The discussion on my post about freelance trends in Elance indicated that there’s huge need for some kind of a freelance pricing guide. So I’ve decided to share my insights about freelance fees in the next 3 posts in the Freelance Tips category.
Today, I’ll shed some light on the questions we ought to answer when deciding on our freelance profile rate.
A while back I wrote about the freelance profile being the key to freelance success, remember? Well, the profile rate is part of the reputation every freelancer is trying to build.
On one hand, we shouldn’t put a very low rate at our freelance profiles as “cheap” often implies “poor quality”. On another hand though, we shouldn’t place a too high price either. Being a newbie freelancer, we most probably don’t yet have the experience or reputation to back-up our high fees demands and promise for high quality. So, what now?!
First step in this freelance pricing guide is to do a quick research for your niche of expertise
If you are relying on oDesk, Elance or other freelance job boards to get new clients, this research should be fairly quick and easy. Look for the following:
- What are the average and more importantly, the most common rates on the profiles of freelancers who offer similar to your services?
- Is there an obvious correlation between freelance profile rate and freelancer’s location?
- What part of the freelancers in your niche of expertise are from India, the Philippines, Pakistan and other geographical places with relative low life standard and majority of freelancers price themselves on the low-end?
- What’s the significance of the proven track record (reviews or lack of such) on the specific website when it comes to profile hourly rate?
- What is the correlation (if any) between the freelancer’s profile rate and their niche of expertise – broad area of services or strictly specialized in something; independent contractor or part of an agency team; operative or management skills; else?
Let’s make such research in the Marketing category of Elance.
In the post about freelance trends according to Elance, the marketing skills on the rise are internet marketing jobs, lead generation jobs, social media marketing jobs. So, if I were an expert in any of these fields with proven track record, it would enable me to price myself higher than the average rate.
Thanks to the search engine in Elance, I managed to see quickly that the rates for social media marketing is two, even three times lower than the business consultancy and marketing planning rates. This is partly due to the fact that a lot of social media marketers arebfrom countries with low socio-economic status. The other (and I think more important) factor is that there are not so many people who can offer strategy planning and high-level business consultancy.
To put it in other words, there are many contractors who can manage your day-to-day SMM activities. But there are very few people who can make a social media strategy plan for you and then monitor and analyze the results, tweak the strategy as they go, etc. For that reason, such consultants can sell their services and skills at much higher rate than the average freelancer.
To add some numbers in the mix, the first group of operative social media marketers can charge from $5 to $15 per hour and the second group of SMM strategy planners could charge $20, $30 and more. It all depends on location, experience, and expertise.
Another example – in Elance (and oDesk, for that matter) link building used to be a big hit. Most common price for link building used to be from a couple of dollars per hour up to $7-8 per hour. It can go as high as $15-20 per hour if the freelancer provides strategy planning and implementation of SEO, not just “link building”. Freelancers who offer link building services most often are located in India, Pakistan, and Bangladesh, which additionally keeps the prices low.
When it comes to internet marketing consultancy services, it’s another story. We see that prices vary dramatically. There are people from low socio-economic countries who claim to offer consultancy at $10 per hour as well as native English speakers (US and UK) whose prices go as high as $150 per hour. I think the truth is somewhere in the middle.
Most freelancers who do internet marketing for Elance clients price themselves in the range of $15-$50 per hour. On which end of the price range you are depends on factors like native language, experience, specific skills, availability, proven track record, and more.
In addition, there are clearly 3 types of correlation:
1) between reviews and profile rate – the more reviews and stars you have, the higher price you can sell yourself at
2) between completed jobs and profile rate – the more work you have done on the specific freelance job board, the more new clients are inclined to trust you and hire you for their project
3) location and profile rate – people in India, Pakistan, the Philippines, Egypt have the lowest hourly rates and people in the US, Canada and UK have the highest profile rates. The profile rates of European freelancers are somewhat balanced, depending on their niche. The level of their specialization appears to be more important than their location when forming their prices. The same is valid for Russia and former Soviet Republics.
Knowing all of this, how does a starting marketing freelancer decides on their profile rate?
First step is choosing their niche to prove themselves. Being a newbie freelancer with zero track record on any freelance site will make it impossible to land a high-paying consultancy contract, no matter how brilliant marketer he or she is.
