Welcome to my article “How to Set Competitive Rates as a New Freelancer”. As a new freelancer, one of the trickiest hurdles you’ll face is figuring out how to set your rates. You want to charge enough to feel like you’re making a living, but you also don’t want to scare off clients by pricing yourself out of the market. It’s a delicate balancing act — like trying to walk a tightrope while juggling flaming swords (without the safety net). But don’t worry, you’re not alone! Many freelancers start out unsure of how to price their services, and guess what? Even the pros still have moments of doubt.
Setting competitive rates is a blend of strategy, research, and knowing your worth — all while keeping one eye on the market and the other on your ever-growing list of tasks. In this article, we’ll walk you through the steps to determine rates that reflect your skills, stay competitive with others, and ensure you’re not working for pennies (unless it’s a really fancy penny). Let’s dive in and get you feeling confident about your pricing — no flaming swords necessary.
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Understand Your Skills and Experience Level
Before you can slap a price tag on your services, you need to get real about what you bring to the table. Are you a seasoned pro who can churn out high-quality work in your sleep, or are you just getting your feet wet and googling terms like “deliverable” and “scope of work”? Be honest with yourself — and no, this isn’t the time to let imposter syndrome hijack the conversation.
Start by listing your skills and breaking them down into categories like “I’m amazing at this,” “I’m pretty solid here,” and “Still figuring this out, but I can fake it till I make it.” If you’ve spent years in a related industry before freelancing, that’s worth something, too. For example, if you’re a former marketing manager turned freelance copywriter, you’re not exactly starting from scratch — you’ve got insider knowledge and experience that can give you an edge (and justify higher rates).
Also, think about the services you’re offering. Are you doing something highly specialized, like coding a custom app? Or are you offering general skills, like proofreading or graphic design? The more niche or technical your skillset, the more you can (and should) charge. Specialized services are like designer handbags: clients expect to pay a premium.
Finally, remember that clients value confidence. If you undervalue yourself because you’re “new,” you’re not just hurting your wallet — you’re also signaling to clients that you’re not sure you’re worth it. So assess your skills honestly, but don’t sell yourself short. And if you find yourself stuck between self-doubt and overconfidence, err on the side of believing in yourself — no one else is going to advocate for your worth quite like you can.
Research Industry Standards and Competitors
If you’re going to set rates that clients take seriously, you’ll need to know what the going rates are in your industry. After all, you don’t want to be the person charging $10 an hour when everyone else is earning $50 — or worse, the freelancer asking for $100 without realizing you’re pricing yourself right out of the market. Knowledge is power, and in this case, it’s also your best defense against both over- and undercharging.
Start by snooping around online. (Don’t worry, it’s not creepy; it’s research.) Platforms like Upwork, Fiverr, or LinkedIn can give you a sense of what others in your field are charging. Look for freelancers with similar skills and experience — and if you’re feeling really ambitious, check out their portfolios to see how your work stacks up. If their rates seem way higher than you expected, don’t panic. It might mean you need to level up your skills or just get comfortable charging more.
Also, consider the type of market you’re targeting. Are you competing in a global market with freelancers from all over the world, or are you focusing on local clients who might be willing to pay more for someone nearby? For example, a freelance designer in New York City probably has different rates than one in a small town, and that’s okay. The key is knowing where you fit in and setting rates that make sense for your target audience.
And let’s talk about niches. If you’re in a super-specialized field, like AI consulting for cat-themed tech startups (hey, it could be a thing), your rates can go higher because you’re offering something rare. On the flip side, if you’re in a more saturated field, like copywriting or social media management, you’ll need to position yourself competitively while finding ways to stand out.
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The bottom line? Don’t set your rates in a vacuum. Take the time to research your industry and competitors, so you can approach pricing with confidence — instead of playing a game of “Guess What the Client Will Pay.” Knowledge is your best friend here, and luckily, there’s no shortage of information out there to help you find your sweet spot.
Pricing Strategies for New Freelancers
Let’s face it, pricing your services as a new freelancer can feel like throwing darts at a board blindfolded — except the board keeps moving, and you’re not even sure if you’re aiming in the right direction. But don’t worry; with the right strategies, you can take the guesswork out of setting your rates and start charging with confidence.
Hourly vs. Project-Based Pricing: Which Team Are You On?
First, you’ll need to decide whether you’re charging hourly or by the project. Think of hourly pricing as the safe, reliable option — like ordering pepperoni pizza. It’s straightforward, and clients understand it easily. If you’re just starting out or working on projects with unpredictable scopes, hourly rates might be your best bet. Just make sure you actually track your time (hello, time-tracking apps!) so you’re not accidentally working for free.
