As business owners, freelancers can choose how to price their freelance services. It's not just about how much to charge but what types of pricing model(s) they want to offer their clients, as well. Let's break down the different types of pricing models you might offer to your freelance clients.
Hourly Rate
Your freelance hourly rate is exactly what it sounds like. How much, per hour, are you willing to work for? Most freelancers have one hourly rate to keep things simple, especially at first. If you're not sure of what your own hourly rate should be, check out the Freelancer Hourly Rate Calculator.
Pros of hourly rate pricing
You get paid for every increment of time you spend on the client's projects. Most freelancers (rightfully!) bill for ANY time spent on that client's account which means any time spent on client meetings or calls, answering emails, AND heads-down work.
Pro tip: if you do work on an hourly basis, borrow a page from the attorney's playbook and bill in .25 increments.
That means if a client sends you an email and it takes you five minutes to read and respond to it OR it takes you up to .25 hour (15 minutes), you bill them 1/4 of your hourly rate. As with everything else, make sure you communicate those policies up front so that the client knows how you work.
Cons of hourly rate pricing
Keep in mind that in most cases – unless otherwise agreed-upon – the client's expectation of working on an hourly rate basis comes with no minimum number of hours guaranteed by the client. So, you could be working for a few hours or have an ongoing relationship where the client provides you with regular work but if they suddenly decide they don't need anything else, they're under no contractual obligation to continue working with you.
Per Word
This type of pricing is limited to writers, proofreaders, and editors due to its nature. Per word pricing is a popular way for writing-focused freelancers because it ties scope directly to pricing. So if your client wants an 800 word blog post, you can tell them your per word price and if you charge .50 per word, their out-the-door rate would be $400.
Pros of per word pricing
It's very simple, transparent, and easy for clients to understand. It also makes scoping a breeze – providing pricing is as simple as word count x per word rate.
Cons of per word pricing
My biggest beef with per word pricing is that it commoditizes the creative service of writing. It tends to make clients (and writers) very task-oriented and less value-oriented. It's helpful for clients because they can easily compare your pricing against who THEY consider to be your peers... but is that really what you want?
Most clients aren't super strong in the area of vetting writing talent so they might not be comparing skill levels and value in an apples-to-apples fashion. For this reason, I'm not a fan.
Also, when you price per word, you need to make sure that your per word rate covers all of the auxiliary work that goes into writing that content asset as well such as research, calls and meetings, emails, content strategy and so forth and so on.
That means if you have a higher per word rate to compensate for all of the research/communication/strategy that goes into a piece, you may have a tougher time selling your services if the client is super price sensitive. It's not impossible but you need to do a killer job during the sales process and discovery call explaining EVERYTHING that they get at that per word rate so that they understand the value behind your per word rate.
And this probably goes without saying – but a per word rate is only good for writing. The second you start adding in additional services – EVEN if they are "writing-adjacent" like content management, image creation, editorial calendar management, etc. – then you need to find a way to price those additional services in lieu of a per word rate.
Per Project: Fixed or Flat Rate Pricing
The next type of pricing you might like to consider using with your freelance clients is called fixed rate or flat rate pricing. These are interchangeable terms and essentially mean the same thing. I tend to like the term 'flat rate' because it's a bit more modern and I think it communicates the value of this type of pricing a little better to potential clients so you'll often hear me refer to it under that term.
The way flat rate pricing works is that you'll have an initial call with the client to 'scope' your project to determine how much time and complexity is required in order to complete the project. From there, you'll assign a flat rate to the entire project. Most people try to estimate how many hours of work the project will require based on those discovery discussions and then create a flat rate that's all-inclusive of those requirements. Over time, you may productize your offerings and create standard flat rate packages to offer.
Pros of flat rate pricing
The pro's of flat rate pricing are that you don't have to track your time (although it's never a bad idea to track anyway so you can confirm for yourself how much time you spent on the project and improve your scoping skills over time!) and if you work quickly and efficiently, you aren't penalized the way you are if you charge an hourly rate. Clients tend to love the idea of flat rate pricing because it's predictable and can't get out of hand.
Cons of flat rate pricing
The con's of flat rate pricing are that you have to be very good at estimating the scope of the project otherwise you risk charging too little for the time and energy you spend on the project. You also have to be very careful about how you "write" the scope into your client agreement so that it's crystal clear as to what is included and what is not included at that flat rate. Lastly, you have to be confident in your ability to set and enforce boundaries for when (not if – I promise you! – but when) a project is going off the rails of the original scope that you agreed upon with the client.
