Establish your hourly rate
When setting your hourly rate, there are several pieces of advice you need to follow to ensure the rate you end up deciding is both reasonable and appropriate. There is no point at all in setting your rate so astronomically high that clients are put off. Trust us and follow our tips to know exactly how to go about the process of deciding your hourly rate.
As a freelancer, you need to take into account the competition when fixing your hourly rate. The aim in doing this is to get plenty of contracts by ensuring your own rate is very competitive. So take a look at competitors operating in the same sector as yourself, and focus especially on what they offer in terms of hourly rates. You will need to base your own rate on the average of these rates.
Target the top end of the market
Contrary to what some in the industry may believe, it makes no sense whatsoever to provide your services at giveaway prices. Doing this will not in fact attract clients but will instead tend to put them off. Why? Quite simply because you cannot provide a complete and comprehensive service at a knock-down price. This Utopian ideal needs to be forgotten. Setting your rates at the top end of the range will enable you to establish your position in the marketplace as a provider of a high quality service, though it is also important not to go too far and set your rates unaffordably high. Paying that bit more gives clients the confidence that the service will be properly delivered; this is the simple reality of the situation.
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Provide special offers
It is more or less true to say that no matter what market you operate in, you need to provide promotional offers to your clients where your hourly rates are concerned. In particular, this will help to generate loyalty among them and make them feel that they are receiving a special privilege in comparison to others. By offering discounts over the long term, your clients will be all the more likely to entrust larger projects to you; and most importantly of all, they will be less likely to contact a competitor because their hourly rate happens to be lower.
Gradually increase your hourly rate
When first approached by a new client, it is a good idea to quote a higher hourly rate than you usually charge. Why is this? Quite simply because this gives you more margin for negotiation with your client. It leaves them with the impression that they have successfully negotiated the price and thus achieved significant savings. The advantage for you is that it enables you to charge a higher rate, which increases the amount of revenue you make. It goes without saying, however, that you should not adopt this strategy when first establishing yourself. You need to take the time to build confidence in what you are doing and ensure you have all the arguments in place to justify your hourly rate.
The big mistake to avoid
There is one big mistake you absolutely must avoid when deciding your hourly rate. You must not at any cost base your rate on the salary you formerly received as an employee. These are two very different things. There is no point performing clever calculations that in reality have no real significance. Making this mistake will lead to you setting a relatively low hourly rate that will not prove at all profitable. Bear in mind that you are no longer an employee and that your hourly rate has to cover all your expenses and outgoings before it can even begin to make you a real profit.