Invoicing for Freelancers: How to Set the Perfect Price

These days, small and medium-sized businesses, as well as individual specialists and entrepreneurs, often offer their services on a freelance basis. This is basically contract-based work, while remaining self-employed.

While getting started with freelance is incredibly simple today, there are still a few hurdles. And, believe it or not, rating your work might become one of the most significant challenges.

Many beginners find it hard to price their services adequately. They aren’t sure if what they are charging is considered too low or too high, and end up spending months on end either working for (nearly) free or trying to calculate the perfect rate.

If this sounds like you, we have you covered! This article is your ultimate guide to defining the right price for freelance services. Read on and we will tell you how to calculate prices quickly and easily!

What Is Freelance Pricing?

In a nutshell, it is a predetermined rate for the freelance services you provide. It should be calculated based on your expertise, type of service, value of work, and other factors. And it’s far more preferable for freelance workers to determine their own rates rather than build their business based on prices defined by their customers.

5 Pricing Models Freelancers Can Use

Before you can start invoicing your clients and making money, you need to figure out how much you are going to charge for your work. Before we move on to actionable steps, let’s define the 5 most common pricing models that you can try:

1. Hourly

As the name suggests, this model implies charging your clients by the hour. This is one of the most popular solutions for freelance workers, especially those who are just starting out.

The biggest benefit of this model is that it’s extremely straightforward. All you need to do is to define a fixed hourly rate, then track the time you spend on each project, and shape your bills accordingly.

The biggest downside of this model is that it doesn’t suit all kinds of services. Namely, work that doesn’t take much time to complete but requires a lot of strategic thinking and planning might end up being underpaid if you choose this model.

2. Daily

Another way to charge your clients is by the day. This model eliminates the hassle of tracking the amount of minutes you spend on each project. Instead, you set a daily rate and simply calculate the total number of days you spend.

It’s an excellent option for short-term projects that take under a week to complete. In this case, daily pricing is incredibly logical and simple.

Nevertheless, if a specific project takes more hours a day than a standard working day, you might also be left underpaid.

3. Scope-Based

This is another popular option. It implies invoicing your customers based on the exact amount of work you’ve done for them.

For example, if you are offering content writing services, you can charge by the number of words or pages. In photography or photo editing, you can charge based on the number of shots, etc.

The first issue with this method is that it doesn’t suit all types of services. Secondly, there might be cases when the scope of work is rather small, but takes a lot of time. For example, writing a compelling social media post will take no less time than crafting a blog article. Yet, the word count and hence the price will be significantly lower.

4. Project-Based

The next model implies setting an individual rate for every project. It’s good because it doesn’t require you to track hours or compromise your earnings on small-scope tasks.

Yet, it is still easy to underestimate the scope of the work. This model also requires a bit more time and effort to calculate the scope and desired revenue for each individual project. And it can be hard to meet every client’s unique needs.

5. Retainer Packages

This pricing method implies setting a specific rate for every client, for example, monthly or annually.

It works best when you have recurring clients and need to perform a specific amount of work for them regularly. And it’s perfect as it lets you know how much revenue you will get.

The only issue with this method is that it doesn’t suit beginners well because it requires building a pool of recurring clients first.

Bonus Tip: When you become an experienced freelancer, you can adopt one more pricing model - by the added value. It implies giving certain guarantees to your clients.

What Are the Factors to Consider When Pricing Your SEO Freelance Services?

Now that you know everything about the definition of freelance pricing and the most popular models, you're probably excited to start calculating your own rates.

In this article, we will walk you through this process step by step. In particular, we will focus on calculating the cost of SEO freelance services. But first, here are some top factors that you will need to keep in mind:

• Market competitiveness - Entering the freelancing world, you will likely have to compete with thousands of other experts in your niche. In order to succeed, you will need to keep your rates competitive. Keep in mind that good SEO specialists are in demand. Thus, be sure not to undersell yourself. On the other hand, don’t set an enormous price that will make you miss plenty of opportunities.
• Your target customers - It’s never a bad idea to research your potential customers and analyze their backgrounds. This will help you understand what cost they can afford to pay for your services. Consider this when setting rates that are accessible to your prospects.
• Your dream rate - One of the best things about working on a freelance basis is that you can set the price you like. That’s why your dream rate is another factor worth considering when calculating your cost. Set your dream rate as the top end of your range.
• Overhead costs - Freelancing is one of the most pocket-friendly forms of business. It doesn’t require a significant investment from the start. Nevertheless, being self-employed will require you to pay for some things out of your own pocket. Keep this in mind when setting your rates.
• Your expertise - Lastly and most importantly, you must charge your clients according to your real experience and skills in your niche. Otherwise, you might face customer dissatisfaction.

