Payment: one of the major reasons why anyone pursues freelancing or the creation of their own digital marketing agency, and yet it's also one of the biggest hurdles to get over. Not only is it difficult to move from being handed a rate of pay to setting it for yourself, but it can also seem daunting, awkward, or even downright terrifying to talk money. It's a sensitive subject with a lot of different approaches. With the amount of potential competition out there, you want to make sure that you are charging a rate that makes you and your client happy, not scaring them to the pricing lowlands.
What to consider? What are the options? Let's find out.
Time is Money...
When starting out, the easiest way to figure out payment is by charging an hourly rate. You can do the research - the average hourly rate for freelancers is between $50-$100. Now this is an average; the majority of beginners charge rates under $50. Many charge $15-$20 an hour, which is sometimes more appealing to potential clients.
Another way to figure this out isn't through research, but math. You can set a yearly salary expectation for yourself, and work backwards from there. How much do you need to work, and at what rate, in order to reach that yearly goal? There you have it, your hourly rate. This is an excellent way to have a solid idea of what you are able to charge.
So what are the benefits of this model? You are getting paid for the time you spent on a project. This is important. A common mistake freelancers make when they first start out is to lowball the whole process. When this happens, they get locked in to low rates for longer hours than expected. So having a clear, strong idea of what you will charge in order to make your expected living is a good approach once you are freelancing full-time.
But this can backfire. Time is money...
...But So Is Value.
So you've got an hourly rate, and you've been working away at a lot of projects. Eventually, though, you realize two things: you are getting way better at this, and it is taking you far less time to complete projects.
While this is a good sign - your skills are increasing, and the quality is showing - it's the second realization that is a problem. The less time you work, the less you get paid. The output quality is ever-increasing, but the returns are getting smaller and smaller. This is the snag of charging hourly. You outgrow the model, and if you aren't ready to change the approach, you will end up having to juggle far more projects than you're ready to handle.
So how can you change this? You need to look into your work's value for your client. There will always be small projects that you can still charge by time spent, but the bigger and more sophisticated the project, the more you need to assess the final product.
Your time won't be the focus in this line of thinking. Instead, you'll want to look into what the client is getting out of this whole set up. Are you designing a website that is going to pull in so much more revenue for the client? Are you creating something that has long-standing, repeat uses? Then it's time to look into pricing according to the end goal. This is when you need to pitch budgets according to the value of the work, not the time spent working on it.
Again, these rates can be based on research - finding out what others are charging for similar projects. However, now that it's up to you to set everything in motion, you need to stay as adaptable as you can.
Having completely concrete payment plans may seem like the best possible option. For some of you, it may be. But for a lot of freelancers, having the ability to remain flexible according to your own terms is part of the appeal of this kind of work.
What kinds of things should you keep in mind? It can be anything from how much you like the work itself to how much you like working with the clients. Really, these kinds of considerations depend on each individual freelancer's work and lifestyle. Remember that these are no longer decisions that can be outsourced or passively waited for. You need to sit down and outline what it is you want, and how it is you'll get there.
Much like needing to figure out your work and agency's focus, you need to understand the value of what you are offering, as well as what you need to maintain this freelancing career. It is very easy, especially in the beginning, to allow yourself to become a victim of imposter syndrome. Don't let those feelings take control. If you are good at what you do and are building a portfolio of quality work, you've got all the backing you need to convince clients that your pricing is fair.
Communication, Communication, Communication
What's the biggest takeaway from all of this? Like so many other aspects of freelance and agency life, it is all about staying in contact. Open, honest communication with your clients is the best way to make sure that all of your project and payment parameters are clear and understood.
Payment should never be passive. Adapt and change according to projects, value, clients, and any other relevant factors. You need to consider the negotiations and discussions of project scope, figuring out exactly what is expected, what budget has been set aside, the timeline. Money is great, but nobody said it was easy. You need to take all of these things into the mix whenever you are accepting a project.
Unfortunately, this is going to be the case no matter what level of freelancing or agency you are. Your pay will be an ongoing project, not a goal. But as complicated as each project and the rates of pay may be, it does afford you the ability to keep talking. Every new discussion of payment will make the next conversation more informed than the last - and it will show. With each passing experience and project, you will be building your credit in the community. Eventually, with the right negotiations and the best possible work, you will no longer need to negotiate. You'll be able to see all of the details, name a price, and seal the deal.