The five stages of freelance pricing

by Tom Albrighton 8 August 2016 Freelancing

Pricing your own services is one of the hardest things about freelance life. I don’t think I’ve ever spoken to a freelancer who didn’t have at least some uncertainty over what to charge. Setting and submitting prices can lead to indecision, prevarication and even anxiety. And all over something that should be positive: an enquiry about your services.

If only pricing was just about information-gathering or problem-solving – a process you could follow to arrive at the correct answer. But of course, there is no single ‘right’ price to charge. Instead, there’s the range of prices you could charge, the (probably unknowable) range of prices the client is willing to pay and the overlap between them – call it the agreement zone.

agreement-zone2

The size of the agreement zone, and your ability to shoot for the top end of it, depends on three factors: your experience, the client and your own approach. You can’t do much about the first two of those. But you can control your own thoughts, words and behaviours during the negotiation.

I’ve found that my attitudes towards pricing have evolved through distinct stages over the course of my freelance life. And since pricing is such a trauma, I’m calling them the five stages of freelance pricing. Let’s begin our journey…

The five stages of freelance pricing

The five stages of freelance pricing

Stage 1
‘They’ll choose me if I’m cheaper’

When you start out, lowballing can seem appropriate for several reasons. You’re a novice, so an entry-level price feels right. You want your price to reflect your own confidence, which is yet to grow. And it’s reassuring to keep your head below the parapet and not expose yourself too much.

Being cheaper can take the form of simply pitching your price lower than competitors, or other offers that amount to the same thing, such as introductory or bulk discounts, free samples, taking on additional tasks without charging extra and so on.

The problem with going in too low is that you reap what you sow. If your prices are based in insecurity or caution, you project those feelings into the market, where prospects pick up on them and reflect them. Cheapness begets cheapness.

The logic of price-cutting is that a buyer should prefer the cheaper option, all else being equal. But that’s the classical economist’s world, where rational actors weigh up multiple factors impartially and independently. In reality, price affects the perception of value; cheaper products may be regarded as inferior. So by trying to lure in that client with a low price, you could actually be pushing them away – or just making other providers look better.

At the very least, you need to be asking…

Stage 2
‘What does everyone else charge?’

The next stage is to accept and start believing that you are a viable provider in the market, like everyone else, with the right to charge whatever they charge.

There are lots of ways to find that out. ‘Find a freelancer’ sites like Odesk and Elance give some indication, although bear in mind that the rates are likely to be on the low side, due to the price-competitive nature of those platforms. The 2016 PCN Copywriting Survey, which I managed, researched recent average UK freelance rates and gives breakdowns by age, location and (significantly) gender. There are also benchmarks from related industries, such as the NUJ freelance fees guide.

You could even anonymously ‘mystery shop’ another freelancer to discover their rates, or get someone else to – if you feel that’s ethical. But you might find it easier simply to befriend them and politely enquire. The worst they can do is decline, and you might still get to meet up for coffee.

The great thing about pricing at parity with your peers is that if prospects question your prices, you can cite something to back you up, even if it’s only anecdata. That shifts the conversation from your price (unsubstantiated, vulnerable) to the price (neutral, objective, uncontentious). But the corollary is that you can’t increase your prices above the going rate without abandoning that third-party support. Which brings us to…

Stage 3
‘I’ve been doing this a while’

At Stage 3, it dawns on you that the copywriting rates you’ve heard about are not handed down from on high engraved on stone tablets, as resources like the NUJ’s might suggest. In reality, prices are fluid and flexible, and recreated afresh every day, as providers out there in the market propose and agree prices with real-world clients. You’ve got more agency than you might have thought.

At the same time, you realise that you now have some experience under your belt. You probably have some clients who keep coming back, and some who’ve brought you referrals. If you stay on the same track, your business is likely to keep growing. And that gives you a bit more security.

As a result, you gain enough confidence to base your prices on your own skills and experience, rather than defining yourself in relation to others.

Now, your skills and experience may still not be that extensive. Nonetheless, you offer a specific value/cost balance that will be right for some clients. Like Liam Neeson in Taken, you offer a ‘very particular set of skills’ that make you a dream for people like them. And specialists can charge a premium.

‘But what I do have are a very particular set of skills; skills I have acquired over a very long career. Skills such as copy-editing, proofreading and drafting white papers for the nonprofit sector.’

‘But what I do have are a very particular set of skills; skills I have acquired over a very long career. Skills such as copy-editing, proofreading and drafting white papers for the nonprofit sector.’

If setting a rate arbitrarily still feels scary, try adding 25% to the going rate, or something similar. Think of it as cover for contingencies, or a tentative shuffle towards the upper end of your price band. You’re still in touch with the market – you’re just moving upwards a little bit. And that will sustain you until you start asking…

Stage 4
‘What’s it really worth?’

