Pricing Your Services: A Guide for New Freelancers

Introduction

Setting your rates as a new freelancer is one of the most challenging aspects of starting your business. Price too high, and you might struggle to find clients; price too low, and you’ll work hard without sustainable income while potentially devaluing your industry.

This comprehensive guide will walk you through the process of establishing rates that reflect your value while remaining competitive in the market. You’ll learn practical strategies for pricing that you can implement immediately, even if you’re just getting started with no prior freelance experience.

Understanding the Psychology of Pricing

Before diving into specific pricing strategies, it’s important to understand some fundamental psychological principles that influence how clients perceive your rates:

1. Price signals quality

Clients often associate higher prices with better quality. While budget options always have a market, extremely low prices can trigger skepticism about your capabilities.

2. Value is subjective

The value of your services isn’t determined by your costs or time—it’s determined by the client’s perception of worth. A logo that takes 5 hours might be worth $5,000 to a business if it helps them build a recognizable brand.

3. Anchoring affects negotiations

The first number mentioned in a pricing discussion becomes an “anchor” that influences the entire conversation. Setting this anchor strategically is crucial.

4. People buy outcomes, not hours

Most clients care about results, not how long something takes you. The less you emphasize hourly rates and the more you focus on deliverables and outcomes, the more value-based your pricing can become.

With these principles in mind, let’s explore how to determine your baseline rates.

Step 1: Calculate Your Minimum Viable Rate

Your minimum viable rate is the lowest you can charge while remaining financially sustainable. This isn’t necessarily what you’ll charge, but it establishes your absolute floor.

Formula for calculating your minimum hourly rate:

Minimum Hourly Rate = (Annual Living Expenses + Business Expenses + Taxes) ÷ Billable Hours Per Year

Let’s break this down:

1. Determine your annual living expenses

Add up all personal expenses: rent/mortgage, food, utilities, insurance, transportation, entertainment, savings, etc.

Example: $36,000/year ($3,000/month)

2. Estimate business expenses

Include software subscriptions, equipment, marketing, professional development, office supplies, etc.

Example: $3,600/year ($300/month)

3. Account for taxes

As a freelancer, set aside approximately 25-35% for taxes (varies by location).

Example: 30% tax rate

4. Calculate billable hours

This is crucial—you won’t bill every working hour. Administrative tasks, marketing, meetings, and professional development are non-billable. Most freelancers bill 20-25 hours per week, or about 1,000-1,200 hours per year.

Example: 1,000 billable hours per year (roughly 20 hours/week)

5. Run the calculation

($36,000 + $3,600) ÷ 0.7 (to account for 30% taxes) = $56,571
$56,571 ÷ 1,000 billable hours = $56.57 per hour

In this example, approximately $57/hour is your break-even rate. Anything less and you’re not meeting your financial needs.

Step 2: Research Market Rates

Now that you know your minimum viable rate, research what the market actually pays for your services. This research helps you understand where your rates should fall relative to the competition.

Sources for market rate information:

1. Freelance platforms: Browse Upwork, Fiverr, and other platforms to see competitor rates
2. Professional associations: Many industry groups conduct salary surveys
3. Reddit communities: Subreddits for freelancers often discuss rates openly
4. Facebook groups: Industry and freelancer groups frequently share pricing information
5. Freelancer forums: Dedicated forums like FreelanceFolder or Warrior Forum
6. Direct research: Ask fellow freelancers in non-competitive markets

Organize your findings into tiers:

• Budget tier: The lowest rates in your field (often overseas competition)
• Average tier: The typical rates for professionals with moderate experience
• Premium tier: The highest rates commanded by specialists and experts

Example for content writing:

• Budget: $0.03-0.05 per word
• Average: $0.10-0.20 per word
• Premium: $0.25-1.00+ per word

Step 3: Position Your Rates Strategically

Now comes the strategic decision—where should you position your rates? Consider these factors:

Experience level

As a beginner, you likely won’t command premium rates immediately. However, that doesn’t mean you should automatically choose the budget tier.

Specialization

Specialists can charge more than generalists. If you have deep knowledge in a particular industry or technique, this can justify higher rates despite being new to freelancing.

Target clients

Different client segments have different budget expectations. Small local businesses typically pay less than corporations but may offer steadier work.

Competitive advantage

What makes you different? Speed, unique background knowledge, additional skills, or exceptional customer service can all justify premium positioning.