5 Steps to Determine the Perfect Price for Services on Freelance

Now you are all set to decide how much you should be invoicing your future customers. In this part of our guide, you will find the main steps that will get you on the right track.

1. Start With Research

As was said earlier, market competitiveness is one of the factors you must consider when calculating your rates. So your first step should be research.

Your primary task is to identify how much other experts in your field charge. To do this, you can browse through different freelance platforms. For example, you can try:

• Upwork;
• Fiverr;
• PeoplePerHour;
• LinkedIn;
• Freelancer, etc.

Get on these websites and search for SEO-related gigs. Analyze how much experts with different skills, experience, and ratings charge for their work.

While researching, note down the lowest, average, and highest pricing points. Most importantly, pay attention to the number of orders that experts with different prices receive.

All this information will help you see which rate range is the best for your niche and level of expertise.

2. Calculate Your Expenses

Earlier, we mentioned that your overhead costs should be among the top factors to consider when setting the cost of your services. Now, let’s break it down a little bit.

If you are providing SEO services, there are several expenses that you want to keep in mind:

• SEO tools - Most SEO professionals leverage various tools and applications to streamline their workflow and enhance the quality of their work. You will probably be using an SEO rank tracker for monitoring your keywords, a technical issues detector for crawling your website, and other tools relevant to your niche. Be sure to consider their cost when calculating your overall expenses.
• Marketing - In order to survive the competition in the freelance world, you might need to market your services to potential customers. For example, you could use paid ads to attract more clients. You might also want to create your own website. Add all these expenses too.
• Equipment - To work effectively on a freelance basis, you will need a solid computer, a good internet connection, and maybe some additional equipment, too. The cost of these things should also be calculated as a part of your expenses.
• Other expenses - There might also be other things that you must cover, such as health insurance, cell phone expenses, freelance platform commissions, etc. Think about everything that you have to pay for to keep your business going.

Once you have defined all your expenses, make a complete list of them and designate an average monthly or yearly price for each. Then, calculate the total amount.

You cannot charge anything below this sum. Keep it in mind when defining how much you will be invoicing your clients.

3. Factor in Taxes

Whether you are offering SEO services as a standalone professional or on behalf of your small company, there is one expense you can’t avoid - taxes.

We didn’t include this point in the previous step with general expenses. And this is for a reason. The truth is that figuring out the tax matter on your own can be rather challenging. So this point deserves a deeper overview.

To factor in taxes, you need to define your legal status first. In a nutshell, there are two options you have as a freelancer:

• Sole trader;
• Limited company.

Generally, most freelancers choose to stick with the first option as it's much more straightforward than creating a limited company. Also, it tends to be cheaper. However, if your venture fails, you might get in trouble.

Registering as a limited company also has its pros and cons. All in all, we recommend you carefully study the difference between different registration types to decide whether to work as a sole trader or limited company.

Also, don’t hesitate to consult with a reputable tax specialist who can help you figure out everything related to taxes faster and easier.

4. Review the Project Scope

If you decide to start invoicing customers per project, this approach requires a lot of attention to detail. It’s crucial to review the scope and complexity of the project to ensure that your rate will help you cover all your costs.

Here is how to do this right:

• First, break down the entire project into smaller chunks and determine what specific tasks you will have to do to complete it.
• Looking at the list of tasks, identify how much time and resources you will need for each of them.
• Analyze the client’s preferred deadline to assess how hard you will have to work to complete the project right on time.
• Evaluate your current schedule and availability to see if you will have to reject any other opportunities to work on this project.