Personally, I love flat rate pricing for the simplicity and because I tend to be pretty efficient in my work so for me, flat rate pricing becomes more value-based than hourly-based.
Retainers
Ooooooh the retainer – the freelancer's holy grail of pricing models!
Retainers come in handful of different flavors. Most common of all is the standard monthly retainer with a set number of hours per month for a flat rate. Usually, the hourly-based monthly retainer is offered to the client at a rate less than your hourly rate because essentially the client is buying a chunk of your time every month, guaranteed.
Every freelancer has their own preference for terms but in my experience, a retainer that reflects a discounted hourly rate should require the client to commit to at LEAST three months and you can incentivize them further with a slightly steeper discount on your hourly rate the more hours per month they agree to retain you for AND if they extend the duration of their retainer agreement to six months or even a year.
Pro tip: include a clause in your client agreement that stipulates that the hours for that month's retainer allotment do not "roll over" so they are provided on a use-it-or-lose-it basis each month. That way, you can easily forecast and pace your production bandwidth and you don't get stuck with a ton of "paid for" hours at the end of the retainer cycle which could otherwise leave the door open for the client to expect to be able to use those hours all at once at the end of their 3/6/12 month term.
It's worth mentioning that another popular retainer model is to provide a flat rate package each month with a fixed scope.
So, maybe you offer a blogging retainer where you deliver a certain number of blog articles each month as well as all of the supplemental services that go along with those blog articles like brainstorming/ideation of topics to pick from, keyword research, content management/scheduling the blogs in Wordpress, etc. – all for a fixed monthly cost for the duration of the retainer.
Pros of retainers
Retainers are my favorite freelance pricing model because they create predictable revenue over a period of time. They also make it easier to forecast your bandwidth so you can better plan to make the most of your time and you have a good idea of when it's time to start looking for new clients to take on.
Cons of retainers
In my opinion, there aren't many cons of retainers. The only one that comes to mind is that when you begin a retainer engagement, you are entering a long-term relationship with that client. So you want to make sure that you have priced the retainer correctly and that you are very careful to set expectations and create boundaries from the beginning since you're going to be in it for the long haul as a client/freelancer duo.
Day Rate
The last pricing model that freelancers may want to consider utilizing is the day rate. I rarely use a day rate in my own businesses because the type of client work that I like to do is longer term and I find that the hassle of working on one-off day rate projects just isn't worth my time. That doesn't mean that it can't be a good tool to have in your toolkit though.
A day rate is exactly what it sounds like – the price you charge for a single day's work from start to finish.
Most of the time a day rate is used for consulting engagements where you'd travel to a client's office to work with them on-site or to host a workshop, etc. So if I travel to a client's office and it requires air travel, I charge a day rate (or half a day, depending on how far I'm going) for the travel day and then another day rate (or multiple days) for the days that I am on-site. My day rate is not my hourly rate, which is higher.
Pros of day rate pricing
It's essentially a flat rate for a day's worth of work. That makes it super easy to scope ("how many days will we be working together?") and administer when it's time to send the invoice. It's also a good way to make sure that you are compensated for your hands-on time properly.
Cons of day rate pricing
You may still need to do prep work to get ready for that day's engagement (such as if you're hosting a workshop or an on-site session) in which case you may want to charge hourly for that.
To that end, you will also need to be clear with the client about what a day rate covers and what is a reasonable amount of work or scope that can be accomplished in that one day. Time flies, especially when you're getting up to speed in the same day that the client may want some tangible work accomplished.
Final thoughts on pricing models for freelancers
The biggest thing to keep in mind as a freelancer is that you are a business owner. My coaching clients hear me say this over and over and over again like a broken record because it's something that many freelancers really struggle with – adjusting their mindset away from 'employee' to 'business owner.'
The reason I'm bringing that up again here, in an article about freelance pricing models, is that when it comes to pricing, you are in charge. You determine how much you want to charge for a particular service AND how you want to go about charging for it under whatever model works best for you.
There are no right or wrong answers when it comes to pricing. You can create your own rules based on how you want to work with your clients. That said, how you charge is just as important as what you charge, so take some time to really consider what you want your day-to-day to look like as a freelancer and how your pricing will impact that daily routine.
As I mentioned above, I almost always work on a flat rate basis simply because I prefer that style of work -and- because I've been freelancing for over ten years so I have had a lot of time to perfect my ability to scope accurately and hone my confidence in holding clients to that scope. Try different types of pricing – you can always change if you find that you don't like a particular style!