Project-based pricing, on the other hand, can be a bit more… adventurous. This approach involves setting a flat rate for the whole job, which works well for well-defined tasks, like designing a logo or writing a blog post. The upside? You’re rewarded for working efficiently, not penalized for finishing quickly. The downside? If the project turns into a never-ending saga of client revisions, you might find yourself crying into your coffee at 2 a.m. To avoid this, always outline clear deliverables and include revision limits in your contract.
Value-Based Pricing: The Holy Grail of Freelancing
Value-based pricing is the dream, my friend. Instead of charging for your time or effort, you’re charging based on the value you deliver to the client. For example, if your social media campaign will help a client generate $10,000 in sales, charging $500 suddenly seems like a bargain. Of course, value-based pricing requires a bit more confidence and experience, so it’s something to aim for as you grow. But even as a newbie, start thinking about how your work benefits the client. Framing your services in terms of ROI (return on investment) can help you command higher rates — even if you’re just starting out.
Discounts: Friend or Foe?
Offering a discount to your first few clients can be a good way to build your portfolio, but tread carefully. There’s a fine line between “attractive pricing” and “why-are-they-working-for-peanuts?” territory. If you do offer discounts, make it clear they’re temporary — something like, “I’m offering a special rate for my first three clients” — and use it as a chance to over-deliver. Happy clients will spread the word, and soon enough, you’ll be able to raise your rates with glowing testimonials to back you up.
The Art of Saying No
Finally, remember that not every project or client is worth your time. If someone’s asking you to do a full website redesign for $50, you have my full permission to politely decline (or laugh, depending on your mood). Knowing your worth and sticking to it is a skill that takes practice, but it’s essential for building a sustainable freelance business.
When it comes to pricing, there’s no one-size-fits-all formula. The key is to find a strategy that works for you, your industry, and your goals. And remember, pricing isn’t set in stone — it’s more like a work-in-progress masterpiece that you’ll refine as you grow. So don’t stress too much. Set your rates, learn as you go, and most importantly, don’t forget to pay yourself what you deserve. You’re building a business, not a charity!
Factor in Overhead Costs and Business Expenses
Freelancing may come with the perk of working in your pajamas, but those cozy sweatpants don’t cover the reality of overhead costs. When setting your rates, it’s easy to forget about the not-so-glamorous expenses of running your own business. Spoiler alert: freelancing isn’t just about getting paid for your skills; it’s also about making sure your business doesn’t run you into the ground.
The True Cost of Doing Business
Let’s break it down. Whether you’re a writer, designer, developer, or a jack-of-all-trades, you’ll need tools to get the job done — software subscriptions, design tools, website hosting, domain renewals, and even coffee (don’t underestimate the budgetary impact of caffeine). And let’s not forget the hardware. Computers don’t last forever, and when your trusty laptop decides it’s done with life mid-project, guess who’s footing the bill? That’s right — you.
Your overhead costs aren’t just the things you need to do your job; they’re also the things that keep your business afloat. Think about things like accounting software (to track all those glorious invoices), marketing costs, and even business insurance if you’re operating in a field that requires it. All these little expenses add up, and they need to be reflected in your rates.
Don’t Forget Taxes (Yes, the “T” Word)
Here’s a fun fact: when you’re a freelancer, you’re both the employee and the employer, which means taxes are all on you. Depending on where you live, you’ll likely need to set aside a chunk of your income for income tax, self-employment tax, and maybe even state taxes. A good rule of thumb is to save around 25-30% of your earnings for taxes (don’t panic, you’re earning more than this — promise). If you don’t factor taxes into your pricing, you might find yourself crying over a surprise tax bill come filing season.
Profit Isn’t a Dirty Word
Here’s the thing: your rate isn’t just about covering expenses and taxes. It also needs to include profit. Yes, you deserve to make money on top of breaking even. Profit is what allows you to save for future growth, take a vacation (because freelancers deserve beach time too), and handle unexpected expenses without spiraling into a financial crisis.
How to Factor It All In
To make sure you’re not accidentally working at a loss, take a little time to calculate your monthly expenses — both fixed costs (like software subscriptions) and variable ones (like new client gifts or the occasional overpriced latte). Divide this total by the number of hours or projects you plan to work each month, then add this to your base rate. This ensures that every hour or project you complete helps cover your overhead, not just your time.
And remember, your rate should account for the fact that not all hours are billable. Some time will inevitably go to admin tasks, marketing, or scrolling through Instagram convincing yourself it’s “research.” So, if you plan to work 30 hours a week but only 20 are client-billable, your rates need to reflect those extra non-billable hours.
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The takeaway? Treat freelancing like the business it is. Your rates should reflect more than just the time you spend working on client projects — they should also ensure your business is sustainable and profitable. After all, you can’t pour from an empty cup (or an empty bank account).
