Whether you are or you need a freelancer, you know that this is the question: “how much”? What is the price that I should pay for a freelancer, as a client? What is the fee I should charge my clients, as a freelancer?
You also know that freelancers are extremely useful in case a company needs temporary, highly technical, and/or urgent assistance.
In the digital field, in particular, these times of disruptive austerity require a valid method to define cost and benefits of budgeting external help.
How much should one pay for a freelancer? Better to hire Janet or Jane? What are the hidden costs, with which you might have to cope?
After a Phd in Political Science and International Relations, I have been freelancing in content production (videos, graphics, web-design) for 7 years now and I can say I have spent a quite reasonable amount of time trying to figure out what the right price was.
In this article you will find 5 common approaches to determine a freelance fee (PART I) and 5 lessons I think I have learned about it (PART II).
So, here are 5 common approaches, which fresh starters may use at first to define a freelancer’s price.
1 – Time is money, money is time
Because of my education, I wanted to believe in Karl Marx and his idea that the price of an object depends on the amount of time, which a worker spends on it.
However, that would mean that worker A, who is twice faster than worker B, would get half of the money for delivering the same product in half of the time!
Nice try, Karl.
2 – Supply and Demand
At my first class of political economy, I have learned that supply and demand regulates the definition of a price: the more people supply the same service, the cheaper it will be for those in demand.
Unfortunately, this rule only takes a few simplistic factors into account (such as perfect information) into account and holds all else equal (such as entry barriers, taxation, technological change): how that applies in real life? No economist knows.
And what about the time that it takes looking for (and selecting) all the people, who can offer the same service in the same area? Isn’t that time a cost for your company?
Thank you for nothing, Mr. Marshall.
3 – Portfolio
I used to think that the quality of my work was the only relevant metrics at my potential clients’ eyes. However, most of them hire a freelancer only when they totally lack the technical understanding of the task and cannot internalise it.
This lack of understanding creates a real dilemma in (honest) freelancers. For instance, in web-development there are a lot of good practices (in terms of mobile responsiveness, SEO, or security, to name a few) that represent a constraint in terms of design.
Clients without technical understanding will ask for something that “looks good” (and, possibly, cheap and fast), even if that will result less effective (and expensive) in the long run.
So long, quality standards!
4 – Market rates
A more quantitative (and, apparently, reliable) method to identify the right price for a freelancer is the study of market rates. That implies that freelancers with the same role and amount of experience will cost the same.
However, the mere measure of “years of experience” tell us nothing or very little about the actual skills of a professional: that goes without saying. And it’s particularly true in fast-changing markets, such as the digital one.
Does this person respect his/her clients’ mission or runs away with the money asap? Is this person accountable for mistakes or delay? Or is he/she one of those people, who hide behind technical jargon and refrain from taking any action against their own interest?
More importantly, after years of experience, are these professionals still “hungry” and committed to deliver quality work and to expand their business?
Market rates can shed light on a category of people, but not necessarily on the single individual, who will perform for us.
5 – Given budget
Sometimes, the best way to assess a freelancer’s value is by comparison.
You set a given budget for your project and ask three freelancers at least to provide you with a clear list of deliverables, a timeline, a work methodology, so that you can get a better picture.
If the freelancer offers too little, you may feel that this person is simply looking for a high margin. If the freelancer offers too much, you may understand that this person does not really know in what trouble he/she is getting.
However, the problem of the price here simply translates to the problem of the budget: not exactly a solution.
Luckily, more effective techniques to negotiate the price of freelancers exist.
We can name at least five, our 5 best techniques to set freelancers’ price.