12 Pricing Lessons Learned from 13 Years As a Freelancer

This is part of a book (Free Money) about freelance pricing and money mindset I’m writing in public. Here are the prior installments (in order):

1. Why is freelance pricing hard?
2. Are you stuck in a freelance pricing dead-end?
3. Step 1 in Smart Freelance Pricing?
4. Step 2 in Smart Freelance Pricing?
5. Step 3 in Smart Freelance Pricing?
6. Step 4 in Smart Freelance Pricing?
7. Freelancing is the perfect con.
8. Freelance Pricing as Risk Management

To see future installments as I publish them, get updates in my weekly newsletter, and check out the Twitter thread I’ll be updating along the way.

As far as freelancers go, I’m a dinosaur. I’ve been at it since the Great Recession in 2009 when I lost my agency job.

My education in the liberal arts—B.A. in English and M.A. in Literature and Creative Writing—taught me how to think and communicate. However, it helped me precisely diddly squat when it came to such essential business-y things as pricing.

In my six years of post-secondary schooling, I never took a class called “How to Make Money as a Writer.” I never saw one remotely similar offered. All I had to go on as a freelancer was six months’ worth of osmosis at the agency and, later, my own failed experiments.

What I’m about to share came not from a formal classroom or textbook but the finger-in-electrical-outlet variety. “Yep, that hurts.” Shocks to the system tend to be very effective teachers.

Here are 12 of the best lessons about freelance pricing I have, in no particular order:

1. Get closer to the money if you can.
2. Better questions lead to bigger proposals.
3. Time is never what clients buy.
4. Focus on small, incremental gains.
5. There is no right or perfect price.
6. Heroism is a bad business model.
7. Freelancing is predictably unpredictable.
8. Pushback on price reveals one of three problems.
9. Projects that pay the most don’t always pay the best.
10. Leadership sometimes means being a web blanket.
11. Don’t assume saving money is the client’s #1 priority.
12. Authority, guts, and confidence determine what you can charge.

1. Get closer to the money if you can.

The closer you are to the money, the easier it is to charge based on the value you create.

Conversion copywriters are closer to the money than content writers. A PPC ad manager is closer to it than the designer handling the ad creative. My friend Andy who is an e-commerce consultant is closer to the money than a brand consultant like me.

How close are you and your current offers to the money? Noodle on that question, and see if a new offer can’t edge you closer.

Check out these 3 examples of freelancers who got closer to the money:

• Adrienne Johnston has built a $200k+ per year designing presentations for her client’s potential clients and investors. Presentation design is closer to the money than visual identity or editorial design.
• My coaching client, Jake Milner of Nercher Consulting, landed a 12-month, $13,750 per month consulting retainer with a light manufacturing company. Using their financial and inventory data, Jake helps clients figure out exactly how much new stuff to order and when to order it. They avoid tying up their cash in materials and inventory they won’t use anytime soon. Jake’s mix of analysis, financial controls, and ordering strategy is closer to the money than the consulting most CPAs do focused on minimizing a company’s tax liability.
• Joel Klettke is a conversion copywriter who productized case studies and launched Case Study Buddy. According to Joel, “Companies will pay a premium for [a well-written case study] because it’s tougher to do.” Individual assets start at $4,000, and packages range from $5,000 to $15,000+. The prices look like a bargain when Case Study Buddy’s past clients like Chris Dreyer of Rankings.io talk openly about the ROI: “We’ve closed $179,444 worth of deals in the past month and case studies helped close them all.” Case studies are closer to the money than content writing and other types of copy.

If you haven’t yet tried value-based pricing, I’d recommend Million Dollar Consulting by Alan Weiss, The Business of Expertise by David C. Baker, and The Win Without Pitching Manifesto by Blair Enns.

2. Better questions lead to bigger proposals.

Most clients believe they already have clarity, but in my experience they don’t. They ask for a new website when they really need a marketing plan. They shop for a new logo when the underlying brand still needs better defined and gaps filled. (Why are we so eager to pick the paint colors before we’ve built the house?)

Inside the initial request is a desire. Inside the desire is a need. Thoughtful questions peel back the layers and help both parties find the core problem or opportunity—that is, the real project:

• “If you could wave a magic wand, what would happen in your business?”
• “What will a new logo give you that you don’t have now?”
• “What are you hoping a new website will do for you?”

Once I have a handle on the real project, I can ask even more questions to determine the value of a positive outcome.

