A question I have tried to avoid answering in the past, is “How do you know what to charge as a freelancer?”. This is because I never had a simple, straight-forward answer that honestly felt right. My pricing structure has changed over the years as I learnt, through trial and error, what works best for me. I am finally comfortable enough to answer that question with confidence, so I will share with you the nitty-gritty of why, what and how I charge for my services as a freelancer, and I hope that it can help you to arrive at a confident and consistent pricing structure too.
How to estimate and bill for work: Flat fee vs an hourly rate
In some instances, estimating a flat fee for the entire project works great for me as a performer or producer, but my contract stipulates that should the project take longer than estimated, or the client decides to go through excessive revisions then an additional hourly rate will be charged. In other circumstances, I simply refer to my hourly rate which can be found on my website.
What should I charge?
Only you can really decide on what the value of your service is, but below are a few things to take into consideration.
For me, being highly skilled, qualified and experienced, I am going to charge more than what I did 10 years ago because my clients are not just paying for their mastered track for example, they are paying for my expertise. Although a session might take me an hour to finalise, the session did not in fact take an hour, it took 12 years.
Bear in mind the simple economics of supply and demand. The more in demand my services are, the busier I am, so the more expensive my rates are. During my quieter season I might charge less in order to secure the work. When estimating a quote for an entire project, use your hourly rate as a guide. The more experience you have working different sized projects to hard deadlines, the more accurate you will become at estimating their scope.
In any industry it is important to know what your competitors are selling, and for how much. In creative industries, I don’t like to think of other artists as competitors, as we all offer something truly unique so it is almost unfitting to compare. However, in business speak, this rule still applies. You probably have friends who are in a similar line of work as yourself, or know other people who you could speak candidly enough about prices with. If not, research it. Make some inquiries as an anonymous client and get some quotes from other professionals. Creative industries are often small communities in themselves, so undercutting the market can be very unwise. I know people who have done this quite unknowingly. If you have low self esteem, you may feel like charging a quarter of what everyone else is charging, but I guarantee you that you will be shooting yourself in the foot with behavior like that. You are not better or worse than the next creative professional, so learn what they charge, and consider where you fit in the marketplace using the average market price as a guide.
For the most part, I steer away from negotiating my fees with clients, but on the occasion that I do, the negotiation wouldn’t be a talking down of my price, it would be an amendment of my product/service so as to fit their budget. After many hard lessons, I am now confident of what my services are worth and I no longer accept jobs that make me feel undervalued.
I take a 10-20% deposit to secure a booking (depending on the size of the job), unless it’s a company with a billing department. Mostly, my clients are private so this is not often the case. I tend not to ask for a deposit from repeat customers because I am lucky enough to have great, honest clients.
On the completion of the product, performance or service, I deliver an invoice to the client. Occasionally, I will need to send out a reminder if I haven’t received the payment balance within 6 weeks. If a client requires a payment plan, I divide the estimate into thirds to be paid out over three months. If an outstanding invoice has not been paid within three months, a letter of intent to notify a debt collector will be issued, and then the outstanding money will be followed up by an agency. This is a fairly standard procedure of collecting outstanding income, but again, thanks to my stellar clients I am generally paid on time.
I keep track of all of my expenses using Dropbox on my phone and computer, so that I don’t need to keep paper receipts (I live in AUS –the laws may be different in your country). I keep a digital record of every invoice, and a master spreadsheet on Dropbox, and Google Docs. For the most part, that’s my tax taken care of, with just a few hours of working out totals at the end of financial year, and then I send everything off to my accountant who reviews everything and suggests amendments with his expertise.
We are all just people. People who need one another. The best business relationships are ones that are mutually beneficial. So my final thought is this: you’ll know you’ve quoted the right price because you wouldn’t want to accept the job for any less, but you would feel uncomfortable if you had charged any more. I’d like to think that we all have an ethical compass like that, and I think it’s good to use it.
If you have any questions about what and how to charge as a creative professional, please leave them in the comments section. If you are a freelancer, I’d love to hear how you approach estimating, pricing and invoicing.