As a creative freelancer, one of our toughest challenges is how to set rates. Here are four ways to set your pricing. You can use a combination of these approaches, and sometimes may need to make adjustments depending on your career goals or the needs of a specific project.
- Market-Based Pricing – Market-based pricing is generally driven by two key factors: the number of vendors available (supply) and the amount of work (demand). But there are other variables at play. For example, if there are union rates for this job or service in your area, that may affect the typical rate charged–it usually improves it. Or, there may be pressures on the market, such as seasonal demands. Becoming an active member of a local association or meetup group — in my area of Washington, D.C., TIVA and Women in Film & Video , in NY and LA the Blue Collar Post Collective (BCPC)— is a great way to develop friendships with colleagues and learn about trends in your market. The BCPC conducts an annual rate survey which is a great tool for our industry.
- Value-Based Pricing – Using this model, the price of your services are driven by the value the customer puts on your work. For those with more experience in a particular subject matter or style of content, value-based pricing can work well. Value-pricing also works if a client really wants a particular team in place for a project and you have the track record to deliver what they need.
- “I Need This Job” Pricing – Of course there are stages of every career where you accept a rate lower than you might otherwise because you are trying to gain experience, try your hand at a new skill or tool, or secure work in a down market. I would just warn that you don’t want to do this very often, or you are likely to get stuck at the lowest rates (and bring everyone else down with you.)
- Salary-Based Pricing – Wait, we’re talking about freelancers, right? So why would the term “salary” apply? Well, you may want to set your day rate by determining the amount of money you’d like to (or need to) make divided by how many days you are likely to work. This is not a hard and fast rule, but a good way to see if you are going to make your financial goals. If not, you either need to raise rates, work more hours, or perhaps garner more skills that prospective clients want.
These are excerpts from an upcoming Lynda.com course of mine on Freelance Work Strategies for Video Producers and Motion Graphics Designers. Let me know if there are topics you’d like to see addressed!