Getting Paid – Know Your Worth

Business advice
Estimated read time: 4 mins
Published: 21/04/2016

If you are a freelancer and dealing with clients one-on-one, then you need to make sure you cover your back financially. To make sure you know what you are worth, pitch at the right rate, and deal with the inevitable set-backs, remember the following bits of advice.

We’ve looked at what you can do if you’re not being paid on time, but before you get to this point you’ll first need to set your price and get negotiating. There’s always the chance that someone else will undercut you, in all likelihood you won’t be the highest or lowest pitch, but this doesn’t mean that you should set out to be the one who undercuts others. There is a certain rate you will need to set as a minimum (and you needn’t work for the minimum!), you need to know you worth, set your price, and then stand firm.

If you’re knew to freelancing (which would make sense if you’re looking for information on what price to pitch), the obvious first step is to do a little leg-work and networking, finding out what other freelancers working in your industry charge. If you have other freelance friends don’t be afraid to ask how they charge and how they decided on their rate, everyone has to start somewhere. You are then free to compare yourself and your skills to theirs, allowing you to have a first estimate at what rate you think would reflect your skills and relative experience while being competitive. If you’re still looking for some more specific considerations, take some time to think about the following when deciding what rate to pitch at.

Covering your overheads

If you can’t decide how much you should be charging for freelance projects, remember that whatever your rate is it will have to cover all of your business-related expenses. If you rent an office, or work from a more flexible location, if you have to do a lot of travelling, and whether you need to pay for any materials/software, these are all things to take account of. As much as you will want to be competitive, you will need to cover these costs as well as giving yourself room to earn a living. Be realistic as well as reasonable. While a client won’t be sympathetic to hear you have a lot of expensive hobbies and so need to charge more, when pitching you will need to think realistically about the amount of money you will need just to get by.

As well as thinking about your business (and personal) costs, you should factor in your productivity. How long do you expect it to take you to complete a particular task or project? How much can you realistically hope to achieve in a set amount of time? Whatever answer you get to – and be honest with yourself, not idealistic – it is best to add on a day or two. This time is then there as a safety net, ensuring that any unexpected hiccups and delays won’t leave you out of pocket. When you are so dependent on the income each job brings you can’t afford to lose money on a project or you could run the risk of not being able to cover the rent that month.Be flexible (with limits)When you’re pitching to clients it becomes clear that some budgets will differ greatly; what some will find a reasonable rate will be beyond the financial reach of others.

One size won’t suit everyone. 

You need to be prepared for a little bit of negotiating – if you don’t have to negotiate then you are probably pitching at a rate lower than you could – which will often mean starting with a higher rate than you expect to eventually agree on. Make sure you are comfortable talking about money. This also means you should know in advance what your minimum daily/hourly rate is; once you know the lowest you are willing to accept then don’t budge from that position.

Your set minimum rate may be higher than that of others and it may be outside the price-range of certain clients; you may miss out on some projects by not lowering your rates, but this is better than working heart and soul on projects that don’t deliver the money you need to live and grow. You may also find clients which seem promising at first and then turn out to be poor/late payers, don’t work with these people again. You only waste time and energy on chasing up late invoices; this time and energy would be better spent working for people who pay up on time!

Make your terms clear

Think through your terms and conditions regarding payment.  This should mean having a legal document which you and your client can sign before you start any work. On this document you will want to include (as a minimum) the payment terms, details of how they should actually pay you, and further information regarding any late payment fees (as well as the financial implications of the client cancelling or delaying the project). If you’re not going to explain in advance what will result from late payment then it can be more difficult to enforce.

Stay on top of your invoicing structure. 

When sending through an invoice for work done make sure you include a polite reminder of the payment dates. Some freelancers also like to include benefits which come with early payment (where invoices being paid before a certain date may allow for future discounts, for example). If you haven’t received the payment by the agreed date it is customary and perfectly acceptable to send an email over as a polite reminder, following up with a phone call if you still haven’t received the money a couple of days later. 

Further reading

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