Value-Based Pricing: A Smarter Way to Set Freelance Writing Rates

Value-Based Pricing: A Smarter Way to Set Freelance Writing Rates

Want to land bigger contracts and better-paying clients? In The Creative Class, Paul shares the pricing, marketing and productivity skills he’s honed in more than a decade of freelancing.

Best of all, Paul is kindly offering The Write Life readers $30 off when you use the code ‘THEWRITELIFE’ at checkout.

As writers, we’ve all been there. You talk to a potential client and they ask: “Well, what is your hourly rate?”

And if we answer, we’ve no doubt heard some variation of: “Oh, that’s a lot of money. My college buddy is a writer and he only charges half of that/my cousin charges $15 an hour/that kid down the street from me will work for Mars Bars.”

That’s because the value of the work we do as freelancers can’t simply be summed up in an hourly rate.

Beyond that, the more experience we get and the faster we get with our craft, the less time we’d be able to charge for. We’d basically get punished by having to charge less simply because we can do our work more quickly.

There is another way.

How value-based pricing works

Here’s what value-based pricing means: associating your price with your deliverables, not with the number of hours it takes to complete a project.

Let’s start with two scenarios:

  1. A seasoned writer quotes a client $300 to write an article.
  2. A seasoned writer quotes a client $300 to write an article that’ll take 60 minutes to write.

In both scenarios, the article takes 60 minutes to write, but the second quote commoditizes the work and clouds the client’s judgment.

Who’d hire a writer at $300 an hour? That sounds like what you’d pay a plumber to fix your hot water tank on a holiday, after midnight!

In reality, a writer with the right experience, skills and knowledge can create a brilliant article in one hour that perfectly matches the client’s content marketing strategy. The client receives the same benefits in both scenarios, but the first connects the price with the value of the result, while the second associates the price with the time it takes to write.

Linking cost with time turns you and your skillset into a commodity.

This is how Upwork and Fiverr work. Basically, the person who can do the work at the cheapest rate gets the job.

It also means you’re punishing yourself for working quickly and efficiently. Time-based pricing is a race to the bottom, because someone will always be willing to charge a little less per hour and undercut your rates.

Instead, why not focus on attaching cost to value, instead of to time? How much is the end result worth to the client?

That way, they’re paying for your expert problem-solving skills and your ability to deliver something truly valuable.

How to start charging by value for freelance projects

How does value-based pricing work in practice? When quoting a client’s project:

1. Break tasks down into a separate line items with individual deliverables

Deliverables are what the client will receive. An example of a deliverable might be an About page you write. Or a blog post. Or an edited book chapter.

Break down the price into deliverables, rather than how many hours each deliverable might take.

You should also always include some optional pieces as well, like additional blog posts and newsletter copy, social media share examples, newsletter automation content and/or onboarding strategy.

These become negotiation points. You don’t discount your services, but you can take off optional pieces if the client can’t afford the entire job.

2. Create a price for each deliverable

That About page, for example, might be priced at $500.

While the client only ever sees the price for each deliverable, internally I know how long each will likely take to complete — at least on average, based on previous projects.

I base my pricing on a formula that’s worked for me for 15+ years. If I’m booked for more than three months in advance, for more than three months in a row, without a rate increase during the last six months, I raise my rates by 15 to 20 percent.

I’ve raised my rates 700 percent since I started working for myself in the ‘90s based on the above formula (but then again, I was charging far too little back then).

3. Since all projects require timelines, attach a time frame to each deliverable

For example, About Page, $500, two weeks.

Don’t indicate how long the project will take to complete in terms of hours you work, but rather when you’ll be able to deliver it to the client.

I base my timelines on the average of previous projects…and then I triple it. At least. So if I know an About page will take me three days of solid work, I quote nine days for the turnaround.

I do this because something always comes up to delay work.

Plus, I’m always working on more than one project at a time. Either from life or other projects, I’ve learned the hard way that unless you pad your schedules for deliverables, you’ll always be late. And being late is the worst thing you can do as a freelancer if you want your client to be happy.

If I get the work done early, instead of sending it right away, I sit on it so I can work on other projects. The client gets it when I said I would deliver it, and sometimes a tiny bit early. I under-promise and over-deliver.

And, since they expect it on a certain date, they leave me to my work — whereas if I said the work would take me X hours to do, they’d be emailing me after X hours, even if that was in the middle of the night.

Laborers charge hourly, leaders charge by value

Pricing by value instead of by time emphasizes quality and benefits, not quantity or speed.

Good freelancers price their work by the value they provide to their clients, while others price by the hours they need to complete a task.

This is where some freelancers set themselves apart from others.

You can find a labourer on Fiverr or Elance who charges just a couple bucks an hour to complete a task (from web design, to copyediting 1,000 words, to rapping the lyrics you write). They’re interchangeable, too — if a client gets rid of one, they can easily swap that person out for another cheap freelancer. Laborers compete on price, and it’s a race to the bottom of the price ladder.

Leaders are respected for their skills and the unique way they transform client problems into smart solutions. Clients hire leaders specifically because of who they are. You can’t take one leader out of the equation and swap another in, since the results and problem-solving approach would vary significantly.

Leaders are teachers whose opinions support good decision-making. Leaders differentiate themselves on communication (how they understand their clients, provide solutions and apply their expertise to teach) and quality (how well they apply their expertise).

With hourly pricing, you’ve set a cap for yourself on how much you can make, since there are only so many billable hours in a day. When you remove the time it takes to complete your work from your pricing equation, you can make more money as you become more efficient and skilled.

Pricing is not a simple task. You’re not only being hired for the billable hours of completing deliverables, you’re also being tasked with solving problems. That involves communicating with the client (and possibly their audience), research, revisions, formatting, searching stock websites (or just grabbing photos from Unsplash) for articles and any number of other tasks related to the deliverables you’ve got to create.

Your price also takes into account the years you’ve spent learning your craft (either at school or through work) and the years you’ve spent working with previous clients and learning through those projects.

Remember: Your price is not just for the task at hand, but for all that you bring to the table.

To minimize the risks, and to increase your expert status, always communicate the value of your work. Demonstrate how the end result will benefit your client. Separate cost from time and focus on the final price — and value — of each deliverable.

Your client wants results and an end product, so emphasize those deliverables above all else.

Finally, what you’re “worth” isn’t what you get paid — otherwise we’d all charge ONE MILLION DOLLARS per project. And if anyone asks you to work for free, “for the exposure,” tell them that people die from exposure.

Your work is more than the number of hours you log at your desk or on your couch (hey, I don’t judge). It’s also an accumulation of learning, exploration, focus, creativity and experience that adds up over time.

So give value-based pricing a try the next time you quote a client. Or better yet, propose to a client you already have that you move to projects based on deliverables, rather than hours. And let us know how it goes!

Like what Paul has to offer? Sign up for his Creative Class, and get $30 off when you use the code ‘THEWRITELIFE’ at checkout. 

This is an updated version of a story that was previously published. We update our posts as often as possible to ensure they’re useful for our readers.

Photo via Andrey_Popov / Shutterstock 

Filed Under: Freelancing
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