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When you are looking to start freelancing and weighing your options on how to get started, where to start, and most importantly, how to price your services to win more clients, you want to research what other freelancers are doing and what the “pros” suggest.

Needless to say, many freelance marketplaces are available to set up a profile to market and sell your services to the business community. Choosing a platform that aligns with your expertise is not as critical to your success as some would suggest unless your skillset is so niche you need a specialized platform to reach the right client type.

The most important element to win clients is the pricing of your services. Too low, you aren’t experienced enough to get the gig. Too high, you’ve priced your services and yourself beyond the means of most businesses.

Maybe that is what you want when you price a service too high, but if that is not your intention, fair pricing can mean different things to different people, and in a very competitive space, you need to ensure your pricing helps you stand out from the competition.

Luckily, we’ve got you covered, as this post will inform you about the pricing models to leverage for your services and outline six tips you can use to win your next gig over your competition.

Freelancer Pricing Models

How to Price Your Services to Win More Clients

There are several common pricing models for freelancers. Most gigs or projects fall under one of these seven frameworks when working as a freelancer. Remember, you are just like all small business owners. You will have expenses and tax repercussions. Ultimately, your choice comes down to pricing services based on your overhead costs and desired profit margin.

You should develop at least two different models to be successful. Having one will limit your opportunities to bid and win projects, and having too many is difficult to manage and ensure a positive return.

Hourly rate

Hourly rate means that you charge a set amount for each hour of work you do for a client. It’s a popular option because it allows you to track your time accurately and ensures that you’re compensated fairly for your work.

Plus, clients appreciate seeing how much time they’re paying for and can better budget their projects accordingly.

Of course, there are some downsides, too – sometimes clients may feel like they’re being nickel-and-dimed, or they may not fully understand how long certain tasks take. Overall, the hourly rate model is a reliable and transparent way to price services.

Ease of Establishing: Easy to establish consistency.
Model Accuracy: This model is highly-accurate if you’ve calculated your costs and produced them at an hourly rate.
Profit Margin: Hourly pricing of your services typically provides a medium profit margin.
Model Downfall: No significant downfall or risk to this model.

Project-based

You might also consider using the project-based model for pricing your services. This same pricing formula means that instead of charging by the hour or on a retainer basis, you’ll quote a fixed price for the entire project.

This model has several benefits – for one, it’s easier for clients to understand and budget for. Plus, it gives them more certainty about what they’ll be paying upfront.

On your end, it allows you to estimate your earnings better and manage your workload. It also incentivizes you to work efficiently and complete projects on time since your payment is tied directly to delivering the final product.

Ease of Establishing: Easy to establish consistency.
Model Accuracy: This model is highly-accurate if you’ve calculated your cost structure to fit within the model.
Profit Margin: Project-based pricing of your services typically provides a medium profit margin but can be low if you do not provide the necessary project guardrails.
Model Downfall/Risk: No downfall but the risk of limited profit margins if projects go over budget.

Per diem

Per diem or daily rate is a great option to consider if you’re looking for a more flexible approach to your pricing structure. Essentially, the per diem model involves charging clients a daily rate for your services rather than an hourly or project-based fee.

This can be especially beneficial if your workload varies from day to day, as it allows you to adjust your pricing accordingly. Plus, it can simplify billing and make it easier for clients to understand exactly what they’re paying for.

Ease of Establishing: Very easy to establish consistency.
Model Accuracy: This model is highly-accurate once you’ve calculated your costs.
Profit Margin: Per diem typically provides a medium to a high-profit margin.\
Model Downfall/Risk: Only relevant in some industries, not applicable for many.

Weekly rate

With this model, you charge clients a flat fee for a week’s worth of work, regardless of the number of hours you actually put in. This can be great for both you and your clients as it allows you to plan your workload more effectively and helps them budget their expenses.

It can also encourage clients to assign larger projects since they’ll be paying a set rate rather than an hourly one. Of course, finding the right weekly rate will take some trial and error, but once you do, this pricing model can be a game-changer for your freelance business.

Ease of Establishing: Medium difficulty in establishing consistency.
Model Accuracy: This model provides medium accuracy once you’ve calculated your costs.
Profit Margin: Weekly rate typically provides a medium profit margin.
Model Downfall/Risk: Only relevant in some industries, not applicable for many. Week to week is difficult to make consistent if work is variable.

Monthly retainer

With this model, you agree to provide a set number of hours or services each month for a fixed fee. This provides stability for both you and your client, as they know what to expect from you each month, and you have a steady stream of income.

The model allows you to prioritize your workload and plan your time accordingly. Just make sure to clearly define the scope of work and set expectations upfront to avoid any misunderstandings.

Ease of Establishing: Very easy to establish consistency.
Model Accuracy: This model provides medium to high accuracy once you’ve calculated your costs.
Profit Margin: Monthly retainers typically provide a high-profit margin.
Model Downfall/Risk: Typically not preferred by companies unless they have full-spectrum visibility into all time spent on a project per month.

Value-based

The value-based pricing strategy is all about charging based on your services’ value to your business owners and clients. Instead of charging by the hour or project, you’ll set your rates based on what your client stands to gain from working with you.

