Creating a fair, but highly-profitable, freelance rate

“So what’s your rate?”

Four words that ruin the negotiations of the unprepared.

It’s a position every freelancer finds themselves in. The question that leads to frantic consideration of every available option and what you think you can get away with charging.

Do you go high and take the client for as much as possible? No. Because you risk losing the client, right?

Perhaps you should play it safe and go low. It’s not as much as you want or need, but some money is better than no money, right?

It’s a fine line to tread.

Especially as you’ve undoubtedly read the articles about undervaluing your work.

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You’re not gonna be that writer who provides thousands of dollars in value but gets paid a few dozen bucks.

As you sit on the phone considering these options the silence stretches.

The client is waiting for your answer and you, well, you’ve hesitated.

It might have been only a few seconds, but with each passing moment, the panic you feel deepens. You know you’ve got to respond soon or you’re going to look like a fool.

So you blurt the first number that comes into your head.

“Er…. Maybe $500? How does that fit with your budget?”

“Perfect”, comes the immediate response.

And with that, you know you’ve fucked up.

There was no counteroffer, no sharp intake of breath, and zero hesitation from the client.

Why?

Because they could have stretched to $750, maybe even $1000 or more.

You know this because they immediately jumped on your initial offer.

They wanted to lock you down at a rate that was a fraction of the budget they’ve allocated for the job.

Now, $500 is nothing to be sneered at.

You’ve come away with an OK rate, but you’ve fallen far short of what you’re worth.

And let’s face it. We’re not in this business to earn an “OK” income.

The reason that’s all you could charge? A failure of preparation.

I’ve been there. I know making your rates up on the spot simply doesn’t build a profitable freelance copywriting business.

If you enter into a negotiation without knowing your rates you’re going to end up undercharging.

I’ve done it in the past and it fucking sucks.

But here’s the good news. By putting 1 hour aside today, you can ensure that you’re prepared for every future negotiation.

You can guarantee that even when you get less than you hope from a negotiation you’ll still be earning enough to live the life you want to live.

Spend the next 10 minutes reading this article and within an hour you’ll have a well thought out, profitable freelance rate sheet which ensures you’ll never undercharge again.

But You’ve Heard You Shouldn’t Use a Freelance Rate Sheet

Bullshit.

That’s the only thing I can say to this terrible piece of advice.

You’ll read advice from freelancers who say that every job is different and requires an individual quote. Tell that to a client and you’ll see them all run for the hills.

How would you react as a customer if you walked into a store, asked the price of an item and were told it depends on how you intend to use it?

Not well, right? You’d worry the store is going to try and rip you off by adding an extra $100 to the price because they think you’re gullible enough to fall for their pitch.

“But Pete”, you say, “those are physical products with a set price. Everyone gets the same item at the end which we can’t offer as a freelancer.”

Well, you’re kind of right.

Take Apple as an example. Yes, they sell iPhones and everyone purchasing a particular model pays the same price.

But Apple knows people have different needs. So what do they do? They offer multiple levels of the same product.

The tiered approach to finding profitable freelance rates

When you head to the Apple store, you’ll note that each product has a range of offers.

Each one with its own detailed specifications.

And each of those specs has a slightly different pricing, both to better represent the increase in value whilst also covering the costs of production.

The same approach is used by service businesses in the B2B space.

The below is a screengrab of Leadpages pricing page. Leadpages, if you’re not aware, offer a software service for people who want to create landing pages and grow their email lists (it’s what I use for all my sales pages here on HaW).

And again, another example from my email service provider of choice, Drip. Drip amends pricing based on your subscriber count.

Both Drip and Leadpages offer a service to businesses. Just like you.

And yet, they’ve managed to distill their prices down to easy to interpret tiers.

This is what you need to do with your business offerings and your freelance rate sheet.

You need to offer the same service to clients but at different tiers.

And there’s a very specific reason you need to offer your pricing in tiers which I’ll explain below whilst also dispelling one of the greatest lies told to freelancers.

How price anchoring helps you find more profitable freelance rates

One of the things I hate with freelancing sites and the advice on freelance rate sheets is the common advice that “every client is different”.

I hate it because it’s just true enough to be believable, ensuring a tonne of people follow the advice.

However, it’s also far enough from the truth to make people following the advice never see any real results.

Cause here’s the thing.

When you treat each and every client as a completely unique entity, you end up reinventing the wheel every time you get your freelance contract signed.

