How to determine your rates for freelance IT work
Though full-time employer-based work is still the norm everywhere in the world, the freelance knowledge economy has grown to become a viable work model that is attracting many with its promise of freedom. And there is plenty of work available for tech professionals with in-demand skills in artificial intelligence (AI), blockchain, robotics, ethical hacking, cryptocurrency, Amazon Web Services (AWS) Lambda coding, and virtual reality (VR), to name a few specializations.
How do you position yourself in this dynamic and competitive marketplace? In addition to having the right skills, pricing your work appropriately is an important part of positioning. Freelance rates are not set in stone. Most independent professionals arrive at a suitable rate through trial and error.
It’s sometimes hard to know how to get paid what you are worth. Every freelancer has struggled with this at the beginning of her independent career, or at some point along the way. There are no definite guidelines that freelancers can adhere to while trying to set a realistic rate.
Earlier this year, FitSmallBusiness.com published hourly rates for what according to them are the “10 highest-paying gig economy jobs of 2018.” Search online and you will find a range of rates on other websites and trade publications as well. These can be hourly or project-specific.
While you can compare rates and arrive at a rough benchmark, however, determining a realistic rate takes both research and experience. Freelancers generally get a fair sense of what to charge as they progress from gig to gig.
CodeMentorX, a platform for freelance developers, has a ‘rate finder’ for those charging by the hour. Even if you don’t work on their platform, you can use the tool to help you decide on a suitable rate.
Some basic ground rules for negotiation
First of all, you need to find out what your skills, level of expertise, and experience can fetch in relevant markets. There are no fixed rates, but you can suss out a range of hourly and project-based rates. Remember you have to arrive at a rate that the client can and will pay, but that will also sustain you with some cushion.
Work out how much you need to earn annually. Apart from living costs, this should include taxes, healthcare if you’re in a country where you need to make your own arrangements, cost of equipment and software, and some extra. Remember that freelancers need to provide for times when there is little or no work to be had. Look at the salaries in your region for your tech stack and experience to see what the market pays.
Research your market to get a sense of what freelance professionals in your line of work and with similar experience charge. Also, find out what clients you consider worth targeting pay for your skill set and experience. You will need to network quite a bit and ask around.
It is best to avoid clients who want great work but are not willing to pay for it. A client who does not treat you as a professional is going to be a problem throughout the project. Even if you don’t have enough work, it’s better to focus on developing your skills and marketing. Remember that you are a professional and not an amateur.
It is also helpful to know what a client can pay. Often a client will tell you what he intends paying. If not, then ask him what his budget is. This will help you price your work to suit both parties. Ultimately, your rate should reflect your skill level and experience and be at least adequate to pay your bills. As you go along, you will discern what the market can take.
Tips for IT professionals to get the best rate for their work
Join a Freelancers Network: interact with others doing similar work in your location. This is a good way to find out what the going rates are for different types of assignments in your stack. You can then work toward setting a viable rate. This is also a good way to gain valuable insights on handling projects, building client relationships, market trends, and more.
Be Professional: Clients who value good work understand that it takes expertise and time to deliver quality and are willing to pay for it. If you are confident of being able to give your clients what they need on time, stick to your rates. Few professional clients will opt out of negotiations for a few dollars. You don’t want to earn a reputation for being someone who can be pressured to lower rates according to whatever suits the client.
Get to Know the Project and Client: It is usually not a good idea to begin a discussion with price. Understand the client’s requirements and let him know what you can bring to the project and how you can add value. See if you are a good fit for each other before you begin negotiating cost.
Discuss Scope: Money alone is not the chief consideration. The work and the client are important aspects of a project. If the work promises to add value to your skill set and portfolio and you like the client, then you could negotiate the scope and mutually agree on reducing it without affecting the outcome in order to keep within his budget.
Hourly or Project-Based Payment: It is important for each freelancer to consider all aspects of the project, weigh pros and cons of both options, and decide whether to ask for an hourly rate or a lump sum. Some charge either of the two depending on the nature of the assignment, while others never charge per hour or day. You will need to find what suits you.
Raise Your Rates Periodically: Precisely when you should raise your rates depends on a number of factors. Once you’ve earned experience and upgraded your skill set, you may consider raising your rates if your skills are in demand and you can demonstrate advanced expertise. Clients will likely be willing to pay more if you have developed a reputation for quality and reliability.
Know before you go
Whatever your price, it is important that you know how and why you arrived at it. A client might want to know whether what you have to offer is worth his money. You need to be able to explain and justify the cost.
Be willing to embrace a period of trial-and-error. You will find that setting the right price becomes easier as you gain a better understanding of the market and the value of your skill set and experience.