A Freelancer’s Guide to Charging Your Clients

While enjoying money is a nice feeling, many times this process is not that smooth and some freelancers are even having a hard time with it.

Here is a guide on how to price your services and how to properly manage your money. 

Settle on a pricing system: Hour vs project

There have been several debates and discussions on which system works better for freelancers, hourly basis or by project. The answer, as you can probably guess, is neither. There isn’t and there will never be one answer about why you should only charge per hour or only per project because every project is different.

Charging per hour

Some designers simply follow their own principles and only charge per hour, no matter the type of project they are working on. They have found their perfect hourly rate and only charge by it, turning down any project that doesn’t comply with it.

It may seem logical to do so, but this kind of charging has a few pros and cons:

Pros

• It is straight forward, no messing around with estimations for various projects.
  
  
• Making your client rate public will help you save some time. Clients who contact you have basically agreed to your asking price.
  
  
• You can calculate the rate that fits you best, so that you will properly utilise each working hour.

Cons

• Clients who have no idea how long it takes to work on their project may not approach you.
  
  
• There is a slight chance that you are over- or underpricing your services this way.
  
  
• Clients with smaller projects may think that your rate is too high for them.

Charging per project

The other side of the coin, is charging per project. If you are not satisfied with the “pay per hour” system, then you definitely have to consider this one.

Here are the pros and cons of this method:

Pros

• You can tell exactly what the amount you would like to get paid  for doing the specific job is.
  
  
• It will be easier to get “small leads” because high hourly rates usually frighten clients with smaller projects in their hands.

Cons

• A wrong estimation will make you work more, because often times the agreed rate can’t be changed.
  
  
• There is no constant pricing when it comes to projects, which might be considered as a scam by some clients.

Dealing with pricing issues

There are several issues freelancers are dealing with constantly. Here are just a few of them.

• Getting paid late

  One of the most common issues is getting your clients to pay you on time. Of course we mustn’t generalise and say that all clients don’t pay on time, but freelancers will more than once have to send reminders to their clients to pay their invoices.

• Settle on a contract

  The best way to avoid clients delaying payments is by settling on a proper contract. There are several reasons for doing that. After signing the contract, both of you will have legal obligations. As long as you do your job correctly and follow the contract terms, you will be fine. You’ll be protected by law against clients that don’t pay their bills on time.

  It’s also common to set a late payment fee, which requires your clients to pay more if they delay their payment. It’s a sign of a partial neglect of the contract.

• Communication

  Another important factor is the communication between clients and freelancers. As you might have heard, communication is the key, and that’s true. It’s always okay to send friendly reminders and updates to your clients and asking them politely to pay their invoices. You shouldn’t always think the worst, as it’s easy for someone to forget in the midst of a busy schedule. The delay may not be intentional, so don’t treat it like it is.

• Invoice them

  One very good thing about invoices, is that most of them allow you to send a “friendly” reminder to your client that it is time to clear payments. That’s very simple to do and only takes one click of a button.

• Taxes

  Freelancing can be considered a business, so you have to take care of the way you handle your taxes. Just in case you are new to freelancing, know that the way you handle your taxes as a freelancer is different from when you are pulling paychecks. There are different forms and documents to file and you will need to have good bookkeeping skills or get a freelance accountant to advice you accordingly.

SOURCE: Hongkiat