Since social media marketing is on the rise, positioning yourself there might be a good idea to kick-start your freelance marketing career. Read all you can online – what’s new in the industry, what’s old, what’s no longer working, what is effective, what gives quick results, what’s recommended in the long run, what people are on what networks, what networks are good for what industries, what to avoid as it is not according to the rules of specific social media network (they are plenty today – Facebook, Twitter, LinkedIn, Pinterest, Google+, YouTube to name the major ones; and they all have specific rules).
Educate yourself and specialize in one direction – e.g. lead generation through LinkedIn; or SMM for small online businesses throughout all social networks. Start small – bid on projects for day-to-day activities management and/or when you are ready, jump in with SMM strategy planning as well to back-up your price requirements.
This wouldn’t be a complete freelance pricing guide for determining your profile rate,
if I didn’t tell you to put a relatively high price on your freelance profile – e.g. $20 per hour. The purpose of this is two-fold:
1) You can manually bid with lower hourly rate when applying to small or repetitive work like day-to-day management of twitter account or Facebook page. This will show the potential client that you make a difference between low-end tasks such as day-to-day SMM activities, and strategy planning in the same niche.
2) You will potentially make more money with a higher profile rate when clients invite you to bid on their projects. The profile rate is the least they are prepared to pay for your services.
Remember, the rate on your freelance profile is not set in stone.
As time passes and your completed projects pile up, you will get more and better reviews which will add value to your freelance profile. Your services will be in higher demand which will allow you to broaden your horizons and get picky about clients and projects. And finally, your limited availability will enable you to increase your hourly rate to filter out the potential clients who are not ready to pay higher fees.
Pricing is always the hardest thing for freelancers to decide on. You don’t want to scare clients away by being to high and you don’t want to be too cheap. Knowing your niche and the pricing of your subject is a great way to help figure out your rate. Also remember to charge for service and not just time. 🙂
Yes, charging for service and not just time is a VERY valuable tip, Susan – thanks for chipping in! I am just not sure how to address that with the profile rate – as end of the day, it is just that – a profile rate by the hour… 😀
Great information as always Diana and so much of it. It’s a very competitive landscape and I think you take some of the fear factor out of the process by suggesting realistic goals and providing some context. I think it would be very easy to get discouraged, so having someone with experience provide a path is very helpful.
Thanks for your comment, Debra! I am always trying to give hands-on practical tips, to present somewhat complex matters in a more simple and easy to understand way. So i really appreciate what you say about taking the fear factor out and providing context, thank you!
Thorough post about what to consider in solopreneur/freelance fees. It’s a continuing discussion in my circles, and usually around how we undervalue our experience and often sell features instead of focusing on the value of work. If in my work, for say $35 (just an example) I can help someone get a new client worth $350 to them, isn’t my fee worthy of being higher than $35? It’s a conundrum at times.
Over from LinkedIn group BHB
Thanks for a helpful look at this issue.
Thanks for your comment, Patricia! It’s a good question you ask.
On one hand, yes, if your work at $35 per hour helps the business get a new client worth $350 to them – it’s probably reasonable to ask for more… If you are the sales rep, for sure!
On the other hand, the fact that the new client is worth $350 doesn’t mean it’s all profits for the business… If you worked let’s say 3 hours to get the business that new client worth $350, the business will give you $105 for your work and maybe will invest the rest into retaining that client that they won with your help in the first place…
Don’t get me wrong – i am a big fan of ‘sell your services and not your time’ advice. To do tat, it’s better to work on fixed price jobs, not by the hour. But if you choose to sell your services by the hour, then it is up to you how much you charge and sometimes it means to charge $35 per hour for getting a new client worth $350. and how the business spends this $350 is totally up to them and out of your control…
Thanks for rising this question again, it is worth giving it some thought.
I think setting a price for freelance services is one of the most difficult jobs a freelancer has to do – especially when starting his freelancing business. I also have published an articleto help freelancer to set their freelance rates. This article is available on http://www.freelancermap.com/channel/19-freelancermap-international/article/7627-freelancer-tips-how-to-set-your-rates-as-a-freelancer-.html
Thanks for your comment, Doreen! I agree setting your freelance prices is a hard thing to do for a starting freelancer. But i also think it doesn’t get much easier with time – as your pricing strategy needs to evolve along with your skills and business… We need to find smarter ways to do more money when working less. That makes pricing even tougher 😉
I will check out your post now, too – thanks for sharing.
