It would seem that who, if not a freelancer, should be able to form price for their services. Nevertheless, in professional communities the question is: “How much to charge for work?” – one of the most asked, and dumping or, conversely, inflated prices – are found on exchanges and in advertisements of performers very often.
A bit of theory
If you do not delve into the jungle of the economy and generalize, then there are two forms of remuneration: hourly and piecework. Hourly – when the performer is paid for the amount of time spent on work. Programmers, testers, photographers, videographers, editors, SMMs, moderators, business consultants, accountants and lawyers usually work with payment for each hour.
Piecework payment, as the name implies, depends on the amount of work done. Most often, copywriters, proofreaders, content managers, sometimes editors, layout designers and on-staff designers work for the “deal”. In general, all those whose work can be estimated in the number of units made.
And probably the most common option that occurs on freelancing is payment for the end result: a finished project, script, layout, etc. A project fee is a compromise option that takes into account both the amount of work done and the time spent on it.
But these are the basics that every freelancer probably knows. Even a beginner, having watched the exchange for an hour or two, will be able to figure out what kind of payment systems there are. Another question is how to correctly assess your efforts.
Price calculation algorithm
What should a freelancer focus on by setting a price tag for his services if the customer is waiting for offers:
- The complexity of the terms of reference. This is the first and most important thing to consider before placing a bet.
- At the average market price. For example, ON Fiverr there are statistics on prices for services, you can take it as a basis. You can focus on the average salary according to Work., but there is no single picture. Someone offers the same copywriters to write 10 Dollar per 1000 characters and earn 4000 Dollar per month, someone calls to work for 9-12, and even for 25-30 thousand.
- For own labour costs. To do this, you need to clearly understand how long the work will take. How to find out the approximate labour costs and productivity if the type of activity for the freelancer is new and he has not performed such services before? Conduct timing.
Timing is a measurement of the time spent on a task. At large enterprises, it is usually carried out by an economist, and he does it in the following sequence:
- Records how much the employee managed to do in 1 hour or one day.
- Then he divides the hourly (daily) salary by the amount of work performed.
- Gets the unit price.
Freelancers, alas, do not have their own economist in the state, so the calculations will have to be done independently. But one way or another, everything depends on the desired amount of daily, monthly or annual earnings.
Sometimes it makes sense to complete a small test task if the topic is new or has not done such work before. It gives an understanding of how long the process takes and whether it is profitable to take on it at all. No, I do not urge anyone to perform tests, let alone free ones. I urge you to evaluate and measure the time spent on the task, with the material benefit that will be obtained in the end.
Again, let’s take copywriters as an example because these professionals probably get piecework to pay more often than others. Let’s say a copywriter can produce 8-10 thousand coherent text in one working day. This is about a thousand characters per hour. To reach the minimum (!) Salary, with a stable daily workload, the rate for the work of a copywriter from 2021 should be 36 Dollar. Therefore, the only reasonable explanation that comes across when you see such vacancies and responses to them is that the customer and the contractor probably forgot to compare the amount of work and payment for it.
Dumping is an eternal theme for price calculation
I don’t want to repeat myself too much. Because dumping, and the fact that it is harmful both for performers and for the market as a whole, has been said many times. In my subjective opinion, three categories of performers most often set low prices:
- Beginners. For the sake of rating and positive feedback. Although personally I never understood this, can you spread a rating or a review on bread?
- Those for whom freelancing is not the main income, but a side job for minor expenses.
- People who can’t (or don’t want to) count.
A competent specialist who makes his living by fulfilling orders cannot be cheap. Because at the expense of the money received, he must ensure for himself:
- Basic needs (food, utilities).
- A good computer (or preferably two) and a stable Internet connection. After all, customers really do not like it when a hired employee asks to move the deadline, due to the fact that the computer flew or the light was cut off, or the Internet. And this happens, believe me.
- A financial cushion when looking for new orders or if the employer has delayed payment.
- Insurance in case of temporary disability. Nobody pays “sick leave” to a freelancer.
- Vacation, because you also need to rest from work.
- The ability to pay taxes on the income received. Yes, I know this is a controversial topic. And many freelancers do not give anything to the state treasury yet, although according to the law they should. And the prices should provide for this.
Therefore, the services provided by the contractor may well cost more than the hourly wages of a full-time employee. After all, all those benefits that the employer provides to the employee, the civilian specialist must pay for himself.
When forming their rates, a freelancer needs to calculate the cost correctly. The service is not as obvious as the product, but it is also there. This is the cost of the time that the contractor spends on the execution of the order, plus additional costs at least:
- depreciation of equipment;
- income taxes;
- home office maintenance (light, internet).
Therefore, the cost of freelance services by no means can be 20 Dollars per hour or less. Indeed, since 2021 in Pakistan, even the minimum daily wage is 9 Dollar, but do people go for free bread in order to work for the minimum wage, without having any guarantees?
A look from the other side
Of course, there is another side to the coin. Not all projects have multi-million dollar budgets. First, proposals with an overpriced (in the opinion of the customer, price) are cut off, and only then a performer is selected from a suitable segment who can provide the best quality. Moreover, the quality depends on:
- Freelancer experience and skills. There is always a chance to find a talented newcomer who will do the job well and for a penny. But the probability is low. The lower the price, the longer it will take to find a contractor and to achieve a suitable result.
- The customer’s ability to formulate clear terms of reference. The more detailed and understandable it is, the fewer inconsistencies will arise in the end.
- Relationship to the work of both participants in the process. The performer, both a beginner and a professional, do not know how to read minds and may well not understand or interpret something in his own way, so communication is required.
Generally speaking, in a market where sellers and buyers from the price, you can always find a contractor for your budget. But let’s all the same respect each other. Let the performers do the job well, and the customers pay for it so that there is enough not only for bread and water.