Common Pricing Strategies for New Freelancers

Let’s explore specific approaches that work well when you’re just starting:

1. The “Portfolio Builder” Approach

Strategy: Start with rates at the lower end of the average tier to quickly build a portfolio and testimonials.

Implementation:

• Set rates 20-30% below the average for your first 3-5 clients
• Clearly communicate this is an introductory rate
• Include a testimonial and portfolio rights clause in contracts
• Raise rates for new clients after completing these initial projects

Example:
If average rates for logo design are $300-500, you might charge $250 for your first five clients.

Pros:

• Easier to land initial clients
• Quickly builds portfolio
• Creates testimonials and referrals

Cons:

• Can be difficult to raise rates with existing clients
• May attract price-sensitive clients
• Potential to undervalue your work

2. The “Value-Based” Starter Package

Strategy: Create fixed-price packages that emphasize business value rather than time spent.

Implementation:

• Develop 2-3 tiered packages with clear deliverables
• Name packages based on client goals, not complexity
• Include estimated ROI information when possible
• Offer a money-back guarantee to reduce perceived risk

Example:
Instead of charging $50/hour for social media management, create packages:

• “Brand Visibility Package”: $397/month (daily posting on one platform)
• “Engagement Growth Package”: $697/month (daily posting on two platforms with engagement strategy)
• “Lead Generation Package”: $997/month (multi-platform strategy focused on conversions)

Pros:

• Shifts focus from your experience to client outcomes
• Easier for clients to budget with fixed prices
• Creates upsell opportunities
• Avoids hourly rate comparisons

Cons:

• Requires careful scoping to ensure profitability
• May need refinement as you learn project requirements

3. The “Foot in the Door” Strategy

Strategy: Offer a low-risk initial service that leads to larger projects.

Implementation:

• Create a small service that solves an immediate problem
• Price it attractively but not cheaply
• Design it to naturally reveal the need for your larger services
• Develop a clear transition process to the larger engagement

Example:
A website developer might offer a $99 “Website Audit and Recommendation Report” that often leads to $3,000+ redesign projects.

Pros:

• Low barrier to client commitment
• Demonstrates your expertise directly
• Builds trust before requesting larger investments
• Qualifies potential clients

Cons:

• Some clients won’t convert to larger services
• Initial service must deliver standalone value

4. The “Tiered Experience” Model

Strategy: Offer multiple service levels at different price points, allowing clients to self-select based on budget and needs.

Implementation:

• Create 3 service tiers with clear distinctions
• Ensure even the basic tier delivers solid value
• Structure pricing to incentivize mid-tier selection
• Make tier differences about service level and deliverables, not quality

Example:
For article writing:

• Basic: $150 (1000-word article, 1 revision)
• Standard: $250 (1000-word article, 2 revisions, SEO optimization)
• Premium: $350 (1000-word article, unlimited revisions, SEO optimization, social media excerpts)

Pros:

• Appeals to different client budgets
• Gives clients control over their investment
• Creates natural upsell opportunities
• Positions your “middle” option as the best value

Cons:

• Can complicate your service offerings
• Requires clear boundaries between tiers

Presenting Your Rates Effectively

How you communicate your rates significantly impacts client perception. Follow these best practices:

1. Always provide context

Never just state a number. Explain what the client receives, the process, and the expected outcomes.

2. Frame in terms of investment, not cost

Emphasize the return the client will receive from working with you.

3. Break larger prices into smaller units when helpful

“$1,200 per month” can be reframed as “about $40 per day” if that makes the value clearer.

4. Present pricing confidently

Avoid apologetic language or excessive justification, which signals insecurity about your rates.

5. Provide social proof when possible

Include testimonials or case studies that reinforce the value you deliver.

Example Price Presentation:

Weak: “My rate is $60 per hour.”

Strong: “The website optimization package is $997, which includes a complete site speed audit, implementation of all critical fixes, and a follow-up report. Clients typically see page load times decrease by 40-60%, leading to improved conversion rates and search engine rankings. I’ll handle everything technically, keeping you updated throughout the two-week process.”

Raising Your Rates as You Gain Experience

Your initial rates shouldn’t be permanent. Create a deliberate plan for increasing your rates as you gain experience:

1. Time-based increases

Schedule regular rate reviews every 3-6 months during your first two years.

2. Project milestone increases

Raise rates after completing a certain number of projects or reaching portfolio goals.

3. Skill acquisition increases

Increase rates when you master new skills or technologies that add value.