Great information, but why do you and so many others assume that people in countries such as the Philippines have a (relatively) low life standard? I am a freelance writer. I live in the Philippines and I have a fine standard of life, thank you. It would be nice if you can remember that you have a worldwide audience and that comments including assumptions about the standard of life enjoyed or otherwise, in countries that are not “developed”, alienate what may be a huge section of your readership.
If you are writing to help new freelancers, don’t you think your advice regarding pricing should relate to everybody who reads your content? Pricing for freelance writing should be based on a freelancer’s capabilities and skills, not upon where he or she is located. The market is global, hence pricing should also be global.
The reason that freelancers price themselves at the low end in your countries of “low socio-economic status” is because clients drive pricing. There are many clients on the boards that you mention, who “bottom feed”: a fact that you have alluded to in other posts. The only freelancers who can afford to work for the rates that these clients (typically from so-called developed countries) will pay, are those in countries where the cost of living allows them to work for such ridiculous rates. Hence the pricing advertised by freelancers in these countries is low – Because bottom-feeding clients wouldn’t dream of paying a fair rate based on ability.
I would personally offer this advice to new freelancers competing in a global market. Wherever you are in the world, price yourself at a rate which reflects your skills in the niche you target. Ignore the difference in prices between world regions. If you are a Filipino or an Indian with a high standard of written English, price yourself based on that fact if you plan to target clients needing well-written English copy. If you are European, English or American and need to improve your mastery of written English, you will do better to price yourself at the low end of the scale in your chosen niche.
On the other hand, wherever you hail from, if you are targeting a niche requiring mastery of accounting, for example, price yourself high if you are a great accountant, low if you are new to the field – Forget where you are from or where you live. If you offer the quality that clients seek, the ones who seek high quality will be prepared to pay the price. If you price yourself at the low end, you are forever doomed to land only the jobs offered by bottom feeders.
If your skill level is low, then you need to work with the bottom feeders until you improve the mastery of your craft. If your skill level is high, you should be able to price your work accordingly, not based on your nationality or your location in the world. Always remember that building your freelance business using boards like Elance is a grind. You need to prove yourself before you can expect to get the better paid work. For those of you who live in certain parts of the world, it’s an even tougher grind, because you have to prove your skills among a population of prospects who look first at where you are located and judge you accordingly. The only way to surmount that problem is to forget your nationality and price yourself based on your skills.
If more freelancers take up this position, perhaps we will see the day when bottom feeding clients can not afford any of the freelancers on Elance (or similar boards). Perhaps we will see the day when highly skilled freelancers don’t have to debase themselves with bargain basement prices. Perhaps we will see the day when prospects visit these boards because they know they will find freelancers offering services of quality in return for appropriate pricing.
Thanks for your post, Diana. I just think it’s a little contradictory and narrow-minded to state that freelancers should base pricing on skills, experience and track record, while at the same time discussing people in countries such as the Philippines, Pakistan and India as if they are not worthy of receiving your help and advice.
Hi, Simon. I don’t assume anything – The Philippines do have relatively low life standard. A quick search online reveals that the minimum hourly rate in the country is less than a dollar (see Wikipedia page) and just to be sure, I went ahead and compared the cost of living in Manila to a couple of cities I have lived in recently – one relatively small city in Western Europe (Alicante, Spain) and to an Eastern European capital with relatively low life-standard as well (Sofia, Bulgaria). Click the links for more but in both cases, the local purchasing power was quite lower in the Phillipines.
You may have a fine standard of life but that’s because you are a freelance writer, charging for your skills what they are worth (I suppose). This doesn’t mean that the life standard in the country is higher, simply because many people are not freelancers and many freelancers don’t charge what they are worth.
The whole purpose of my blog is to educate people who are still charging pennies for whatever they do. I totally agree with you that one should price their services based on skills and expertise, and not location. And I have never ever said otherwise.
Maybe you skimmed through the article or something else but… for research purposes I have outlined some correlations which are evident, and sadly one of them is between location and lower price. I am not making this up – it is out there and everyone could research and see it. I don’t say it’s right, I have never said it should be this way, but it is. So what I am saying is that a newbie freelancer could use this during their research when deciding what hourly rate to put on their profile when starting.
