If you exchange your time for money, you’re communicating that what you do with your time is not worth any value.
Of course, this couldn’t be farther from the truth. The work you do is extremely valuable! So, why are you charging for your time and not for your work?
If you’ve been charging by the hour until now, do not worry. It’s not your fault. Most jobs in the workforce are pay-by-the-hour. It’s so normal that one cannot be blamed for thinking it’s the only option.
Also, if you’re a new freelancer, you may be stymied about how much to charge or mistakenly believe that people will not use your services if you charge by a metric other than hourly.
Now, this may not be feasible depending on your industry, but if you’re a freelancer, I strongly caution you against charging solely for your time.
Here’s why you shouldn’t charge by the hour:
You’re punishing yourself for getting the work done faster.
There’s no reason a freelancer should be penalized for being efficient. The better you get, the more likely it will take you less time to get things done.
Charging by the hour works against your client’s interest just as much as it works against you, the freelancer. Since finishing things well in a short amount of time adds more value to both you and your client, it makes no sense to take a pay cut for getting something done quickly. When you charge by the hour, it’s no longer in your interest to work efficiently.
You’re severely limiting the amount of business you can do.
Your time is finite. It goes without saying that if you charge for your time, the amount of clients you can take on at once will be far more limited than it would be if you charged by a less quantifiable metric.
Charging by the hour also ensures that clients will have to pay for inevitable distractions. Even the most diligent, ethical freelancer using a timer or an app such as Toggle will not take herself off the clock every time she spaces out or her attention wanders.
You’re saying you’re replaceable.
If you wish to make a living from freelancing and you’re not doing it as a hobby or side-hustle, then you need to charge with your best interests in mind. There are different levels of labor. If what you do requires very little skill and can essentially be done by anyone willing to do it, then it makes sense to charge for your time. The market will view you as a simple commodity easily exchangeable for someone or something else.
But if what you do takes uncommon skill and provides greater market value, charging by the hour makes no sense at all. It’s more than likely that what you do is not something that anyone with a spare X number of hours can do just as well you can. So, don’t make yourself a commodity! Let prospects and clients know right off the bat that you can’t be easily substituted for someone else.
It opens you up for miscommunication and conflicts.
Let’s say your client decides to pull the plug after only a couple of hours and you had expected it to take up to five or ten. That leaves you with far less pay than you hoped, which will leave you frustrated and in urgent need of a new client to make up the difference.
There is also the chance your work will take longer than your client expected. Unless you and your client specified a capped number of hours or a fee limit in the beginning, this will likely result in frustration for the client and resistance toward paying you the full amount.
Time that could have been spent collecting your pay and moving onto the next target will now potentially be lost in negotiation and argument. You may then have to compromise to save yourself anymore lost time or money.
The length of time it took doesn’t necessarily have anything to do with quality.
When purchasing a product, such as a work of art, a useful tool, a gadget, or a music album, the amount of time it took to create it often doesn’t determine its value.
For example, the price of a Van Gogh is the same price whether the painting took him 3 minutes to complete or it took him 3 years. The same is true for a painting by a new, unknown artist.
If Drake cuts an album in a week, his label will sell for the same price as it would had the album taken over a year to complete. And consumers have no problem paying the same price. This is because the time it took is irrelevant to the cost.
The same goes for many services and if you’re a freelancer, the service you provide is your ‘product.’ Don’t cheapen it by charging by the hour rather than by a factor more closely related to the actual work, such as the market value of the deliverable.
Here’s what you should do instead:
Dictate your own financial outcome.
When you charge by the hour, you give your clients the power to determine your wages. This puts you at the mercy of others, increasing the likelihood that the outcome will not be in your favor.
Knowing exactly what you will be paid before you start the project will help you to work with a clearer mind, and likely produce higher quality work. Your client will also rest easier knowing there will be no surprises.
Setting a concrete fee allows you to set the terms, which gives you leverage in a negotiation and puts you in the driver’s seat. As renowned freelancer and best-selling author, Seth Godin, says: Being a freelancer means you get to pick your clients.
So, why not pick your own prices?
Charge for more than just time.
As a content writer and social media marketer, I completely empathize with any freelancer who feels stuck when it comes to pricing. In the freelance world, and certainly in the freelance copywriting and content writing world that I navigate, figuring out what to charge can be especially difficult, because there is such a wide spectrum of pricing. For example, there are many content writers earning less than $20 for every 500-word blog post while others may charge $0.25/word. Still, some will charge $1,500 for one guest blog post!
Figuring out what to charge for your work can seem absolutely daunting when you are getting started. This is why so many of us default into hourly wages.
Allow me to please suggest an alternative:
When pricing, don’t saddle yourself with doubts about what you’re “worth.” Speculation about self-worth is a waste of time. Just as you should never say no for the prospect, you also shouldn’t negotiate your own value down to a lower price point before the prospect attempts to do it for you.
Remember, you can always come down from a higher initial offer than you can from a lower one.
To get a good idea of what to charge, a good place to start is finding out what your competitors charge. What are most people in your target audience paying them for the same service?
You can also base your price on elements such as the number of words, the number of pages, the weight of the products, or the amount of finished products created within a given time period. And yes, you can even factor in the time it took to produce the work! But keep two caveats in mind: a) Don’t make time the only factor upon which your price is based and b) You are not obligated to tell your clients that time is a consideration in the overall fee.
In fact, let me let you in on a juicy, little secret.
You never have to tell prospects or clients what your pricing is based upon! Once you do, you leave yourself open for negotiation.
The best piece of advice I received regarding pricing when I started freelancing full-time was as follows:
Decide what you want to earn in a year and work backwards.
Simple as it sounds, these words of wisdom, passed onto me from a veteran freelance copywriter, changed my perspective and enabled me to see things much more clearly.
Reverse engineer everything back to your desired bottom line. Figure out what you want to earn each month to achieve your desired annual income and come up with an accurate estimate of how many clients you can realistically serve at one time. This should give you a very clear idea of how much to charge per client.
Of course, market conditions must be taken into account and your pricing has to be grounded in reality, but it’s far better to reverse engineer based on your desired bottom line than to timidly price yourself lower before your prospects attempt to do so for you.
While there are, of course, a variety of factors every freelancer must take into account when pricing, the best thing you can do to put yourself in a position to win is think with the end-goal in mind.