Freelancing can genuinely be a lucrative thing for both sides involved. By finding the best freelancer for your needs (and an expert in their field) you can grow your business, and freelancers can also make their earnings. But, questioning how the freelancers’ rates are set is expected. You can make those puzzling thoughts more concise and decide whether to splurge on the freelancer (a bit too much) or not.
Our tips below can clarify price settings in the freelancers' industries, what influences those prices, and whether you pay a fair amount to the freelancer.
How do freelancers set their rates?
With freelance services, there are no specific or fixed work hours. Freelancers determine their work hours and the amount of work they can take on. So, the way they charge clients does not just depend on one factor.
Every freelancer starts with research about the expected rates and salary. A good start is seeing what other freelancers do—novices and expert freelancers offer different rates, varying between the fields of expertise and different industries.
In this type of research, freelancers are the primary determinant of freelance rates. Job boards and platforms show countless profiles of freelancers, fixed rates, hourly rates, daily rates, and so on, and just by browsing through these profiles/rates in a specific industry, we can get a clear picture of how rates are set.
For example, the following factors are strongly influencing the (hourly) rates of freelancers:
- Demand for that skill
- Market competition
- Track record/experience
- User reviews
- Engagement urgency
What can you do to see if freelancers give you a fair rate?
As mentioned, research and comparison is a great starting point. Whether we’re considering a freelancer or an employer, in-depth research into a specific industry (on as many job boards as possible) will crystalize a lot for you. You’ll have an idea of what cost you should expect if you compare, let’s say, a few expert content writer freelancers and a few novices. Consider the specific industry as needed, but you get the gist of it already.
We saw the listed factors above that determine the rates, but if we need to narrow down to a few for you to focus most on, then:
Research and compare others on the market
I cannot stress this enough, but the comparison is vital. It is the strongest indicator of rate-setting when you don’t have the most apparent perspective amid it all. If you look at others like you in your industry, you can look at the talent they have hired—or freelancers in this case. From here on out, you can also conclude what they accept as rates from freelancers.
The other scenario is where you compare the best candidates that got your attention. Are they all long-time experts? How much do their rates vary from one another, and why? All these answers will present themselves once you start comparing.
Review the past clients of the freelancer
The freelancer’s work success is based on or strengthened by the clients who need that freelancer’s services.
Were the past clients big renowned brands? Is there a repetitive niche throughout the clients’ engagements? Does the type of clients reflect a particular expertise in the freelancer that makes even a high rate acceptable?
Consider your industry
Once you browse through industries in freelancing, you’ll see which are the most and which are the least popular. For example, the tech industry will become even more interested in freelancing services than it is already (a lot!).
In the most frequent and widespread industries, the freelancers with the highest rates indeed have good and proven portfolios and robust experience. Because, after all, to stand out in a talent pool of many others would justify the (likely higher) rate of that freelancer.
Check out your competitors in the same industry, and see what kind of freelancers they regularly have for them and at what rates too. Surely precise information of this type won’t be as transparent on companies’ websites, as opposed to some job platforms and freelancing sites — most of the time.
Review the complexity and deadlines of the tasks
If you need the freelancer to work urgently on the engagement, then be prepared to pay a higher rate than the originally agreed upon price. Keep in mind that the engagement's urgency can drastically change the rate, depending on the complexity of the industry.
The amount of time required for finishing a large and complex engagement is a crucial rate-setting factor. Rush fees are added to the fixed, agreed upon fees because great work done urgently should not come at a low price. Usually, a reasonable sum for median complexity engagements is around 30% above the initial rate. For incredibly complex and equally urgent tasks, sometimes the extra fee could reach (almost) a 100% increase.
Invite freelancers to interview
While researching the freelancing rates, it doesn’t hurt to look to employ a freelancer permanently. It’s getting two birds with one stone, and the hiring dilemma resolves itself. Since you need to hire a freelancer and know where your money goes, select candidates that seem to have the best qualifications. Send a few interview invites, and you’ll have an idea of what a fair rate really is.
One thing is always sure—you cannot just jump in and accept the first rate you hear. Also, splurging is fair in urgent engagements with tight deadlines.
Explore the market, look for similar industries, and compare rates while choosing which freelancer provides the best quality. Comparisons in the market (and rates) are crucial to consider, but so is the relevance/demand of the industry.