Building Flexibility and Raising Rates Over Time
When you’re just starting out as a freelancer, setting your rates might feel like carving them in stone — unchangeable and eternal. But here’s the truth: your rates aren’t meant to stay the same forever. They’re more like a work-in-progress, evolving as you gain experience, build confidence, and realize that charging $10 for a project that takes six hours was… a learning opportunity.
Let’s talk about how to build flexibility into your pricing and gradually raise your rates over time without alienating your clients (or causing yourself a stress meltdown).
Start with Flexibility in Mind
Flexibility is key when you’re figuring out your pricing strategy. Think of your rates as a living, breathing entity that will change as your skills, portfolio, and reputation grow. When you’re new, it’s okay to take on smaller projects or offer slightly lower rates to build your experience — but don’t fall into the trap of staying stuck there forever.
One way to stay flexible is by experimenting with different pricing models. Try hourly rates for some clients, project-based rates for others, or even retainer agreements for long-term work. The more you experiment, the better you’ll understand what works for you and your clients. Plus, this keeps your pricing adaptable as your business evolves.
Keep Track of Your Progress
As you work with more clients, you’ll (hopefully) become faster, better, and more efficient at what you do. That means the value you bring to the table is increasing — and your rates should reflect that. Keep an eye on how your skills have grown, how much demand there is for your services, and how your work compares to others in your industry.
Think of it like leveling up in a video game: you wouldn’t stay stuck at Level 1 forever, right? Celebrate your wins, learn from your mistakes, and use that growth as leverage to raise your rates.
How to Raise Your Rates Without Losing Clients
The idea of raising your rates can feel terrifying — like you’re about to tell a client their coffee just doubled in price. But here’s the thing: most clients expect freelancers to raise their rates over time. It’s just a part of doing business.
The key is to communicate rate increases clearly and professionally. Give your clients plenty of notice (30 days is usually a good rule of thumb) and frame it as a natural part of your growth. For example:
- “Over the past year, I’ve worked hard to enhance my skills and deliver even more value to my clients. Starting next month, my rates will be increasing from $X to $Y to better reflect the quality and expertise I provide.”
Pro tip: If you’re nervous about raising rates with long-term clients, consider offering them a “loyalty” discount — like grandfathering them into a slightly lower rate than your new clients. This helps ease the transition and keeps your relationship intact.
Set a Regular Schedule for Rate Reviews
To avoid the awkwardness of sporadic rate increases, make it a habit to review your rates regularly — say, every 6-12 months. Ask yourself:
- Are my current rates covering my expenses and time?
- Have my skills improved since I set my last rate?
- Are my rates competitive with others in my field?
If the answer to any of these questions is “no,” it’s time to bump those numbers up. Remember, raising your rates isn’t about being greedy — it’s about valuing your time, skills, and contributions appropriately.
Know When to Walk Away
Sometimes, raising your rates means losing clients who can’t (or won’t) pay more. And that’s okay! It’s better to focus on finding clients who value your work and are willing to pay what you’re worth. Think of it as making room for new opportunities rather than clinging to old ones out of fear.
The Big Picture
Building flexibility into your pricing and raising your rates over time isn’t just good for your bank account — it’s essential for growing your freelance business. Remember, freelancing is a journey, and your rates should reflect the value you bring as you move forward. So don’t be afraid to start small, stay flexible, and give yourself permission to charge what you’re worth. After all, you didn’t become a freelancer to work for peanuts — unless, of course, you’re freelancing for a peanut butter company.
Conclusion
Setting competitive rates as a new freelancer can feel like trying to solve a Rubik’s Cube with your eyes closed — frustrating, a little confusing, and occasionally leading to thoughts of giving up entirely. But don’t worry, you’ll get there. Finding the sweet spot between charging what you’re worth and staying competitive is more of an art than a science, and the good news is, you can adjust and improve as you go.
The key is to start with a solid foundation: understand your skills, research what others are charging, factor in your expenses, and embrace flexibility as you grow. You’ll stumble a bit in the beginning (we all do), but every client, project, and lesson learned will get you closer to becoming a confident freelancer who knows their value. And yes, that means raising your rates when the time is right.
Remember, freelancing is a marathon, not a sprint. Rates will evolve, clients will come and go, and your confidence will grow with every success (and every small failure you turn into a learning experience). So, take a deep breath, set your prices, and don’t be afraid to advocate for yourself. You’re building a business, and businesses don’t thrive on lowball pricing — they thrive on strategy, adaptability, and knowing their worth.
Steve is Making $20K+ monthly – Discover the EXACT SAME Secrets to Make $5,000-$10,000 Monthly >>>
In the end, freelancing isn’t just about setting rates — it’s about creating a career that reflects your skills, values your time, and supports the life you want to live. Now go forth, set those competitive rates, and remember: you’ve got this (and no, you don’t need to work for exposure unless exposure pays your bills).
Thank you for reading my article “How to Set Competitive Rates as a New Freelancer” till the end. See you in another.