I don’t think I am discussing the Philippines, Pakistan and India as if they are not worthy of receiving my help and advice – they are the main reason I am writing this blog and one of my books, actually. Because I see on a daily basis very talented people charging pennies for their skills simply because they don’t know better.
I have never ever treated someone badly or as if they are not-worthy only because they were located in a poor country. I am from a poor country, I know how it is. And I have always encouraged people to think carefully how they price themselves in order to position themselves in front of the right crowd (away from the bottom feeders, as you call them, that is).
I am sorry if you felt insulted in some way. It was never my intention to insult anyone. I really don’t think there’s anything contradictory in facing the facts and working with them. As I said, I agree 100% with your views about charging what you are worth regardless your location and that has been my advice to newbie freelancers, always.
Hi Diana
Let me take each of your points above in turn, albeit mostly in reverse order.
Firstly, I don’t feel insulted at all and I wasn’t suggesting that you have insulted anyone (at least not intentionally). I am not a native Filipino, but migrated to this country from the West, so I’ve no reason to be personally sensitive to the points you make in your post.
Secondly, far from skimming your post, I read it thoroughly a number of times. I’m not given to commenting on blog posts, it’s something that I am rarely moved enough to do. It’s certainly not something I’d do on the basis of a skim-read.
Thirdly, I am not denying that The Philippines is among the economically poorer countries of the world or that personal income is generally low or that purchasing power is low – All of that is of course, very true. However I see no correlation between those facts and your generalized assumption (because I maintain that it is an assumption) that people in countries like this one live a “relatively low standard of life”……relative to what?
I guess a lot depends on your definition of a “life standard”. If you relate someone’s standard of life to the money they earn and what they can buy with it, I guess the Philippines is a country with a low life standard – However I’m sure there are many people in the countries you mention, who might feel a little insulted that you judge their standard of life to be low because they don’t have piles of disposable income.
If I earn a low wage in a country of low wages and my money does not get me much in the way of luxuries, even if I cannot even afford all the basics, I am the only one who can judge my standard of life, because nobody else sets the standards that I wish to live by. Feel free to state that I live in a country that’s poor or developing or economically underprivileged or however else you wish to indicate that money is hard to come by, but please don’t make assumptions about the standard of life. Sure, if I think my life is of a low standard, then it is…..if you think it’s a low standard, that’s nothing more than an assumption, based on what you believe is a good standard by which to live life – Which I believe has no relevance to a post about what freelancers should charge for their work.
Here is something else to consider. You state that freelancers in the Philippines price their work low and you correlate that with the fact that the country has a low standard of life. However you get your pricing data from internet job boards. It’s worth pointing out that one of the most expensive commodities in the Philippines is internet access.
Therefore, all those freelancers in the Philippines whose standard of life you judge, are those who are able to pay for internet access, in order to bid for and execute projects online. To put it into perspective, a monthly subscription for a 5 mbps internet service costs more than an average family’s electricity and water bills combined. It costs more than half the price of a month’s rent for a small apartment.
So relatively speaking, Filipino freelancers have a high life standard, because they can afford internet access, which many Filipinos cannot afford. Do you believe that statement? I don’t. I just made it to illustrate the point that any statement about life standard has no value in a discussion about freelancer rates. Is one person’s (or nation’s) life standard higher than another’s because they can afford internet access? That person may be more affluent, may enjoy more financial comfort, but his or her standard of life may be higher or lower, depending on his or her own paradigm.Similarly, as a freelancer, that person is pricing his/her work at the rate which he or she believes is realistic to expect. It has nothing at all to do with his or her life standard.
When you imply or state, in a blog intended to help all new freelancers, that low standard of life relates to pricing of services, all you are doing is encouraging bottom feeding clients who don’t want to pay fair rates for online freelancers. This breed of client puts jobs up for offer at the lowest possible rates, because they know that freelancers from countries of low socio-economic status will bid for them. Your point about countries with “low life standards” encourages this breed of client, because it implies that freelancers in these countries will clamor for the crumbs in order to support their low (cheap) standard of life. In turn, these freelancers have no chance to improve the rates they charge, because they are perceived as having a low standard of life and that they should therefore be happy to accept bargain basement rates, regardless of how talented they are.