And that means you’re wasting time on repeatable tasks.

Or more accurately, wasting time that could be spent earning more money.

The tiered pricing approach is the perfect way to achieve a few things.

1. It makes one of your offers seem more inviting, thus increasing your client close rate
2. It helps you package your services so you don’t have to reinvent the wheel every single time
3. It helps you qualify clients. If they’re not willing to pay even your lowest offering, they’re not good enough for you

But there’s a psychological reason why these three-tiered rates are the way to go.

The concept is known as price anchoring.

And the best example I can think of is the old saying, “If you want to sell a $2000 watch, put it next to a $10,000 watch”.

Here’s how price anchoring breaks down.

Your potential clients have an expectation of what they want to pay.

Let’s say their expectation for the project is $1000.

That means any price you throw at them is judged against their $1000 expectation.

Your job is to make them re-evaluate their expectation.

To anchor a new price point in their mind for what is reasonable.

In the above watch scenario, a person with an expectation to pay $1000 for a watch would think $2000 is too much.

But placing it next to the $10,000 watch changes that perception.

It creates a new anchor point which makes the $2000 watch seem like an absolute steal.

You should be leveraging this concept in your own pricing.

Three different levels of service at three incrementally increased prices.

I’m going to run you through how to do this with a real example using the freelance rate sheet calculator you can download below.

How to work out your freelance rate sheet with a three-tier pricing strategy

Before you can do anything with the actual pricing, you need to know what it is you’re offering.

I’ve written on this extensively, so I won’t go into detail on this here (if you want the full breakdown, check out the pice I put together on niche selection).

The short version of that article is that you need two things to successfully find your offer.

Step 1 – Find your ideal offer

1. A niche (so the industry you wish to work in)
2. A specialisation (what kind of service do you offer your niche industry)

Let’s use my own business as an example.

I’m a copywriter.

One of my 2 primary niches is ecommerce.

For ecom brands, I generally offer email copywriting.

I’m an email copywriter for ecommerce brands.

That double level of specificity really helps you narrow things down.

It helps identify who to reach out to and the kind of service you offer.

After a little research I might discover that ecommerce brands struggle in particular with highly effective cart abandonment emails.

So, I narrow the offer once more.

I’m now an email copywriter for ecommerce brands who’s offering a cart abandonment email sequence.

Step 2 – Outlining your deliverables

Once you know what you’re offering, you want to split it into three separate “tiers”.

The general rule here is for tier-one to be the basic level f your service. The kind of thing low-budget brands would like.

You want to start there and map out everything you’d offer.

For the above cart abandonment sequence that might be…

1. One cart abandonment email
2. Three subject lines for A/B testing
3. Check in after 1 month to offer one final round of edits

That’s your base level offering. And honestly, you don’t want people to buy this.

The next level offering is going to be what you want people to buy. My advice here is to increase the value by 100%. The pricing will later be increased by 50% so it seems like an incredible deal for the client.

Here’s the thing though.

You’re increasing the value, not the workload. A lot of the work from level one should also be relevant for level two.

For example, you could offer the below as the level two offer.

1. Three cart abandonment emails
2. Three subject lines for A/B testing per email
3. Advice on offers and coupons to facilitate the sale
4. Advice on email timing for maximum engagement
5. Check-in after 1 month to offer one final round of edits for the entire sequence

Just like that, you’ve got yourself a second level offer.

Now all you need is the top-level offer.

What I’d recomme3nd here is to simply add a “everything from tier-two +” method.

You basically offer everything from tier-two but add in something that massively increases the value of your offering.

That offer will usually be tied to your time.

For example, in the above example, a tier-three offer might be;

1. Everything from “tier-two”
2. Ongoing monthly optimisations for increased sales levels
3. Ongoing advice on how to implement relevant upsell emails

This final tier adds a tonne of extra value because they’re getting frequent access to you, and the price will reflect that.

But what you want to do here is basically build a couple of elements into the offer that allow you to “take over” the process for the client.

It’s a bigger ask, and few people will go for it. But that’s ok.

The only goal of your bottom and top pricings are to make your middle pricing seem more valuable.

The lower one makes the deliverables in the middle one seem more valuable in terms of results.

The cost of the higher one makes those deliverables seem more reasonable.

Now let’s get onto pricing these bad boys.

Step 3 – Figure out how much you need to earn

So we know the deliverables, right?

Now we need to understand how much we need to make every month for the kind of life you desire.

