Welcome to the second part of our contract miniseries for budding freelancers.  Part 1 covered how to develop a proposed scope of work for new projects.  Here, we’ll dial into the piece of that proposal that tends to cause the most angst among new independent contractors:  the fee.

Honestly, unless you’ve done this before in a previous life or trained with a pro, it’s going to take time to become comfortable with what you charge.  Second-guessing will become second nature:  am I charging too much or too little, will this insult the prospect or leave money on the table, etc.

Fortunately, there are ways to minimize the intimidation factor and blow through this stage a bit faster.  Here are a few of the bigger ones to consider as you get your sea legs.

Freelance Pricing Structures

Options may differ by industry, but generally speaking there are three primary structures for freelancers:

1. Fixed fee: Need a 10-page website?  That’ll be $X.  Want to add two more pages?  Cool, that’ll be an additional $Y.  Pretty straightforward.  The key is pricing competitively as well as appropriately for your experience level.
2. Hourly: The nice thing here is that you’re getting paid for every (pro-rated) hour you work.  If that website you quoted for $X takes longer than expected, you may make less than you would have if you’d charged by the hour.  But, that opens the door for calling your process or even integrity into question (“It took you how long?”).  I find hourly is less than ideal for short-term, “hard” deliverables than it is for ongoing, multifaceted projects.
3. Retainer: A company may want you on hand for a while.  Retainer contracts can be fixed fee, hourly, or some combination of the two depending on the nature of the work.  If possible, chat with a veteran in your industry before committing extended chunks of time if this is new to you.

Resources for Freelance Project Pricing

If you’re hourly, see if you can get a range from other pros in your field.  FYI, it may be tempting to rely on freelancer job sites like Upwork that require contractors to publish hourlies, but be careful.  They can be great platforms, they’re very poor barometers for pricing.

For fixed fees, there are more sources than you might think.  You can tap into organizations like AWAI and Copyblogger that publish industry benchmarks (for various fields) on a fairly regular basis.  I also found other freelancer sites to be hugely valuable.  Not everyone posts their fees online, but many will.  This is a great way to sense-check standard market rates for your niche.

When to Consider Undercharging

If you’re just getting started, you may have to aim somewhat lower than the average bear.  The goal at this point is to gain experience, build a portfolio, and grow your network.  That could mean gritting through more modest pricing to secure those first few jobs to accomplish this.

Don’t do it for long, though.  Also, don’t offer such favorable rates for too many clients.  After all, you want the good ones to stick around, but you don’t want to establish precedents that will be harder to change as time goes on.

Don’t Negotiate Against Yourself

If you quote based on what you think they’ll take rather than what you’re worth, you’re selling yourself short.  I’ve priced myself out of more than one project, but I value my time and you should, too.  You ought to be striving for fairness and consistency with all clients, anyway.

Along the same lines, don’t be afraid to walk away.  You may align on a scope, only for them to tell you they’ve got half the budget it requires.  If you can’t find a middle ground, then politely decline.  They’ll respect that.  I’ve even had once-upon-a-time prospects reach out months later about a different project that ended up going through.

At the price point I proposed.

How to Record the Fee in the Contract

In your agreement, the fee isn’t just a number.  It’s a system.  Include an invoice schedule (e.g., down payment, all at once afterwards, multiple installments, etc.), deadlines (e.g., due on receipt, within two weeks, etc.), and any other relevant payment terms (e.g., success fee, royalties, compensation for canceled contracts, etc.).

It’s not pedantic, it’s protective.  You’re hustling for your client and should hold them accountable for their end of the bargain.  As mentioned in Part 1, never, ever presume things will simply fall into place.  Spell things out clearly and thoroughly.

Confidence comes with time, I promise.  The more you follow market rates, the more projects you knock out, and the more recurring business you have safely in the hopper, the easier this whole process will be.

You’ve got this!

If you’re reading this, that means you’ve made the solopreneur jump (or are about to) and you have the wherewithal to do your due diligence.  Kudos on both fronts.  Good luck, and let me know if I can be of service.