Use this simple evaluation process to understand the scope of any project that comes your way. After that, assess your expenses and salary expectations.

Based on this data, define the ideal price that will meet your individual needs and match the amount of work that you will have to complete.

5. Assess the Client

The last step also requires some research. In order to set an adequate price for services, you need to know who you are going to deliver them to.

Here is the tricky part. As you should know, SEO is now crucial for pretty much any business. That is, the profiles of your potential customers can be incredibly diversified. They could be companies of all sizes and across all industries. But you need to define who you are going to target.

To do this, reflect on your experience and skills. If you are a beginner, you will likely want to target smaller clients. However, if your experience is huge, you can tap into large companies.

After you define who you will offer your services to, analyze the background of your prospects. You want to understand how much they can afford to pay. This will help you set a certain price range at an early stage. But that’s not all.

As a freelancer, you must be able to understand every client’s unique situation and do a lot of negotiation. Thus, when you get interested in a particular client, think about what kind of budget they may have for their project.

Communicate with clients about their expectations, goals, and other important factors and then make an offer based on them.

Finally, you might also consider your relationships with a customer when setting the cost. You could offer special terms to some long-term clients that you enjoy working with. This will help you ensure their satisfaction and retention.

How to Raise Your Freelance Rate

So you already know how to set prices for your work as a freelancer. But what if you want to make more?

It is no secret that beginner freelancers often tend to set rates significantly lower than what they want to earn. The reason is clear - they need to find their first customers and gain some rating and reputation before they can raise their prices.

But the good news is that it won’t be like this forever! Even if you set a lower price at first, you will be able to raise it later. And we will tell you how.

To get started, you need to determine the perfect time to raise your prices. According to a business coach and bestselling author, Allan Dib, there are four signs that indicate when it’s time for a business (a freelancer, too) to raise their rates:

• You’ve reached an 80% close rate (i.e. 80% of your prospects convert into customers);
• You haven’t adjusted your pricing in a long time (or never);
• You’ve gained a solid reputation and many positive reviews;
• You know what sets you apart from the competition to justify a higher rate.

If some or all of these statements are true, it is a sign that you should start invoicing more.

Another sign that can justify your rate change is your professional development. When you start feeling like your skills and experience have grown significantly and you can offer more value to your clients, it must be time.

So you know that the time is perfect, what’s next?

We all know that raising prices can be rather scary. Most specialists and businesses are afraid that this can lead to large churn rates. But it won’t if you do it right.

Here are a few simple tips that will help you in this matter:

Be Prepared to Negotiate

Negotiating a higher price with clients is the hardest part of the process. So let’s take it from there.

Before you get started, you need to explain the value you’re providing to customers. While this should be easy with loyal customers, it can get tricky with newcomers.

The thing is that new clients don’t know yet how you can help them. You need to prepare a convincing pitch that will let them clearly see the benefits they will get from hiring you. Ideally, you should communicate the value through real-life examples - rough numbers, stats, customer testimonials, and case studies will help you.

Another negotiation trick is to always quote higher than your actual rate. This simple trick will give you some wiggle room to negotiate the final cost with new clients. As a result, it will help you keep your new customers happy and, at the same time, keep the rates you want.

Additionally, you can consider offering small discounts to newcomers. For example, give them 10% off on their first month or project. This will give you a chance to show your real value to new clients and persuade them to work with you further, on your terms.

Lastly, there are two important negotiation tips:

• Define your minimum acceptable rate (MAR) before negotiating. Your MAR is a cost that’s lower than your standard rate. Yet, it’s high enough for you to undertake the project without neglecting your value.
• Learn to say no! This must be the most important piece of advice. Once you set your new, high prices, be ready to say no to some opportunities. Never compromise your value just to win another project. Otherwise, your customers won’t value you either.

Justify Your High Price for Services

You already know that you must consider your experience, skills, and other strengths when rating your work. Do the same when raising your initial prices.

Both existing and potential customers want to know exactly what they are paying for. And your task is to justify your rates.

To do this wisely, review and analyze your past and current pricing strategies first. The better you understand them, the easier it will be to defend your new terms.