This is what’s gonna give us the solid information to turn this into a high-converting freelance rate sheet.

You need to first outline two basic numbers.

1. How much do you need to earn to survive?
2. How much do you need to earn to live the life you want to live?

These are two numbers you need to figure out before going any further in setting your rates.

You’ve got to figure out exactly how much you need to earn to survive by listing every expense and how much it totals for the month.

Then, do the same with how much you want to earn to live the life you want to and put them side by side.

Just like in the below (FYI – these are fabricated numbers for demonstration purposes only. Do not use them for your situation. Your situation is unique)

These are post-tax earnings.

You’ll need to look into your country’s tax rates and figure out exactly how much the total pre-tax amount is to net you what you need to survive and thrive.

The minimum rate you’ve worked out (the one on the left) is just that. The bare minimum. I don’t recommend using it to figure out the rest of your rates because it’s too limiting.

By setting the bar as low as possible you’re never going to be able to save money or have a little extra cash to enjoy yourself.

That minimum earning is a safety net of sorts. It’s there to let you know how much you need to survive, not what you should be aiming for.

No one takes a job because it gives them just enough to survive, people take jobs and move up the ladder so they have more money to play around with.

So from this point on, use your goal earning.

Head to your government’s tax website and figure out what the pre-tax amount would be for your income goals and convert it into a yearly total.

I’ve imagined the $5500 above is a pre-tax goal and punched it into a UK tax calculator to get the below.

The tax calculator tells me my goal of £5500 is £120,000 per year. If it wasn’t such a conveniently round number, I’d round it up to the nearest £500 to give myself more wiggle room.

Step 4 – Figuring out Your Minimum Acceptable Rate

Taking your goal earning, you need to figure out how much you need to charge to actually meet it.

This is not a case of picking some numbers out of the air.

I see a lot of advice telling freelancers to increase/decrease the price depending on what they think the client can afford. Which is shitty advice.

By having no structured fee it makes projecting your future earnings and growth near impossible. Here’s an example.

I know all my rates. If I need to earn $2000 extra a month I know that equates to, let’s say one landing page client on my lowest-tier offering. Or it requires 4 of my $500 consults.

I also know that on average, I send 50 outreach emails to land one client.

So to land an extra $2000, I need to send ~50 emails. By knowing all the stats it makes the process so much easier to predict and perfect.

But if I charge Company A less than Company B because they’re smaller, it muddies the water and affects my profitability.

It might feel good in the short term to help them out, but it makes it difficult for you to understand your own business.

You need to know how much you charge for each service so you can figure out what steps you need to take to hit your income goals.

If the clients you approach can’t afford you, then either your pricing is off or you’re targeting the wrong clients. Figuring out your rates is as much about attracting the right clients as it is about earning potential.

Anyway, on to the next step of figuring out your MAR.

Step 1 – Figure out how many hours you can bill in a week.

Remember, you’re a freelancer.

You might work 40 hours per week, but you can’t bill all 40 of those hours.

Much of that time will be spent advertising yourself, handling admin work, and other non-paying tasks.

I estimate I have 5 billable hours a day.

Step 2 – Work out the number of hours that equates to a week

You need to know your weekly billable hours first.

Once you have that, you multiply it by the number of weeks you want to work a year (everyone wants a few weeks holiday so factor that into your equations).

52 weeks per year minus 5 weeks of holiday = 47 weeks.

Step 3 – Use to find your hourly rate

You should now have the total number of working hours per year.

Divide your required minimum earning by the total yearly hours and, ta-da, you have your minimum acceptable rate.

One of the spreadsheets in the free downloads will help do this for you. The below is a screen cap of what it’ll tell you.

So I’d round that up to 110 and I’d know that I need to charge 110 per hour to hit my dream income goal.

That is now your minimum acceptable rate, or MAR.

$110 is the very least you can accept per hour in the above example. If you were to drop below it, you’d struggle to hit your goals.

It might look high, but when you package this into a deliverable, the prices actually look quite reasonable.

Important Caveat – When you’re figuring out your MAR and your rates for each job always round up. You’ll find you’ll get weird numbers like 72.37 for your hourly rate. That then rounds up to $75 an hour. It just gives you more wiggle room for negotiation and takes the pressure off.

Step 5 – Pricing your tier-one deliverables

The key thing here is to price the initial tier we worked out earlier.

What you’re going to do is write out how long it’ll take you to create each and every deliverable included in the tier.