For example, a client who asks for a website may need more leads and a predictable process for getting them. I ask, “What is a new client worth to you?” and learn that clients are worth at least $10,000 each. The clients 10 new clients over the next 6 months. Charging $15,000 to $25,000 to help the client get 20–50 new prospects (and 10 new customers) represents high ROI on the client’s investment in me.

To ask the questions and peel back the layers instead of pricing out whatever the client first asked for takes disciplines. Yet, that discipline has consistently turned bigger opportunities and bigger proposals to match.

If you don’t already have a list of thoughtful questions for finding the core problem or opportunity, you can get the 22 questions I use for free.

3. Time is never what clients buy.

To win at this freelancing game, we need to rethink what we sell and what clients buy. Time is never what freelance clients buy.

Of course, that doesn’t stop them from asking.

Most freelancers get emails like this one I received from an agency owner:

His request was innocent enough: “I’d love to pay you for a little bit of your time to talk through some stuff on this topic.” However, time isn’t what he wants to buy.

Imagine asking a heart surgeon, “Can I buy some of your time?”

As you lay on the operating table, you’re paying for 15 or more years of education and training.

• 4 years of college
• 4 years of medical school
• 5 years of general surgery residency
• 2 to 3 years of specialized cardiac fellowship

Whether an operation takes the surgeon 10 minutes or 10 hours is beside the point. You’re also paying for the expertise, judgment, and decision-making accumulated over the course of the many (hopefully) successful operations that preceded yours.

You’re hoping that she can save and extend your life. You’re paying for the desired outcome. You don’t give a mountain of moldy beans about the surgeon’s time.

Of course, you can also pay for a couple of high school football players to move a pile of rocks for you. You’re still paying for an outcome, but this one requires no special talent, training, or tools. Thousands of people in your city could perform the task and deliver an identical result.

There was a pile. Now there’s not. Fantastic.

Freelancers are much closer to surgeons and rock haulers. We often solve painful, expensive problems, and the value of the outcome often far exceeds whatever the “market rate” for an hour of our time may be.

Take my coaching client Kate, for example. A client can’t extract her time from who she is. The client must buy the whole package, including her specialized knowledge, soft skills, and character and personality traits:

• Kate earned her B.A. in Public Relations and graduated Summa Cum Laude. Translate: She’s a smart cookie.
• At her first job with a tech company, she wrote tons of copy: eBooks, campaign mailers, blog posts, social media updates and press releases.
• She also got her feet wet in sales, specifically top-funnel lead generation through cold calls and cold emails.
• She coordinated communications for a tourism board, served as a staff writer, and planned and executed group press tours, media visits and trips to meet with travel editors and freelancers
• She worked at a PR agency where she oversaw client accounts, created their campaigns, and implemented those campaigns.

When a client says, “I want to buy some of your time,” reframe the conversation.

Here’s the way I did that with the prospect I mentioned earlier:

When a client asks, “What’s your hourly rate?” or “What do you charge?”, respond with these 9 words:

“That depends. What would you like to see happen?”

Shift the client’s focus from your time to the desired outcome, and you can begin to quantify the value of that outcome. That shift is consequential because, as I mentioned in the last lesson, the real project determines what clients buy and what you can charge.

Copy the 9 words: “That depends. What would you like to see happen?” Better yet, save them as a shortcut on your phone (keyboard shortcuts) and desktop (text expander app called aText).

Next time someone asks what you charge, sell outcomes, not hours.

Here’s a story about Nikola Tesla to tie a bow on this lesson.

(Related: When was the last time you raised your rates? Follow this step-by-step process to get that rate increase email ready. Stop thinking about it, and send it!)

Did it really happen? Doesn’t matter.

As the story goes, Henry Ford invited Nikola Tesla visited to his factory to help him solve a problem. Telsa quickly found the source and made an X on a boilerplate. When Ford later received the $10,000 invoice, he was taken aback. He asked for an explanation. Tesla sent a second invoice, itemized as follows: $1 for the making the X and $9,999 for knowing where to put it.

I wasn’t able to determine if this visit and the invoice ever happened. Whether it’s fact or fable, the story contains truth.

What we know is just as valuable as what we do. Combining the two at the right time for the right client can be very lucrative.

4. Focus on small, incremental gains.

You won’t charge your Dream Rate 100% of the time right away. That’s just not realistic, especially if you’re just starting down the freelance path.

One of my coaching clients, Myles, discovered this. After going through my pricing process, he arrived at a Dream Rate of $150 an hour. He then use that rate to calculate flat fees for several writing and branding projects.

