Know Your Worth: 15 Tips For Setting Your Rates As A New Freelancer

As a new freelancer, you might feel clueless when it comes to setting your rates. You don’t want to overcharge and get no offers, but you also don’t want to undercharge and have clients take advantage of you.

This decision can be one of the most stress-inducing parts of starting your business, and it’s not to be taken lightly. You’ll want to set realistic rates while staying true to your worth as a service provider. Below, 15 members of Forbes Coaches Council shared things to consider when settling on your rates.

1. Don’t Overthink It

People, including you, perform best when motivated internally, rather than externally. Set your rates in a reasonably competitive band, perhaps even a bit below market. Then go about your work with passion and commitment. The excellence you will achieve by setting aside an excessive focus on rates and rewards will build your client base faster, make you happier and, in the end, be more profitable. – Tom Kolditz, Doerr Institute for New Leaders

2. Do What’s Fair For Both Parties

There is no one right answer to the pricing approach. Do what makes sense for your business. As a solopreneur and coach, I find that pricing projects by value work best. I also find that open, early conversations with clients serve both parties well. Finally, each client is different. For me, a standard “rate sheet” doesn’t make sense. I simply consider fairness for both parties. – Patrick Jinks, The Jinks Perspective

3. Create A Strategic Pricing Model

Create a pricing sheet as a jumping-off point so when you’re asked for a proposal, you can come back to the pricing sheet you’ve strategically created and it will stop fear or emotion impacting your pricing. Work out your revenue goals, divide this by the hours you want to work and then consider your competitor’s prices to come to a pricing model. Regularly review to ensure you stretch yourself. – Rose Kirby, Rose Kirby Ltd

4. Consider The Value You Bring To A Client

Aside from trying to figure out which fee structure to apply to an individual client, it is pertinent to always keep in mind that one’s expertise and the value they bring to a client is key. A more seasoned consultant may charge more, but they will provide better value in identifying, resolving, planning and ultimately creating cost savings for the client. Productivity and efficiencies will rise. – Jane Gios, HR Solutions Network

5. Price For Profitability

Setting rates as a freelancer can be laborious. One way to simplify the process of setting prices is to determine the profit margin you need to clear on a product or service. First, calculate the cost of goods or services sold from total revenue. After deducting expenses, set rates based on a healthy profit margin. A good rule of thumb is to have a gross margin percentage of 30% or greater. – Lori A. Manns, Quality Media Consultant Group LLC

6. Set A Price That Allows You To Invest In Yourself

One consideration is how much are you willing to invest in yourself. You won’t find success in setting a price you’ve never paid in your own experience in investing in yourself. Value is subjective. You can see that in designer fashion brands, from $500 Coach to $2,000 Louis Vuitton. The key to finding a balance between realistic rates and your true worth lies in your self-confidence. – Whitney Mullings, Whitney Mullings

7. Choose A Rate You’ll Be Comfortable With For Your Next Several Clients

As a freelancer, all you have is your time and your reputation, so pick a rate you will be comfortable with for the next several clients that captures the value you provide. Whenever possible, lump sum a project and ask yourself: Why am I a freelancer? If I were booked solid, would I be happy with the income? Would I be willing to do the same work at the same price for my next 10 clients? – Brad Elson, Palmer OSG

8. Determine Whether Fixed Versus Flexible Works Best For You

When setting rates, decide where you have hard lines and where you have soft lines. Where must elements of your rates be fixed and where can you be flexible? Consider creating a variable rate card versus a single fixed rate. Some work is more (or less) challenging than others, so bill accordingly. – Faith Fuqua-Purvis, Synergetic Solutions

9. Learn How To Sell Yourself First

Entrepreneurs I coach arrive with $50 to $5,000 rates for the same service. Low-priced are overworked, underpaid and burned out. Medium- to high-priced are worried due to low sales and pushback. They all quickly learn that when you provide a talent-driven service, it’s not the price, but your ability to justify the value. A strategic consultation process makes it possible to close at any rate. – Laura DeCarlo, Career Directors International

10. Consider All Your Business Costs

Start with evaluating what these rates are in your field and location. Then create pricing in at least three different groups—for example, basic, advanced and premium. Calculate based on overheads, hourly pricing, the money you need to spend on education, services you provide, clientele, etc. Show clients their unique benefits. Believe in your ROI, but be open to negotiation. – Inga Bielińska, Inga Bielinska Coaching Consulting Mentoring

11. Start With A Base Retainer And Scale Up

One of the methods I have seen work is having “skin in the game.” Such an approach would include a base retainer and a progressive scale of profit-sharing based on actual results. Of course, this can only be done if the freelancer is truly convinced of their ability to initiate and execute changes that lead to higher profitability. – Kamyar Shah, World Consulting Group

12. Send A Survey To Your Free Clients

Do some free consulting and let people know what you would charge. Send them a bill that is zeroed out and have them look at the bill with you and go through the value they saw in what you have done. Ask them if it was an actual bill, would they be happy about paying it. Be ready for them to respond and give you tough feedback. Listen, take notes and you will be closer to knowing your true worth. – John M. O’Connor, Career Pro Inc.

13. Determine Your Target Yearly Income And Work Backward

Freelancers often set lower rates than they should because they are concerned about generating business. It is important that you establish your hourly rate based on your target yearly income and then zero in on value when pitching services to your customers. Contrary to what many new freelancers believe, customers will pay higher rates if they can see value in the investment. – Rosa Vargas, Authentic Resume Branding & Career Coaching

14. Carefully Research Your Market

You need to spend time knowing what others in your field are charging, from the very experienced to those who are early in their careers. Many freelancers set their initial rates too low and lose credibility in the eyes of their customers. They might think, “Why would someone who was competent charge so little?” – Dr. Joel M. Rothaizer, MCC, Clear Impact Consulting Group

15. Implement A Three-Tiered Pricing Strategy

Establish a three-tier pricing system with an introductory offer, a medium-priced offer and a premium solution that is more comprehensive. You can also choose to give away a sample of your product or a free consultation to showcase your expertise, but beyond that, know your worth, practice target marketing to your ideal client and be resolute in appealing to a specific niche that you can dazzle. – Debbie Ince, Executive Talent Finders, Inc