Then, think about ways to point out your added value. How have your skills and experience changed since the time you set your initial rates? How many satisfied customers did you have over this period? Is there any evidence to prove your added value?

Answer all these questions to find effective ways to point out your value. And use this as a pitch for justifying your new cost.

Additionally, find a way to differentiate yourself from your competitors. Figure out what makes you better and worth paying more for than other freelance SEO specialists. Once you find your distinctive features, showcase them to your prospects and existing customers.

Finally, after you prepare all the evidence, start acting and stand your ground. Sound confident when negotiating and justifying the cost of your services. The more confident you are, the more likely customers will be to believe you.

And here is a bonus tip - identify your client’s pain points and use them when pitching your services. Appealing to pain points can help you encourage your prospects to make a purchase decision faster and hire you, no matter how high you set the price.

Increase Your Value as a Freelancer

When it comes to boosting your earnings as a freelancer, the reputation you have on the chosen freelance platform plays a huge role.

In order to get noticed and hired by prospects, you need to have an excellent standing on your platform. So if you want to increase your rates, you must boost your value as a freelancer.

How to do this, you may wonder?

The rules of the game might differentiate from one platform to another. Yet, there are almost always some general metrics of success, such as:

• Rating;
• Number of orders completed and success rate;
• Reviews;
• Response rate.

All these elements of your profile indicate how well you are doing your job and how happy your customers are. To boost your value as a freelancer, you need to improve these metrics.

The rating, number of orders, and success rate take the longest to improve. To make these indicators look great, you need to take many orders and complete them right on time and to the highest quality. Then, after some time, you will be able to see excellent indicators in these metrics.

Response rate is something you can easily affect yourself. This metric indicates how quickly you respond to your prospects and, thus, shows your reliability. Try to answer messages as quickly as possible to improve this indicator.

Finally, there are reviews. These show your customers’ satisfaction and emphasize your trustworthiness.

All in all, the more positive reviews you have the better. To improve them, encourage clients to leave testimonials about your work. Trust us, this will help your business a lot!

Stand Out From the Competition

Working on a freelance basis means always competing with a crowd of other specialists. Interesting and high-paying projects always gather big queues of those wishing to win them. And you must stand out from this crowd to be worth the high price you set.

There are several ways to stand out from the competition as a freelancer. First of all, of course, your rating and perfect reviews will help you grab prospects’ attention. But that’s not all.

Another thing that will help you stand out is the quality of your work. If you consistently deliver impeccable quality, you will quickly earn an excellent reputation. As a result, clients will flow to you on their own.

Finally, there are some profile improvements that can also help you gain a competitive advantage:

• Make sure that your freelancer profile is fully completed and filled with accurate and up-to-date information.
• Add a profile picture. A professional headshot will show prospects that there is a real person behind your account, which will increase trust.
• Hone your descriptions. Feel free to get creative in your profile descriptions and don’t hesitate to apply SEO tricks to it as well, such as relevant keywords. This can help you increase your visibility and stand out from the crowd.
• Build a brilliant portfolio that showcases your skills and expertise to the fullest. And be sure to update it regularly to ensure that prospects always see the best of your abilities.
• Attach a resume. Although freelancers aren’t employed workers, having a solid resume can still help your business grow. A well-written resume that emphasizes your experience and strengths will help potential customers see your real value and choose you over your competitors.

All these tricks should help you stand out from the competition. And trust us, the more you differentiate yourself from the rest, the more clients will be willing to hire you for their projects, even when you raise your rates.

Conclusion

Whether you are an employed worker or an entrepreneur, rating your work wisely is crucial. Your rates indicate your value and there is nothing worse than underselling yourself.

When it comes to freelance work, determining the perfect price for your services is even more crucial. Set it too high and you could lose plenty of opportunities, or set it too low and you could end up working for free.

To achieve the best results, you should determine your price for services according to your expenses, experience, and other crucial factors and raise it later, when it’s the right time.

Of course, this always sounds pretty confusing and complicated, especially for beginners. But not anymore.

After reading this guide, you know all the secrets to effective invoicing. Use the tips from this article to set the right price for your freelance services and enhance your earnings along the way!

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