He got a few conversations with potential clients going and sent them quotes. When they balked at his prices, Myles sent me this message:

“What do you think? Should I be willing to lower my rate for a big retainer like that, especially this early in my career? Or do I need to insist on the dream rate from the start to have a shot at a sustainable business?”

Here’s what I told Myles:

Your Dream Rate may be aspirational at first. It is a reference point and tool. It’s not something you need to defend like a child or fluffy kitten.

Give yourself permission to be pragmatic. Start somewhere between your Survival Rate and Dream Rate. As you veer away from your Survival Rate, any amount you charge above your past rate is a win.

We track our growth the way Dan Sullivan describes in The Gap and The Gain: “The way to measure your progress is backward against where you started, not against your ideal.”

We compete against our past rates, not our future ones.

For example, Emmy- and Telly-winning video editor Jesse Koepke uses 10% increases to ratchet up his rates, one project at a time.

5. There is no perfect price.

At any given moment, you’ll find themselves at one of three approximate points on the freelance continuum:

1. Stability. If your freelance earning is unstable, your first earning target will match the take-home income you need break even each month—that is, to not accumulate debt.
2. Sustainability. If your earning has stabilized, then your next target is true sustainability — that is, at least three months’ worth of living expenses in savings.
3. Flexibility. Once you have an emergency fund to sustain you during slow months, you set your sights on more ambitious earning goals that move you past creature comforts to true lifestyle flexibility.

We can harp about “competitive” or “market” rates, but the right price is the one that moves you toward the next point on the continuum, from where you are to where you want to be.

Think of your Survival Rate and Dream Rate as bowling bumpers.

If you’ve ever gone bowling with kids, then you’ve seen the bumpers. They form a barrier between the lane and the gutter on each side. Balls rolled at the wrong angle bounce off the bumpers and zig-zag their way to the pins.

Like kids bowling, freelance businesses have more zig-zags than straight lines. You’ll bounce back and forth between your Survival Rate and Dream Rate.

• Your Survival Rate is the bumper on the left. If you were to hop over it and make less than your Survival Rate, you land in the gutter. You end up with debt, back taxes, or both. I’ve learned this lesson the hard way—cough—more than once.
• Your Dream Rate is the bumper on the right. If you keep the ball closer to your Dream Rate, you cover your immediate needs and generate a surplus some months.

We need loftier goals to jar us out of complacency. Your Dream Rate gives you a number to aim for, and the closer you get to it with each project, the closer you get to your lifestyle goals. Earning a surplus puts you in the position to say no to low-paying projects, walk away from clients who becomes difficult, and finally get that Beyoncé’s tattoo.

When in doubt, bowl your price right down the middle.

6. Heroism is a bad business model.

You know that parable about a dude throwing starfish back into the ocean. A skeptical bystander on the beach tells him he can’t possibly save them all. The starfish savior offers up a quiet, noble-minded reply, “You’re right, but I can save some. I’ll do what I can.”

Your freelance career is bound to include conversations with the starfish, that is, the clients who ask you to save them.

Once you’ve progressed through the discovery and proposal phases, the prospect may really want to work with you and really need your help. Yet, when you give what is a reasonable price for you, the client counters with a sob story, $17 in cash, and a $25 Amazon gift card. Plus, two sticks of gum at project completion.

The key words to remember are “a reasonable price for you.” If this prospect can’t afford that, then the project isn’t a good fit.

A discovery conversation, followed by a proposal, isn’t the same as volunteering to solve the jigsaw puzzle of their budget constraints. The client’s budget isn’t your problem to solve. You don’t have to find a way to make the project work because they’re desperate.

Trust me, heroism is a bad business model. Don’t tie on your cape and swoop in to save the day.

7. Be kind to yourself.

Freelancing is predictably unpredictable. Even if you’re freakishly good at positioning and negotiation, you cannot exert perfect control over any project. Too many variables have a pull on the amount of time required to finish a project.

How confident are you in the estimates of time required to deliver a positive outcome? How confident are you in the client’s ability to stay focused, give helpful feedback, and and make timely decisions?

Many variables affect what a reasonable price for you would be under the circumstances.

