Five Things To Know Before Setting Your Prices

Setting prices is one of the most stressful aspects of freelancing for beginners. In my first few months of work, I used to get a bit panicked every time somebody asked me how much I'd charge for something. I'd run to my copy of Writer's Market to look up the average price for similar work; do Google searches for the going rates, and post questions on writers' forums about how much to charge. I'd gather it all together, pick an arbitrary figure somewhere in the middle of what seemed to me to be the range, let the client know, and hold my breath. Sometimes I'd be right on the money; sometimes I'd guess wrong.

My first year and a half taught me a lot about pricing. I'm still perfecting my skills in this area, but now I know that I need to pick prices that work for me as much as for my clients. Here are five things you should know before quoting a price on any project.

What other people are charging. It's not necessarily a good idea to charge a certain price just because others are charging it. But knowing what your competitors charge can give you a good idea of what clients generally expect to pay, and for beginners, it's a good benchmark. I remember being acutely worried that if I quoted too low, clients would think I was no good--and if I quoted too high, they'd think I was some kind of evil price-gouger.

When I was starting, Peter Bowerman's The Well Fed Writer was my bible. Peter suggested calling other freelancers and asking about their price range. I tried that, and it didn't work so well--the people I called were generally unwilling to talk specific prices, saying that every project is different and they couldn't possibly give me an idea of their range. I tried posting the question on Craigslist, however, and I got a very different response. I had about ten very helpful pros email me back with their own price ranges and advice on setting prices. I definitely recommend going that route.

What your particular market expects to pay. Some markets just pay more than others. You might write an article for one publication and get $.25 per word; sell the same article to a different publication, and you'll get $1 per word. If you start out on lower-paying clients, you could shoot yourself in the foot by offering the bottom-barrel price to a company that regularly pays many times that amount. Knowing what a certain type of client expects to pay for writing work will keep you from doing that.

The value of your work. An e-book, marketed correctly, can make its owner thousands of dollars. If you wrote that e-book for $250, that's all you get for it--don't expect royalties. A sales letter or landing page can also pull in big money--even though I've seen writers write these for $50 or even less. When pricing something like this, I don't just ask how much work will go into it--I also ask myself how much the client can stand to earn from my work, and try to price accordingly. A $2500 sales letter will definitely do a better job than a $25 one--the writer will be able to afford to put more time, energy, and research into it, and is likely pricing higher because experience tells him his work is worth it.

The amount of time it takes you to do the work. I charge very different prices for articles that require different amounts of research. Some articles are simple how-tos or overviews of a topic, written from research gathered from reputable written sources. Others require finding interviewees and conducting interviews in addition--and this can be much more time-consuming. A short how-to article based only on written source material can take as little as an hour to write, while a feature article that includes expert interviews might take days or even weeks. These articles could (and should) cost hundreds of dollars more depending on how much research is involved.

The least amount you need to make to meet your goals. Unfortunately (for me, anyway), setting your prices does involve working with numbers. Write up your monthly budget and figure out the minimum amount you need to make per month to meet your financial goals. From there, you can compute how much you need to make per week and even per hour. Bear in mind that you probably won't work every hour of a forty-hour work week, since freelancing can be a feast-or-famine business. To play it safe, I use 25 hours per week as my baseline. Once you know how much you need to make per hour, you can figure out how much to charge for each project based on an estimate of how many hours it will take you to complete. This will give you a solid figure, and in negotiation, you'll know the job just isn't worth it if the price goes below that point.

Setting the right price isn't just about finding out what clients expect to pay. It also involves knowing how much you need to earn, and how much your work is worth. Learning these things takes time and experience--but once you do, you'll feel much more comfortable quoting and negotiating prices.