So let’s revisit those and add in the requisite time.

1. One cart abandonment email – 1 hour
2. Three subject lines for A/B testing – 1 hour
3. Check-in after 1 month to offer one final round of edits – 1 hour

So it’s 3 hours of your time.

At $110 per hour, that’s a total of $330 for this level.

Again, round up to both make it a nice round number but to also give you more wiggle room.

So it would be $350.

For that tier.

If you can sell one of those tiers at that price, you’ll earn more than your minimum acceptable rate which will have you on track to hit your dream income goal.

Step 6 – Scaling your freelance rates up by tier

So as mentioned above, you want your tier-two service to be around 2X the value in terms of the deliverables.

You’re going to make that second-tier seem super attractive by only increasing the fee by 1.5X.

So they get 2X the work of tier-one for 1.5X the price.

The reason is this makes it seem more valuable and reasonable. However, it also results in a higher paying client for you.

You will, however, also need to check the value by the hour to make sure you’re not cheating yourself.

A quick calculation from tier-one’s $350 would have the tier-two price at about $525. Let’s round that up to $550.

And then we double-check it against the hourly rates.

1. Three cart abandonment emails – 2 hours
2. Three subject lines for A/B testing per email – 1 hour
3. Advice on offers and coupons to facilitate the sale – 30 mins
4. Advice on email timing for maximum engagement – 30 mins
5. Check-in after 1 month to offer one final round of edits for the entire sequence 1 hour

That’s 5 hours of time, which, at $110 / hour comes to $550.

Which is oddly lucky for us.

If the prices don’t align so perfectly, you might need to mess around with the deliverables to ensure the value to price ratios are maintained.

I should also mention, those ratios are guidelines, not hard and fast rules.

You do need the value to outweigh the cost though.

So tier-two works at $550.

Now it’s time to make $550 look like an absolute steal.

Again, I’d recommend at least doubling the price here.

But do make sure to check it against your hourly estimates.

So the $550 from tier-two is your baselines.

1. Everything from “tier-two” – $550
2. Ongoing monthly optimisations for increased sales level – 3 hours per month
3. Ongoing advice on how to implement relevant upsell emails – 2 hours per month

That’s another 5 hours so another $550 for a total $1100.

I’d round that up to $1250 for a nice round number.

And just like that, you have three tiers of the same freelance services with rates that are both profitable for you and reasonable for the client.

That’s it for figuring out your rates. It really is that simple.

Of course, if you want to make it even simpler, get a copy of our freelance rate sheet calculator.

Once you’ve done this, your primary job is to fill all f your billable hours in a day with this work to hit your goals.

That’s what the other 4 hours per day are for. To find new clients and get them to hire you.

Should you display your freelance rate sheet on your site?

There’s a minor online debate as to whether you should openly display your freelance rate sheet on your site.

Some freelancers do as they think it’s a great way to filter prospects who can’t afford them, others don’t because it doesn’t demonstrate value and every job is unique.

It’s a personal decision, but I’d recommend you do.

Mainly because of what I’ve mentioned above.

Outlining your rates on your site will dissuade those who can’t afford you.

That stops you from lowering your rates. Which stops you from working at a loss.

I don’t want to waste time on phone calls and playing email ping-pong with clients who literally cannot afford to hire me.

Every hour not spent earning eats into the 4 hours a day I have to find paying work.

A little extra to make your freelance rates waaayyy more profitable

If you really want to skyrocket your earnings then there is a simple way of making the above rates even more profitable without increasing the prices.

Something that comes about completely naturally when you price your services this way.

The end goal is to minimise the time it takes to produce the deliverable.

This helps increase your hourly rate because you’re being paid the same amount for less time on the job.

As you sell more of these packages to clients you’ll find yourself doing the same things over and over again.

You’ll find simple templates that allow you to create the deliverable in less time.

This is the start of productising your service.

Which is a fancy way of saying you create systems and processes to quickly create something of high value and quality.

By stripping your offerings down to three tiers, you’ll quickly find which systems and processes you need to sell this as a product.

And the more of the process you can templatise, the less time you need to spend working on it, which means more money per hour for you.

Use this to create freelance rate sheets that get clients to say “yes”

Your freelance rate sheet is not a magical magnet that’s going to attract higher-paying clients and deter the cheapskates as soon as it’s published on your site. That’s your job.