• Client’s Level of Urgency
• Client’s Budget
• Client’s Industry
• Client’s Experience Working with Agencies and/or Freelancers
• Client’s Personality
• Client’s Goals
• Project Timeline
• Project Deliverables
• Your Skill Level
• Your Specialized Knowledge or Domain Expertise
• Your Confidence
• Your Cost of Living
• Your Financial Situation & Goals
• Your Brand
• Your Positioning and Packaging
• Value of Client’s Problems and/or Opportunities
• Your Results or Reputation

And many variables can multiply the time required to deliver a successful outcome:

• Scope Creep
• Extra Revisions or Changes
• Extra meetings and Calls
• Delays
• Decision by Committee
• Client’s Indecisiveness or Disorganization
• Your Inefficient or Broken Processes
• Client’s Inefficient or Broken Processes
• Poor Time Management
• Miscommunication / Misunderstandings

Try not to beat yourself up when a project bombs or your effective hour rate goes down the toilet. Squeeze out what insights and improvements you can, and do better the next time.

8. Pushback on price reveals a belief problem.

You’ve probably already had a prospect push back on a price you gave. They do this for four reasons:

1. The prospect wants a discount. Some people pride themselves on never paying full price for anything. It’s a personality type. Ever heard of someone driving to a gas station 30 minutes across town to save $0.10 per gallon? Yeah, those people. The compulsive need to save makes it difficult for them to value their own time or make investments based on long-term value. When they trump up some reason they deserve a lower price, you can offer to reduce the scope to match. If they keep pressing the issue, politely decline and prepare to walk away.
2. The prospect really doesn’t have the money. Occam’s Razor often comes into play: The simplest explanation is the best. The client has spent time going through the discovery process with you. Maybe they got excited about working with you. Your price was like a bucket of ice water over the head, and they didn’t have the presence of mind to say, “As much as we’d like to work with you, we don’t have that budget.” Instead, their disappointment squeezed out sideways as criticism or indignation.
3. The prospect doesn’t see the value. Maybe the marketing director has tried content marketing in the past and been underwhelmed by the results. Maybe the startup founder got burned by the last freelancer she hired and is understandably skeptical of your ability to deliver. It’s natural for people to balk at the price when they don’t really believe that a transformation is about to occur. You can build a strong case for your value, but you may be barking up the wrong tree.
4. The prospect doesn’t view you as an expert. Depending on what a prospect knows about you and how you structured the discovery and proposal process, they may not yet see you as the resident authority they can’t afford to not hire. Clients want to hire experts. They want great, not okay. Your positioning is too weak to justify the price you gave.

There’s not much you can do about the first two. You probably won’t change the prospect’s personality. And if they don’t have the budget and you can’t come down on the scope without changing the project (and outcome) dramatically, then you’re at an impasse. Keep in touch and hope their urgency increases until they will scrape together a budget.

The second two reasons for pushback reveal a belief problem. What people will pay changes based on perceived value. Perceived value goes up with perceived expertise. To change a client’s perception of a “fair” price, you have to change what they believe about the value.

If I asked you to give me $10 in exchange for $20, would you agree? Of course. You believe that you can double your money with zero effort.

What if I offered to take away your lower back pain and had dozens of testimonials from happy clients to back up my claims? Would you pay me a significant amount of money to improve your quality of life? Probably.

In an episode of his podcast, “The Game,” Alex Hormozi observed what’s really going on during the earliest stage: “Sales is a transfer of belief.”

Before you can reasonably expect to consistently charge at or above your Dream Rate, you need strong positioning and proof in your ability to deliver that transfers belief.

9. Projects that pay the most don’t always pay the best.

Back in 2016 I had a huge breakthrough with my freelance pricing. At the time I was COO of Closeup.fm, the tech startup I had co-founded and invested $25,000 in.

Closeup consumed 75% of my time and paid 0% of my bills. Startups are really cool until you’re too tired to care. I was burning down fast.

As the sole breadwinner for my family, I felt a wee bit of pressure to, you know, come up with chicken nuggets and carrots for my wife and two kids. I needed to make more money, but surprisingly, the solution wasn’t charging higher prices for bigger projects. Projects with higher prices don’t always pay the best.

Whether we charge by the hour or project, freelancers spend a certain amount of time completing that project. When you divide the price by the time you spent, you get an “effective hourly rate” (EHR).

In 2016 I was charging around $500 for a page of web copy (up to 500 words) and $750 for a blog post (up to 1000 words). The blog post pays more at face value.

Any smart freelancer would try to sell more blog posts, right?

Because I’d tracked my time, I had an approximate EHR for web copy and blog content projects:

• A tight system of questionnaires and templates enabled me to knock out a client’s web copy in around 2.5 hours. $500 divided by 2.5 produces a $200 EHR.
• A blog post might take me 4.25 hours. $750 divided by 4.25 equals $176.47 EHR.

