What exactly is the worth of one hour of your time in euros? Changing the value you place on sixty minutes of your precious time is a certain way to up your game. Why? The simple reason is that it assists you in making trade-offs and helps you to focus on the service you offer.
If you charge €5 per hour, odds are that the undertakings that would earn you €50 per hour are really dissimilar. In truth, it may not just require a skill set that is different but also a mind-set as well as a set of expectations that are different.
This article focuses on how you can set up your hourly rate as a freelancer who provides one or more services to your numerous clients and customers.
How much are your 60 minutes worth?
You already have the knowledge of the amount you are vending your time for if you are currently waged by the hour as a freelancer. However, that does not mean that amount is the worth of your time. Your time might well worth more.
As a freelancer, in my early days of consulting, I had my first surprise when I realised I was at €100 per hour being billed out. I could recollect that I was not getting paid that, but the fact that someone believed my time had a value of €100 surprised me.
It was after that I realised others were making more money while even working less. It was then I thought to myself: “I’m not doing something right”.
There is a quick trick to figure out the amount your hourly charge is. If you are on a salary before or have people who supply the same services as you do that are on a salary, simply cut off the thousands and divide what you get by two.
For instance, if you earn €20,000 per annum, then take €20 and half it, so you are paid €10 an hour. If you earn €100,000 per annum, then take €100 and half it, so that means you get paid €50 per hour. It’s not a precise science, but it provides you a practical approximate range.
You can then compare this with the value of services you are providing, if you feel your services are worth just about that amount, you can set that as your hourly rate as a freelancer. But if you feel your services are worth more, it might be time to up your hourly rate.
Begin the process by asking the question
You begin to see opportunities and patterns by simply asking the questions: What are €50 per hour undertakings? Which activities cost €100 per hour? What are the activities for which someone can charge €10, 000? Know the range in which your services fall.
For instance, some trainers such as Tony Robbins have asked €10, 000 per hour. This informs a question you could ask yourself: What type of services did he offer that was worth as much as that? Then you can compare the services you are offering.
How much exactly are your freelancing services worth? What problems are you helping to solve and how much is that worth? This will help you in knowing the amount you should ask for as your hourly rate.
If you begin to look around, you could find examples and models of people that earn more money an hour despite offering what you might consider more or less the same services as others who earn less.
You should compare and contrast the services you are rendering with theirs and your findings will let you know how much you should set up as your hourly wage. Find out why some people earn more than their counterparts.
Also, essentially, you should see the limitations and limits. For example, where are you offering your freelancing services? Two freelancers rendering the same services in different locations might be earning a significantly different amount of money for some reasons.
Your skills might be worth €100 in one part of the world and €50 in another or even as low as low as €10 in another part, so carefully consider this before you set up your hourly rate so that you do earn far less than you are supposed to.
The point here is to research on the amount your fellow freelancers charge for the same services, know the average amount and then you can select an hourly rate that you consider satisfactory – one you believe is a fair reflection of the value you are adding.
Do not settle for less
Having found out the relative hourly rate you could charge for your services as a freelancer, do not settle for the minimum value. In fact, you should put more value on your time and opt to charge higher rates, especially if you have a little bit more to offer than similar freelancers.
It is a common saying in business that when you offer the cheapest services, you get the worst clients and this is very true. When you offer the minimum hourly rate out there, your clients will not value your services and they will take your services for granted and be tempted to even offer you less.
Also, you want to earn more than the average Joe or Jane. After all, time is all we have got. So you should not limit yourself to the minimum hourly rate out there. Though, this does not mean you should set the highest hourly rate. Set an hourly rate that will meet your earning target.
As a freelancer, you do not want your skills to be undervalued and this is why you should not set up a very low hourly rate in the quest for patronage. It will be unwise to charge a low hourly rate just to enjoy high patronage because the big guns do not go for the cheapest rates.
Meanwhile, in order for you to maximize your earnings, you can figure out how to make the most of your existing experience and skills or even consider gaining new skills.
As a freelancer or consultant, you could up the ante on folks by asking them to pay a premium for your time or service. You could split your offerings and rates by having a lower priced rate for one market, and a premium rate for another. This will portray you as a professional.
The freelancer's sector
Different niches require different levels of expertise. A writer can be well versed in writing pieces centered on the theme of entertainment or celebrity culture. Such a freelancer will charge a different price from what a writer working in the technology sector would.
This is because an entertainment freelancer can get the larger percentage of his or her materials online from other sources and this is not always the case with another working on technology. Also, the time that such research will consume is also a major determinant of the amount a freelancer will charge as hourly rates.
The difference
- The dissimilarity existing between the different hourly rates such as €10, €100 or €10, 000 may or may not be what you anticipate. While it might be partly due to skills and experiences, a larger part of it may, in fact, be due to perception.
- In the long run, folks do not pay for the intrinsic value but for the “perceived value” and reality is based on perception. This is the reason why branding is the perfect way to change the game. If two freelancers provide the same services, the better brand, more often than not wins.
- So before setting your hourly rates, it is important that you build your brand accordingly so that you whatever hourly rate you set, you can be assured of getting enough clients for you to meet and even surpass your weekly and monthly targets.
- If you do your homework well on branding, setting up a satisfactory hourly rates becomes easier. When you want to set up an hourly rate, you have to put in consideration your brand. Since you intend to gradually grow your brand, set up an affordable hourly rate initially.
- When you consistently deliver excellent services as a freelancer, then you can gradually increase your hourly rate as your brand is growing by the day.
- Given the way the Web has made the internet a worldwide market, you must set up your hourly rate with the knowledge that there are people readily available that can offer the same services for more or less.
- Also, when a freelancer is recommended to a client by a trusted party, he will be able to command a higher price. This is because the freelancer will be coming in from a position of trust. He has been tested and is trusted by the original client and this is the reason for the recommendation.