The value-based approach considers factors such as your expertise, experience, and the results you deliver. It’s a win-win situation: your clients get measurable benefits from working with you, and you get paid what you’re truly worth.

Ease of Establishing: Difficult to establish consistency.
Model Accuracy: This model provides medium to high accuracy once you’ve calculated your costs.
Profit Margin: Value-based pricing typically provides a high-profit margin.
Model Downfall/Risk: Typically not preferred by companies unless you can prove significant results from previous projects and provide a contact to verify.

The revenue share model is a pricing strategy that has become increasingly popular among freelancers. Essentially, with this business model used, the freelancer and their client agree to share a percentage of the revenue generated by the project.

This means that both parties benefit if the project is successful and generates much revenue. The revenue share model can be particularly appealing for freelancers who are confident in their abilities to deliver great results for their clients.

It also incentivizes a freelancer to work hard and do their best to ensure that the project is successful.

Ease of Establishing: Difficult to establish consistency.
Model Accuracy: This model provides low accuracy once you’ve calculated your costs.
Profit Margin: Revenue share can provide low to high-profit margins.
Model Downfall/Risk: Preferred by companies that want a shared risk model or don’t have a marketing budget to outsource projects.

Regardless of the pricing model you choose, you need to ensure you’ve done your homework to determine best the approach that meets both the client’s and the project’s needs and stays fair to both parties.

Freelance Service Business Profitable Pricing Strategy

Until you get a good feel for a client and how you work on any particular type of project, it’s best to have a pricing strategy in effect to ensure you can calculate your costs. Most freelancers will have two types of costs, direct and indirect.

Direct costs are expenses that are directly related to a specific project, such as materials or software licenses. By factoring in these costs when determining your pricing, you can ensure that you’re not undercharging for your services and that you’ll still make a reasonable profit margin.

It’s also important to keep in mind that direct costs can vary from project to project, so make sure to take the time to assess each project individually before setting your prices.

Indirect costs include things like overhead expenses, such as rent, utilities, and equipment, as well as the value of your time spent on administrative tasks like marketing and billing. These costs may not be immediately obvious, but they can significantly impact profit margins and your profitability if you don’t take them into account when setting your rates.

By factoring in both direct and indirect costs, you can ensure that you are charging a fair price for your services while still making a profit. Other types of costs you may incur on some projects, but not all, are labor costs or material costs. Only factor these into the required projects and have a plan for them to reduce overhead costs in total.

Freelance Service Pricing Tips

Competitive Pricing Handwritten Text Encircled on Paper

Below are some of the best freelancer tips on what you can do to understand better how to price and what to price. Follow these, and you’re well on your way to earning more with each freelance project.

Create a service list and connect with other freelancers: First, decide what specific services you want to offer. Then, connect with other freelancers in your industry to get an idea of what they charge for similar services.

Establish a mindset for pricing your services: Understand the types of projects you want to take on and the pricing models that resonate best with those types of projects. Have more than one service price model at the ready so you can provide pricing based on what the customer requires.

Knowing what to charge can be one of the most challenging parts of starting a freelance business. You may think that setting low rates can help you win more clients. However, when you charge too little for your time, both you and your client will likely be unhappy.

Research your clients and don’t be afraid to ask questions: Before you start working with a new client, research their business and industry. This will help you understand their needs and how you can best serve them. Don’t be afraid to ask questions about their budget and timeline.

Make it easy for your customers to pay: Offer multiple payment options such as credit cards, PayPal, or bank transfers. Many freelancers don’t want to take the financial hit of credit card fees, but in doing so, you have a competitive advantage over those who want to get paid via paper check.

Focus on building lasting relationships: Building long-term relationships with clients is key to success as a freelancer. This means delivering high-quality work on time and being responsive to their needs. It’s much easier to establish repeat clients or monthly clients under annual contracts than it is to try and find new, reliable clients to fill your pipeline.

Communicate in a way that demonstrates high value: When communicating with clients, focus on the value you bring to their business rather than just the price of your services. Talk about the success you’ve achieved with other similar services or clients or on their projects if it is a repeat client.

Freelance Marketplaces

As mentioned, there are many freelance marketplaces to market and sell your services. Some are better than others, but the 25 we’ve listed below are recommended for all freelancers to try, regardless of their niche. Most of these offer the best opportunity for a new or seasoned freelancer to get decent-paying gigs.

Final Thoughts on How to Price Your Services

Most freelancers do not become six-figure earners out of the gate or without building up a reputation for success. You need to start with these same guardrails in place. Understanding that the ramp-up to earning higher-priced gigs takes time will allow you to not stress yourself out about pricing failures.

You will make mistakes in pricing as a freelancer. Some projects and customers are much more difficult to price than others, and you may not build enough contingencies to protect against a project going sideways. The best thing to do is to keep the client happy and satisfied, even if you did lose money.

Keeping a business-first approach to all things and not letting it get personal is the way to build success over the long term. They’ll be many opportunities to make money as a freelancer. Once you’ve established your value and expertise in your craft, you’ll be well on your way to earning what you are worth and having many clients who have no problem paying those rates.

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Freelancing? How to Price Your Services to Win More Clients