A page of web copy had a lower price than a blog post, but it paid better, in terms of EHR. 50 pages of web copy would have taken me 125 hours to finish and made me $25,000. In that same amount of time, I could have written 29 blog posts and earned $21,750, or $3,250 less. That’s a lot of nuggets and carrots!

Don’t let initial price fool you. Projects with the highest price tag aren’t always the ones that pay the best. Track your time closely, and scale projects with high EHR.

10. Leadership sometimes means being a web blanket.

Freelance long enough and you’ll eventually have this experience: You’re sitting in a room, real or virtual, and as you look around, you realize you’re the only one who’s not high. The other person or people aren’t doped up on drugs. No, they’re caught up in a rash and rather confusing enthusiasm for a plan or project with less going for it than a rusty cheese grater.

You have a choice to make: Do you dampen the enthusiasm by pointing out all the holes? Do you risk being the buzzkill?

The short answer is yes.

What’s more valuable to the right clients than simply executing whatever plan or project they give you? Helping them uncover the real problem, need, or opportunity. And yes, pointing out the weaknesses in a plan that your expertise says is bound to disappoint.

Happiness is a fleeting feeling, and toward the end of a doomed project, the client’s happiness will pop like an overfilled balloon (when you rub against a cheese grater).

Freelance clients will pay you more if you’re willing to care more about protecting a positive outcome than keeping the good vibes going.

Here are practical ways to do that:

• Determine exactly how the client has contributed to their own undesirable state. Slow down the discovery process and temporarily add temporarily to the client’s pain if you must.
• Ask pointed questions and temporarily add to the client discomfort if you must.
• Disagree with the client’s diagnosis when your integrity, expertise, and experience demand it. Most leaders are already surrounded by enough yes men. Strategic no’s cut through nonsense.
• Highlight the risks of doing nothing and taking the wrong path.

Mind you, none of this has to be adversarial. You don’t have to be aggressive or rude.

You can find and use all sorts of sugary language to help the medicine go down. For example, “Will you humor me for a second? I want to make doubly sure that we’ve uncovered the whole dartboard before we start throwing darts at the bullseye.”

You can certainly get paid to take orders. I’ve sat in too many rooms removed from reality and have been too agreeable, too nice. That passivity later bit me when I was asked to waste my time and the client’s budget on futile tasks and projects.

You can get paid a lot more to show true leadership. We must care enough to resist groupthink and poke holes in bad plans. Raw honesty and clarity must come before happiness.

If the client insists on a distorted reality, let the project go.

11. Don’t assume saving money is the client’s #1 priority.

Does every freelance client want a good deal? No. Saving money often isn’t the top priority. Any number of things will be more important than paying the lowest price:

• Working with a subject matter expert who has no learning curve
• Working with a known authority with a proven track record
• Achieving a very specific result in a predictable timeframe
• Getting it done faster with minimal oversight required
• Avoiding delays, embarrassment, and hassles
• Not having to do it yourself
• Getting long term value
• Investing in quality

During my freelance career I’ve had many clients whose motivations and priorities were starkly different from my own. Their time was more important than their money. What was a significant amount of money for me was a relatively small sum for them.

There’s always someone who will charge less. There’s always someone who will charge more.

Your job isn’t to be competitive with your prices but to charge commensurate to the value you create.

12. Authority, guts, and confidence determine what you can charge.

Creative projects don’t have set prices. Things are worth what people will pay. What people will pay goes up with perceived value. Perceived value goes up with perceived expertise.

Here’s a story to drives home this point: Steve Jobs once paid a designer named Paul Rand $100,000 to create a logo for NeXT Computing. You read that right. $100,000 for a logo. In 1986.

Was Paul Rand’s work quantifiably a hundred times better than the designer who charged $1,000? Of course not.

Talent or skill alone can’t explain a price that’s 100 times higher. Rand could charge that because he was a recognized authority, he had the guts to name that price, and he had the confidence that he could deliver.

If you aren’t satisfied with your prices or your freelance income, reassess your self-imposed psychological barriers and your niche.

• What if you knew that shifting to a particular pricing strategy would reinforce your expertise and help you stand out from competitors?
• What if you were confident that your freelance pricing were sending the right signals about your brand, services, and value?
• What if you pivot to a different target audience that places a much higher value on the outcomes you deliver?

Freelancers often blame clients for our woes, but undercharging is often the culprit. Yet, we’re the ones who set our prices.

Our prices attract a certain type of client, either ones we want or ones we don’t, and our authority, guts, and confidence ultimately determine what you’re able to charge.

If you were waiting for a sign to raise your prices, this is it.