Hands Up If You Charge More Than $100/Hour

Posted: February 26th, 2009

When setting your freelance rates, it is hard to overlook the fact that there are others in your field charging $100+ an hour while you ponder setting yours at a fraction of that. So what gives? How do they manage to get away with charging so much and probably earning an income well into 6 figures while you are still figuring this all out?

Personally, I’m not one of these lucky bastards but that light bulb went off in my head after reading Peter Bowerman’s article on What Makes a $125-an-hour Writer. He mentions talent and marketing are key components, which goes without saying. After all, you do need to be the best at what you do to be earning these rates. You also have to actively search out those clients and convince them you are worth the high cost. This takes some skill in selling yourself as well.

Another of his points is that you need to be highly specialized in what you do. The specialist can do a few things quickly and very well as opposed to the jack-of-all-trades who has talent in many things but is not an expert in any one of them.

What drew my attention the most, however, was his last attribute mentioned: speed. It is a no-brainer that freelance experts work faster, but when you combine faster work with higher rates, then you have the secret of the $100/hour freelancer AND you have your marketing tool for attracting new clients.

Say, for example, if you work twice as fast as a freelancer charging half your rate, then to a potential client, there is no difference in the price of the work. You become the more attractive option, however, due to your speed and perceived expertise. I say perceived here because you still have to convince the client you are the expert you say you are.

Here is where we go back to marketing yourself. Peter says:

Developing that marketing sense – which just isn’t that difficult – simply requires the ability to think strategically about a business. Translation? Being able to intelligently discuss with clients issues like strategic objectives; audience and that audience’s hot buttons; features and benefits; and USP (Unique Selling Proposition) [see my post on the USP] – what sets your product/service apart in the marketplace.

The important thing to note, though, is that as we become more knowledgeable and work faster in our profession, our rates need to increase as well, It is very likely we are still working at the same rate as in the past when we were much slower in our work (I was guilty here). The irony in this case is that we are losing money as we become faster in our work, quoting fewer hours as a result but keeping our same rate.

Let’s take for example a project you may have once charged $25/hour for 4 hours netted you $100 in the past. If it now only takes you two hours and you charge the same rate, it nets you only $50 thereby losing $50 in the process. Now, we can’t just set our rates at $100+ an hour and start looking for clients, but rather evaluate our skill level and the speed at which we work THEN raise our rates accordingly.

One simple method is to find a project in the past, calculate the time it took to complete it then divide this result by the time it would take you to complete it today. Take this result and multiply it by your hourly rate to find the increased rate you should be charging. To illustrate:

Time to complete project in past  – 20 hours
(Divided by)
Time to complete same project today – 10 hours
Result: 2
If your current rate is $25/hour, multiply by result which equals $50/hour

Set your rates in accordance to your expertise and focus on that expertise and speed when marketing yourself to clients and you have your winning formula for achieving the goal of being a $100/hour freelancer. You may not be quite there yet, but at each stage you quicken your work pace, your rate can increase accordingly.

I know I’m practicing this as we speak.

More on the author, Johnny Spence
Johnny is the founder of The Freelance Rant and a freelance web programmer with 8 years in the business. Have a visit at his company Oscarrr!web or see what he's up to on Twitter.

1 Comment. Join In!

  • Peter Bowerman

    February 26th, 2009 at 11:47 pm

    Hey Johnny,

    Thanks for the pingback on the piece I wrote for The Wealthy Freelancer. Good piece here, but you’re overlooking one crucial thing. You’re talking about raising your rates, but why does a client even need to KNOW your rates. These days, if someone asks me my rate, I say, “Well, I could tell you my hourly rate, but it wouldn’t mean much to you without the context of a particular job. It’d be far better for both of us if I gave you a quote on a particular job.”

    If I told prospects I charged $125 an hour (my current rate), many would head for the hills (though most wouldn’t because I come referred to them and they know roughly what to expect). But if they ask, How much for Project X with these parameters?” and I say $1000 because that’s a fair price for such a project and that’s about what they were thinking, we’re in business. If I said $125, they might be thinking – “Geez, times WHAT? 15-20, 25?” But if I can get that project done in 8 hours when it might take another writer 12-15, I’m doing OK.

    It gets even more fun when you’re doing repeat projects of the same kind for a client, You may have charged say $1000 before b.c it took you 8 hours, but maybe now, since you’ve done so many, it only takes you 5. Your true hourly rate just jumped to $200.

    And none of that is possible if you tell your prospect/client your hourly rate. You want to start crafting your professional persona as that of someone who charges for their expertise, not by the hour. One sounds infinitely more professional than the other, no? And then you effectively sidestep the “price game” that too many freelancers get into and which can only ever end badly. Why? Because there will always be someone willing to do it for less.

    My two cents!