This isn’t some magical approach I’ve discovered. It’s one used in the B2B world oh so often (and as a professional service provider, you are a B2B vendor).

I’ve included a few samples below from service and product-based businesses that use this kind of productised approach to great effect.

You’ll notice that some are freelancers, others are software, and others still are similar services.

The reason they all adopt this price anchoring mode is simple. It works.

Some might have three tiers, others might have 2.

But by placing more than one offer on a page for the same service, you increase your chance of making one look more valuable to the customer.

If you like any of the below and want to implement the same on your site, use the freelance rate sheet calculator download immediately below.

Let’s start off with yours truly… cause I am the most humblest…

PJBoyle.com – email copywriting service

I’ve split the two primary services I offer into three tiers. For email, the tiers break down as the below.

Tier-one is a simple one hour audit for $500.

Tier-two is an ongoing optimisation package where I’ll work with the client to continually increase the effectiveness of their email strategy. It’s priced between $2000 – $7500 depending on what’s needed.

Tier-three is basically the creation of a full launch strategy through email. Creating something from scratch for the client, and is $7500+.

The services are effectively achieving the same goal. Helping the client improve their email marketing.

However, there are different levels depending on what the client needs and the size of the project. They simply pick the menu option that best suits them.

I’ll be honest and say that I sell far more of the $500 option. However, the wonder of having such a low entry piece that still provides revenue is it helps me demonstrate value often leading to an upsell for the second level tier.

I basically get paid $500 for an hour of my time to prove how I can help them achieve even more.

Which is the whole purpose of a 3-tier system for your freelance rate sheet.

Very Good Copy – 1-hour Copywriting consultation

Eddie Shleyner of VGC is an incredible copywriter.

In addition to founding VGC, he’s also the Copy Chief at G2. And his site is full of testimonials from some big names in the business.

And, as you’ve already likely guessed, he’s organised his rates on the same sort of tiered approach.

However, Eddie does it a little differently, only offering 2 levels of service.

As above, it’s the same service.

A copy consult.

However, level one is an email or a landing page, level two is an email and a landing page.

And if you notice the pricing, you’d save $500 if you got them as a package as opposed to purchasing separately.

Not only is this a perfect example of the way to tier your service, but it’s a great way to look at the pricing.

Snap Copy – Copywriting Agency

Once upon a time, Snap Copy was run by the almost legendary CopyHackers team.

Now, it’s run by an equally talented group of copywriters – Lianna Patch and James Turner.

Here’s the thing about their pricing though. It’s a little odd.

You don’t just pay for a service, you buy tokens which can then be traded in for services.

I’m sure the team has tested the crap out of this and have probably figured out that this is more profitable for them.

However, the way they organise both the token purchase and redemption aligns with the above three-tier price anchoring.

Here’s the token purchase screen.

I really like the addition of how much you pay per credit in each tier.  Makes it far easier to see the value.

After you’ve bought those credits, you get to trade them in for some of their wonderful wordsmithing.

Here’s the redemption screen.

They’ve doubled down on this process and come up with a nifty little process to better sell their service.

What you need to look out for here is how much more value the middle option adds.

It might not look like ti, but you get 3X times the number of credits for 2X the price.

That’s a great deal for any client thinking of using Snap Copy for a larger project.

Case Study Buddy – Case study creators

Case Study Buddy (CSB) is the baby of the great Joel Klettke.

And no prizes for guessing what it is they offer.

Once again, Joel’s stuck to offering the same service – case study creation – but has tiered the pricing and approach for his clients.

Here’s how the prices break down.

What I love about this is the way the tiers change the deliverable.

To me, it looks like the increase in price gets you a progressively more narrative and story dirven piece.

However, I’d imagine the majority of the underlying research actions are the same across the deliverables.

It appears that the only addition is the sourcing of an actual client quote for the second-tier and above.

What I’m trying to say is that I reckon Joel’s processed the crap out of this.

The process for tier-one likely makes up 80% of the process for tier-two and so on.

This should make it much easier to scale and add extra value with little extra work.

Take the tiered approach to presenting your freelance rate sheet

As a freelance writer, you are first and foremost a business owner.

And one of your chief concerns should be to make the decision to hire you as easy and friction-free as possible.

This tiered approach to displaying your freelance rate sheet is the approach you need to adopt.

It’ll make sure the service you want people to buy stands out as the best value.

If you need any help getting your rates sorted, download the freelance rate sheet calculator now to work out what it is you need to be charging.