How much should I charge for freelance services? – MoneySense

Pricing your services can be tricky, even for experienced freelancers. Let’s go over the factors to consider when deciding your rates. There are three parts to this: understanding the market you’re in, determining your income needs and your business’s break-even point and, lastly, setting your price using cost-based or value-based pricing.

1. Understanding the market

The first step in finding out how much you should charge for freelance services is to do market research. You’ll want to determine the following: 

• Competitors: Who are the other players (businesses or freelancers) that offer the same or similar services in your industry or region? 
• Customers: Who are your competitors targeting? Who are their customers, where are they, and what specific products or services are they buying?
• Pricing: How are your competitors pricing their services? Check their websites to see whether they use hourly or project-based pricing. What factors might play a role in their pricing—for example, do they provide unique value or services, do they have lots of experience, or do they charge below-market prices to attract customers? 

Then, map out where you fall into this mix, and use your research as a benchmark when making your own decisions. When doing this analysis, you can figure out your place in the market using the popular S.W.O.T. method: find out the strengths, weaknesses, opportunities and threats in your business environment (your geographical region or your competition online, for example). This will also help you compare your offerings to those of other vendors. 

If you’re a freelance event photographer, for example, and you offer photos but not videos, your service packages should be priced lower than those of freelancers who offer both. This could help you attract customers who are looking for more affordable rates. And, you could also expand your services to include video in the future.

By the end of your research, you should be able to answer some questions about how much you will invoice as a freelancer, such as: 

• What are the going rates for services in your industry?
• Will you charge hourly for your services, or will your pricing be project-based, or both?
• If you are charging for projects and/or packages, what services will they include?
• Will you have different bundles or packages at different price points, based on your costs and the value you provide to the customer? 

How much to invoice as a freelancer 

Now, you need to determine the dollar amount you should charge for your freelance services. There are two parts to this: a personal needs assessment and calculating your business expenses.

1. Personal needs assessment

How much will you need to pay yourself? Understanding your personal needs (rent payments, utilities and other necessities) versus wants (discretionary spending on food, entertainment or hobbies) will help you determine what you are able to pay yourself and what you are willing to sacrifice until your business grows. 

Let’s say your needs require that you earn at least $1,000 a month from freelancing in addition to your other sources of income. When determining your personal payout, you need to consider your income tax bracket as well—new freelancers often forget about this. If your needs cost you $1,000 per month, and you’re roughly in a 30% tax bracket, you’ll need to pay yourself at least $1,300 from the business. (Read more about tax brackets, how they work in Canada and find out how much taxes you may have to pay.)