost structure to use for your calculations. Your living expenses will include expenses like rent, clothing, and food.
Business costs include everything you use to complete your jobs for clients, such as software, website hosting, additional training, legal help, accounting assistance, etc.
Once you sum up all your relevant costs, divide this number by your work hours each day. For instance, say your total costs per week come to $2000. You will need to divide by your weekly hours, say 40 hours per week. So, you will need to charge upwards of $50 per hour.
Then factor in the tax rate by adding the applicate rate of tax. Say your tax rate is 25%. Your minimum acceptable rate will be $50 x (1+25%), giving you $62.50.
Remember, the baseline rate isn’t necessarily your final rate. It’s a cutoff point below which you can’t go. Knowing your lowest possible rate will save you from pursuing fruitless negotiations if the client’s budget is well below your rate.
Charge per project
Working per hour puts a choke on your earning potential. By charging project-based rates rather than hourly prices, you can increase how much you earn per hour. For instance, for a 5-hour job at $40 per hour, you would earn $200. But if you charge $200 for the whole job and complete it in 2 hours, and then take on another project for the remaining 3 hours, you would make more money for the same amount of time worked.
Once you start charging per project, work on improving your output. For example, if you’re a freelance writer, learn how to type faster, dictate while having an automated system capture your words or subcontract.
Focus on value
What the client thinks about your work usually makes the difference between being paid well and haggling for scraps.
So, take the time to research the client and how the project can add value to their business. Dig deeper into the client’s enterprise to determine how your work will benefit its operations or impact its profitability.
Once you drill down on your client’s potential value gains, you can present a stronger value proposition in the negotiation. Make it crystal clear what the client stands to benefit from so that they can understand the exchange of value. Since most clients give much more weight and attention to solving their areas of pain, you would be wise to do the same.
In addition, leverage your strengths. Showcase your past work accomplishments, education, and training. Your website or portfolio must be marketable, well designed, and appealing. You can also use videos to tell your story.
By highlighting what you can achieve, you can establish common ground, making it plain to the client that you can meet their goals. Once clients perceive your work to be more valuable, they are usually more open to paying more.
Offer smart discounts
Offering discounts can help improve your earnings, but only if you do it right. If you undercut your rates through regular discounts, it may give clients the impression that your work is less valuable.
If you use online platforms like Upwork, clients can see the rates for your past jobs, making it harder to negotiate higher rates.
So, instead of regular discounts, change the scope of the work to accommodate more tasks for the same rate. Clients get more for their money while you maintain your premium rates.
In situations where you have to offer discounts, let clients know the reasons for the discount, so you leave room to get back to your original rates for future projects—for instance, a once-off first-time discount for new clients.
Keep improving your skills
Growing your skills allows you to charge higher rates based on your expertise. When you increase your skills, you can also upsell and scale your services to earn more. For instance, a writer can learn how to proofread and edit and offer their clients a package including both writing and editing services to get a higher overall rate.
You can sharpen your skills by:
- attending relevant training courses
- joining professional networks
- reading articles or listening to podcasts by experts
- enrolling on online learning platforms such as LinkedIn Learning
Once you establish yourself as an expert and passionate professional, you can justify your higher rates.
Securing lucrative rates
Having a base rate will prevent you from falling for poor-paying jobs. In addition, consider fixed-price projects rather than hourly work to increase your earning potential.
It also helps to show the client your value and only offer discounts tactfully to avoid undercutting your rates. Most importantly, keep gaining ground in your skills training so you can negotiate from a position of expertise.