By this point, you’ve been through the mill and you’re still standing. You’ve gained clients, held on to clients, lost clients. You’ve missed out on some jobs, messed up others. But above all, you’ve done a lot of solid, high-quality work that has firmly cemented your status as a professional. Turning around to look at the view, you realise you’ve come a long way. And you’re a lot less scared than you were.

On the other side of the coin, you’ve also seen that your work delivers real value for clients. Your stuff is helping them reach people, persuade people, sell to people. You’re not somehow conning people into paying you to write, eking out a living against the odds. You’re a trusted and valued provider.

These two perceptions come together to support value pricing. If someone asks for a tagline, you don’t ask yourself what others charge, or how long it might take, or even what you’ve charged before. You ask yourself what it’s worth to the client. And if they’re going to use it on everything they produce for the next 10 years, the price should reflect that.

Value pricing reflects outputs rather than inputs: the result of your work, rather than the resources you draw on when you do it. So it probably isn’t expressed in terms of an hourly or daily rate. Instead, it’s a fee for you to create and deliver a particular business asset, to the best of your ability. So whether that tagline takes you five minutes or five days, you still set a price that reflects its value.

Stage 5
‘If you want me, that’s what it costs’

At Stage 5, you simply go ahead and charge what you want, with no second-guessing or self-sabotage, or even that much consideration of whether you will get the job.

This is probably what non-freelancers imagine pricing is like: ‘La la la, set a price, do the work, get the cash, off to the beach’. In reality, most freelancers will probably take several years of hard graft to reach this point, and many may never reach it it all. It is the stage at which you are, finally, secure – psychologically, professionally, and to an extent financially.

However, the Stage 5 price isn’t a number plucked from the air. It’s simply the rate at which you will be 100% happy to do the job, regardless of your current workload and the way the job pans out. At the same time, it’s not extortionate; it’s still a fair reflection of the value the client will receive. Nor is it completely remote from the market as a whole – although it may be towards the top end of the scale.

If you get to be very high-profile, so your reputation precedes you, Stage 5 will be your natural home. However, you might also end up here purely because of supply and demand, rather than perceived quality. In other words, referrals and repeat business fill up your calendar to the point where you have to start saying no. And the smart play is to say no by increasing your prices – in other words, by gently pricing certain prospects out, so they walk away without you having to decline their work.

Obviously, ‘take it or leave it’ can sound arrogant or confrontational, so you need to choose your words carefully. Consider humble, apologetic language such as ‘Due to my current commitments, this is the best price I can offer you right now,’ or ‘Unfortunately I can’t meet your expectations on price’. That frames your price as a regrettable circumstance, rather than your own decision.

Sometimes, I see freelance copywriters strike a Stage 5 posture up front, in the form of a website saying how incredibly in-demand they are, and how they’ve graciously deigned to take on a handful of clients. If those chosen few clients are in the market for transparent scarcity tactics, they’re clearly in luck. Personally, I think such a position has more power when disclosed to genuine enquirers rather than stuck in the shop window for all to see.

How long does it take to move through the stages?

Based on my experience, I’d say you could easily spend around one or two years at each stage, before you feel you can move on to the next. But your mileage may vary.

You might also reach a stage where you feel you can’t get any further. After 11+ years’ freelancing, I feel I’m around Stage 4 most of the time, occasionally tipping into Stage 5 when I’m very busy. Talking to other freelancers, I think many may be stuck at Stages 3 or 4 – although it might not feel that way to them, of course, and it’s not for me to say how they should run their freelance life.

It’s also possible to fall back a stage or two if your confidence takes a knock. Some negative feedback, missing out in a competitive pitch or just a quiet week or two can easily see you slipping back into old ways. But if you’ve experienced the thought patterns of a higher stage once before, it should be easier to get into them again. It’s just a question of refocusing on the right things.

How can you move through the stages more quickly?

If moving through the stages is just a matter of time, shouldn’t you just get your head down, do the work and wait for things to develop?

Yes and no. You can’t fake experience, or an informed sense of what your work is worth. But leaving behind Stage 1 is really just a matter of will, and Stage 2 is just about information. Even stages 3 and 4 can probably come quicker than you think. And you won’t be paid any price unless you ask for it.

Mindset matters. Most freelancers wish their prices were higher, in a fairly wistful, passive way. But if you have a concrete, quantified idea of how you’d like your prices to develop, you’re in a much stronger position. Chance favours the prepared mind, and you can prepare yourself for opportunities to ‘act up’ to the next stage or ‘act as though’ you’ve already attained it. You might find you never go back.

Anyway, I hope you find these ideas useful and wish you luck in your journey through the five stages.

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  • DropCapCopy

    Fantastic post as always Tom – very useful, thanks!

  • Angela Murphy

    Excellent article thank you!!

  • Good post, and one that applies to all freelancing, not just copywriting.

  • Thank you so much for the insightful post Tom, it’s really useful. I’m one of those people who finds pricing stressful. I think I’m at stage 3 (after five and a half years of freelancing) and drop back to stage 2 quite often. Thanks again!