Yes, there is a correlation between location and price, but your point about life standard doesn’t help the matter and it doesn’t help freelancers in those countries. It speaks only to freelancers who aren’t in The Philippines, India, Pakistan or Egypt and acts only as a warning to avoid charging low rates. For freelancers in The Philippines, India, Pakistan and Egypt, your statement says “you live in a country where your standard of life is low” that’s why you price your services low. Trust me, I am the reader and that is what I see when I read your post.
Lastly – and this is the first point at which I do feel a little insulted, you make a truly wild assumption about my own standard of life. Hence I feel the need to correct you on that point. I have a fine standard of life, because I have a wonderful family, we have enough to eat and a roof over our heads and we all have our health and are happy. I live in the climate that suits me and I get to walk on the beach in the sunshine every day.
I have no TV, no motorized transportation, no air conditioning, no hot water supply, sometimes no cold water supply and my internet connection makes up 7% of my monthly expenditure. I work online and contend with regular electricity supply interruptions and internet outages. None of which has anything to do with my standard of life, any more than does the rate I charge as a freelancer.
What is relevant though, is the fact that I have had to work extremely hard to earn decent rates for my work, because my location shows up on my freelance board profiles. Hence I have had to fight through the dross of cheap clients who treat countries like the Philippines (and the people who live in those countries) as the online equivalent of a sweatshop workforce. Presumably because they think it’s justified by the existence of a “low life standard” in this and similar countries.
However, I’m happy to say that through sheer perseverance, I now have a good base of regular clients who pay me for my skills, not for my location and, as you mention, I also have a long list of 5 star reviews which can really help freelancers get found by the better clients. My income is increasing, my ability to afford niceties in life is improving, but my standard of life remains happily unchanged, because it has no correlation to where I live or the money that I make or what I can afford to buy with it.
Thanks for taking the time to come back and comment again, Simon. You say you are not insulted but yet, for some reason you seem to take the whole thing very personally. You are preaching to the quire here – I already said I agree with you 100% about charging what you are worth regardless your location and that has been my advice to newbie freelancers, always.
Kudos to you for having the lifestyle you want. But it seems to me we are talking semantics here – or maybe I used the term “standard of life” the wrong way (after all English is not my mother tongue).
When I say “standard of life”, all I mean is how much money one makes in a certain country and what the purchasing power of this money is. When I say “relatively” low standard of life, I mean relative to the rest of the world. We seem to be in agreement about that, once we go past the term used.
Yes, I state that majority of freelancers in the Philippines price their work low and correlate that with the fact that the country has a low standard of life. It’s evident from hundreds, even thousands of profiles I see online. I don’t say it’s right, I merely state what it is.
And yes, I get my pricing data from internet job boards for the purposes of this post and to match my readers searching. After all, this is a post for profile rate and only job boards like oDesk and Elance have profiles to put profile rates on.
And yes, most freelancers from low socio-economic countries price their services low, especially in the beginning, because they think that’s normal. This is the key – they think it’s normal, they don’t know better, and that’s why they are doing it. I don’t say it’s right, I merely state what it is.
But I have never ever implied or encouraged anyone to do that. To the contrary – I have always encouraged people to forget what they used to make at their day jobs, regardless where they lived or live, and start thinking how much they want to make, make a plan to get there, and then just do your job and get there.
I am curious – how does my post send this message:
In this very same post I say:
In the context of Elance and SMM jobs, this is a high rate for a starting freelancer who has no proven track record and may or may not have skills beyond daily management of smm profiles. Not to mention that I end the post on a somewhat positive note how your prices will only grow with time and experience.
I cannot control the fact that on job boards the location in a low socio-econmic country correlates to pricing of services – it is how starting freelancers think and operate. But with my blog I try and I hope I do imply and state that it shouldn’t be this way. And to help them not get trapped into the vicious circle of working with low paying clients, I share my experience how to work around the lack of experience and still charge what they want and/or deserve – in this post, by specializing.
Thanks again for taking the time to read and comment, Simon, and I am sorry that my key point here is misunderstood. I really don’t see how this post encourages starting freelancers in low socio-economic countries to accept low paying gigs. Not valuing your time and working for pennies is one of the things I firmly stand against.