If you’re trying out the gig economy on Fiverr, Upwork, Contra, or another top freelancing platform, you may wonder about how to set pricing as a freelancer. Your rate can determine how much business you’ll receive and how much you make, so it’s a significant business decision.
In this blog, I’ll explain how I set my pricing as a new freelancer on Fiverr.
Understanding Fiverr’s Pricing
I started my freelancing journey on Fiverr, and so far, I’ve stuck with them. So, I’ll primarily be explaining my pricing rationale in the context of their structure. If you choose another site, your decisions may diverge slightly with their setup, but overall, the core of how to set your prices remains the same.
Originally, Fiverr had a base price of just $5 (hence its name) when it launched in 2010. In 2013, however, it began allowing sellers to set prices for themselves.
Usually, freelancers charge higher prices for more complex jobs, higher quality work, or tighter deadlines. As a contractor, you set your own rate on Fiverr, yet the ability to assign a dollar amount to your work is often puzzling for beginners.
Conducting a Price Analysis
Your pricing can determine whether you get your first client on a freelancing platform as pricing is one of the top factors influencing a purchase. To set your prices, conduct a price analysis. Here are the top two questions I used when setting my pricing as a freelancer.
How does my experience compare to my peers’ experience?
When you’re first starting out, your experience (if you have any) won’t be initially evident. You’ll have to gain clients’ trust through work with them, and if you’re new to a platform like Fiverr, then you’re likely missing one of the main factors that’ll give you credibility: reviews. So, keep in mind that reducing your pricing (at least in the beginning) can help entice clients who may not book a freelancer without a review otherwise.
Consider these options:
FREELANCER A
- Great profile – displays education, experience, etc.
- No reviews
- $5
FREELANCER B
- Great profile – displays education, experience, etc.
- 5 reviews
- $15
Freelancer B has the advantage with their reviews and their prices reflect it. However, Freelancer A is compensating for their lack of reviews with their pricing. Maybe, just maybe, a buyer will look at these two profiles and think, “You know what, it’s just $5. I’ll give Freelancer A a try.”
I was once Freelancer A, and I got my first order after just 4 days. Someone took a chance on me, and I’m almost positive it was because I had a quality profile and low prices. I may not have had a lot of experience, but I had the skills to do the work, and I slowly gained ground once I got my first few reviews.
Understanding your peers (your competition!) in the marketplace is one of the best ways to determine your pricing, even after you’ve become established. You want to make sure you understand what the market rate is. I recommend reviewing your pricing at least once a year, so you can stay on top of your competition and optimize your revenue.
How am I going to measure the amount of time I spend on my work?
Depending on what type of work you’re doing (writing, graphic design, etc.), you’ll need to decide how you’ll charge for your services. Some freelancers like to be paid by the hour while others prefer to be paid per project. The best way to describe the differences between measurement is time-based pricing, project-based pricing, and value-based pricing.
Time-based pricing is the easiest of the three strategies. Freelancers tend to favor it as do many professional services. If you work for an hour, you invoice the client for an hour. The issue with this type of pricing is that you only earn as much as the hours you’ve got available. In other words, there’s a price ceiling, and the only way to earn more is to work more hours.
Project-based pricing requires you to estimate the effort and time it’ll take you to achieve your client’s desired result. If a client agrees to your quote, then there are no unexpected surprises at the end of the day, and (in theory), both parties are happy. Additionally, if you’re efficient with your time, then you can earn higher than your “day” rate that you’d earn in time-based pricing. The downside of this method is that you need to be experienced enough to evaluate the scope of the project and provide someone a quote off of that number. Otherwise, you could end up working a lot more or scaring off a client with a figure too high.
Value-based pricing is the third option, and it’s based on the idea that you’re charging the perceived value you’re providing for the client. Say you’re writing website content that’ll result in over $10,000 in sales for a client. That website content may not bring in very much revenue for you if you charge $100 for it. However, if you decide to charge a 10% fee based on that value, then you’re looking at a significant spike in your overall profits. Unfortunately, only highly experienced freelancers typically have the bargainer power to use this type of pricing structure. It is something to keep in mind as you continue building your business.
When I first started out, I selected what’s closest to project-based pricing. I decided that I wanted to be paid by word count. To me, this is the best way a writer can be paid because it’s concrete.
For instance, some people wonder if I price by the page. I’ve never done it this way because I’m confident that buyers looking for a deal would cram their pages. They’d use single spacing, size 10 font, and custom margins to their advantage to ensure that they got the best deal. If you base your pricing on word count, there’s no way to manipulate the number.
Now, this works for writing, but there isn’t necessarily a great parallel for graphic design or voice-over. The best advice I can give here is to make sure you price in a way that’s conscious of your time. In the beginning, you may sacrifice some time to get jobs, but as your business grows, you want to make sure you’re able to take on more work and have the time to do this. As a freelancer, you’re never capped in the amount of money you make. You don’t have a fixed salary. You determine how much you make. You can make hundreds per hour if you set your prices correctly.
My Experience with Pricing as a New Freelancer
To help illustrate how to set pricing as a freelancer, here’s what I did when began my freelance writing journey with zero professional experience in September 2018.
1. Determine your base rate
As a freelance writer with no professional experience in September 2018, I stuck to Fiverr’s classic base rate of $5. My only goal was to make a few extra dollars (if that) as a college student. I wasn’t a professional (yet), and I was still learning the ropes. I set my blog post rate at $5 for 500 words.
However, I don’t approach every gig this way. In fact, in addition to launching a blog post gig, I also created a proofreading and editing gig. I looked at a few other profiles and decided that $20 was going to be my base rate. However, unlike my blog post gig, I didn’t start regularly booking proofreading/editing jobs for months. I was a Level 2 Seller before I consistently saw both gigs booked.
Today, I normally start my new gigs off based on the pricing of my other gigs (maybe a bit lower). I also compare my base price to my beers to see what the market rate is.
2. Increase with supply and demand
Once buyers found out that I was a quality seller priced at $5, my gig started flying. Only then did I begin raising my prices according to the principles of supply and demand. Whenever I couldn’t handle the incoming flow of orders, I would raise the price from $5 to $10 to $15…then $20…then $30. Each time, I continued to see a steady flow of orders, which was incredibly rewarding. Finally, I landed at $35 and stayed there for quite a few months before bumping up to $40. I have since revised my based price once again to $55 on Fiverr — a full $50 increase from where I began. My average selling price is even higher than this with higher word counts, add-ons services, and custom orders.
3. Continue to compare with your peers
When I first started, I would peruse the marketplace to see what my peers were selling their services for, and I still do this. I like to see how other sellers are pricing their services, so I can continue to update my prices as necessary. One of the best parts about working for yourself is always being in control of your pricing. If you’re not being paid enough, you have the power to change this.
Final Thoughts
When you’re looking to set pricing as a freelancer, there are a lot of factors in play. How do you stack up against your competition in the marketplace? How can you fairly price your work, so you get paid enough for what you do?
Most new freelancers have to balance wanting to make a lot of money and being able to get jobs on competitive freelancing marketplaces. Because you may have to start out at a lower price than you’d want to work long-term I recommend starting the freelancing process when you’re still in another role. This way, you’re not sweating it for cash while you’re in the learning phase.
If you have any questions, please feel free to contact me!