Unlike working in a 9-to-5 job for company where your salary is determined from the start, freelancers need to plan and set their working rates before going out to secure assignments from clients.
Learning to price your services is crucial for any freelancer. Price yourself too high, and you might lose the gig to someone else. Price yourself too low, and you might be missing out on additional income or even not earn enough to sustain yourself.
So whether you are freelancing in Malaysia or are thinking about doing so, here are 5 factors you need to consider when setting your freelance rates.
# 1 Research Industry Rates
The first place to do your research is to find out what is a reasonable rate for freelance work in your chosen industry for Malaysians.
Rates can differ greatly, and some freelancers from developing countries charge really low rates. You do not need to race to the bottom with them, but instead, focus on the unique skills and quality you can deliver that will allow you to charge a premium.
# 2 Speak With Someone With Experience
By speaking with an experienced freelancer, you can get an idea of how much they charge, where to find clients, and perhaps pick up some tips on how you can negotiate for a higher rate!
If you don’t know any freelancers personally, an alternative is to join a freelance community in your area. There are freelance communities on social media platforms like LinkedIn and Facebook. These groups are usually quite welcoming towards newcomers and have a culture of sharing.
# 3 Charge By Time Or Per Assignment?
A rule of thumb in the freelancing community is that if the scope of work is well-defined, you can quote a fixed rate for the assignment.
On the other hand, if the job requires multiple revisions or if your physical presence is required, then you might want to work on an hourly basis, to ensure you are compensated for the time you spend on the project.
# 4 Remember To Factor In Your Costs
It is easy to get carried away with the high hourly rates and thinking you’re making a lot of money. However, you should factor in the time and financial costs you are putting in as well.
For example, for a 3-hour writing assignment, you might need to spend time to meet or speak with the client, exchange e-mails, draft pointers for their approval, do extensive research, and prepare a quote and invoice, before writing a single word.
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# 5 Identify Your “Floor” and “Stretch”
Now that you take into account your costs and expenses, you know how much do you need to charge for each assignment or hour for it to be worth your time. That is your “floor”, or the lowest rate you should be willing to settle for.
The next thing you can do is to think about what’s the maximum you can reasonably ask for, in other words, your “stretch”. We would all like to think that we are worthy of getting as much pay as the market would pay, but the reality is we need to set a realistic rate based on our skills and experience.
Unlike products where prices are set, the price for freelance services are often subject to negotiation and discussion. Having your “floor” and “stretch” prices in mind will guide you in negotiations and help you get the best possible deal.
Make Adjustments As You Go Along
It is important to remember that working as a freelancer is not at all the same as working with a company. Because you are your own boss, your monthly pay is dependent on the amount of work you put in and the amount of assignments you receive.
The more freelance assignments you take on, the better gauge you will have of how much time and effort you need for assignments. You’ll also get better at negotiating with clients. Once you are more experienced and built up a strong clientele, you should have no problems justifying higher rates in future.
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