How to Negotiate Freelance Rates

female designer working with paperwork and looking at tablet screen
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What's the best way to negotiate rates for freelance work? It's possibly the toughest and most important question to answer as a new freelancer: how much should you charge? Ask too much, and you could shut yourself out of a great gig. Ask too little, and you could wind up shutting off the lights at your brand-new business.

In a perfect world, there'd be some kind of universal rate sheet for freelancers. Graphic designers in New York would know to charge X per design, while writers in Chicago would feel safe charging Y per hour. Here in our imperfect world, though, determining freelance rates—and getting what you deserve—is a complicated process, and it can be challenging to decide how much to charge your clients.

The good news is that by taking it one step at a time, you can figure out an appropriate rate that will support you and grow your business. Best of all, people will actually pay it, meaning that you won't have to return to the rat race anytime soon. Here are five tips for how to best negotiate (or renegotiate) freelance rates.

Look at Your Last Job

If you're like most freelancers, you probably moved from a full-time job to the freelance life, either voluntarily or through a layoff or another form of job loss. Provided that you've stayed in the same industry, you could determine how much your previous employer was paying you and build your rate from there. Just remember to include less obvious forms of compensation, including benefits like health insurance, 401k contributions, and other insurance. When you're a brand new freelancer, there are tools you can use to figure out what you should charge. You can calculate your hourly rate by setting an annual salary you'd like to earn, deducting your expected expenses and taxes, and estimating your billable hours.

Another key to setting accurate rates is to remember to factor in the time you'll need to spend on paperwork, promotion, and other aspects of your business. While you won't be charging your clients for the time you spend invoicing and tracking expenses, you'll need to make a rate that covers the time you put into maintaining your business.

Talk to Your Network

It may come as a surprise to new freelancers how other freelancing writers, editors, and designers are usually willing to share what they've learned, even though you are essentially a competitor.

If you know other freelancers in your field, it's worth it to ask them how much they charge for what type of work. Many will be forthright, and you'll save yourself a lot of heartaches, failed bids, and missed opportunities.

Networking your way to a rate range has another advantage—peers who want to talk about rates may have more oddities and insider tips to share about your industry. You'll learn not only what you should charge, but also how you should phrase things during your negotiation, and what skills you should consider adding to your repertoire to stay relevant. Best of all, you'll have a sense of community, which is often sorely lacking in the freelance world.

Decide Whether You Want to Charge by the Project or Hour

Should you charge by the hour or the project? It depends on the gig, the employer, and your working style. The most important thing, whichever way you go, is to communicate with your client to establish an accurate assessment of the work involved, and then set expectations and parameters. Don't be afraid to ask them to be extremely precise about what they want, when they expect it by, and what will happen if you disagree about the fitness of the work. You don't want to go into a project with any assumptions or questions about the contract. For example, will you receive a partial fee if the client determines your work wasn't adequate? Or instead, will you do a set number of revisions? Is there a timeline for those revisions?

Regardless of whether you charge hourly or on a project basis, you need to know how long they think the entire work will take. Once you have a detailed description of their requirements and a little experience under your belt, you'll have a good sense of whether their assessment is accurate. Don't be afraid to push back, if you think their assessment is off.

Get it in Writing

This is one of the most important aspects of freelancing. Without getting an agreement in writing, you shouldn't expect to see any paychecks, and you shouldn't start doing any work.

Contracts exist to set expectations, not necessarily to provide a framework for a lawsuit. While they technically do the latter as well, the odds are slim that it will be in your best interests to sue. All you're trying to do is make sure that everyone's on the same page.

Contracts don't need to be complicated. A simple statement of work might be all you need. But whatever type of contract you choose, it's worth it to have one, if only to make sure that you'll be able to work together productively to achieve the client's goals and get your payment in a timely fashion.

Ask For What You Deserve

Finally, if you've done your homework and priced the job appropriately, it's rarely worth it to take less money than you're comfortable with. If you take a job that won't pay your bills, you'll experience resentment in the short term and financial problems in the long term. Neither is good for you or your client.

This isn't to say that you can never do a sample gig for a lower rate to break into a new corner of your industry. You could also find it worthwhile to provide pro bono work for a cause you admire or give someone a deal if you think it will lead to future work. But if the rate you're offered is genuinely too low, it's often worth it to graciously decline and move on.

Remember: You're in business, and you want to stay that way. Be brave, polite, and confident. If you conduct yourself well, a failed agreement today might lead to better-paying work down the road.