4. Demand-based increases

When your schedule is consistently full, it’s a market signal to raise your rates.

Implementation strategies:

• For new clients: Simply update your rates and packages
• For existing clients: Provide 30-60 days notice of rate changes
• Grandfather period: Consider keeping loyal clients at old rates for a limited time
• Value additions: Add new services or benefits when increasing rates

Sample client rate increase email:

Subject: Service Updates and Rate Adjustments for [Year]

Hi [Client Name],

I hope this message finds you well. I've enjoyed working together on [mention specific projects] and look forward to our continued collaboration.

I'm writing to inform you about an upcoming adjustment to my service rates, effective [Date - at least 30 days from now]. My new rate for [service] will be [New Rate].

This adjustment reflects the expanded skills and efficiency I've developed while working with clients like you over the past [time period]. I'm committed to delivering even greater value through [mention specific improvements or benefits].

Your current projects will remain at the existing rate until [date]. After that, the new rates will apply to all projects.

If you have any questions or would like to discuss pre-booking services at current rates before the change takes effect, please let me know.

Thank you for your continued trust and partnership.

Best regards,
[Your Name]

Alternative Pricing Models to Consider

Beyond hourly rates and fixed project fees, consider these alternative models:

1. Retainer Agreements

Clients pay a set monthly fee for a defined scope of work or access to your services.

Best for: Ongoing services like marketing, content creation, or maintenance

Example: $1,500/month for up to 20 hours of graphic design work

2. Value-Based Pricing

Price based on the value delivered to the client rather than time spent.

Best for: Services with measurable ROI like conversion optimization or sales copywriting

Example: 5% of revenue generated from an email campaign you create

3. Subscription Models

Clients subscribe to your service on a recurring basis with clear deliverables.

Best for: Regular, predictable services

Example: $297/month for weekly blog content

4. Milestone-Based Pricing

Break large projects into phases with payments upon completion of each milestone.

Best for: Large, complex projects

Example: Website design paid in thirds: strategy, design, and development phases

Handling Price Objections

Even with strategic pricing, you’ll encounter objections. Prepare responses to common scenarios:

Objection: “That’s more than I budgeted for.”

Response: “I understand budget constraints can be challenging. Let’s look at adjusting the scope to fit your budget while still achieving your core objectives. Which aspects of the project are most critical to you?”

Objection: “I can find someone cheaper.”

Response: “You’re right, and that’s a valid option to explore. Many freelancers offer different price points based on their experience and the quality they deliver. I’d be happy to explain the specific value I provide that justifies my rates, including [mention 2-3 key differentiators].”

Objection: “I need to think about it.”

Response: “That’s completely reasonable. Making an investment in your business deserves careful consideration. To help with your decision, would it be useful if I shared some case studies showing the results previous clients have achieved? Or perhaps you have specific questions I could address?”

Red Flags: When to Walk Away

Sometimes the right decision is to decline a project. Watch for these warning signs:

1. Client expects premium results at budget prices
2. Excessive focus on cost rather than value or outcomes
3. Request for free “test projects” or speculative work
4. Attempt to dramatically negotiate down your minimum viable rate
5. Disrespectful communication about your pricing

It’s better to spend time finding clients who value your work than trying to convince someone who fundamentally doesn’t see your worth.

Conclusion: Price for the Future, Not Just Today

Your pricing strategy is more than just numbers—it’s a key part of your business positioning and brand. While it’s natural to feel uncertain about your rates when beginning, remember that your pricing sends powerful signals about your professionalism and the value you provide.

Start with rates that respect your minimum financial needs while reflecting your current experience level. Then create a deliberate path for growth as you build your portfolio and expertise. With each successful project and satisfied client, your confidence—and your rates—should increase.

The most successful freelancers don’t compete primarily on price. They compete on the unique value they deliver to clients. Focus on communicating and enhancing that value, and your pricing will naturally evolve to reflect your true worth in the marketplace.

Remember: Good clients don’t just pay your rates—they appreciate the value behind them.

Action Steps:

1. Calculate your minimum viable rate using the formula provided
2. Research current market rates for your specific services
3. Position your initial rates strategically based on your unique situation
4. Create clear service packages or pricing tiers
5. Develop compelling price presentations that emphasize value
6. Set specific milestones for when you’ll evaluate and raise your rates
7. Practice responding to common price objections
8. Start confidently presenting your new pricing structure to potential clients

With this framework in place, you’re well-equipped to establish and evolve your pricing as you grow your freelance business.