Meet Tim and Tom. They are very much alike. They're both freelance graphic designers. They're both very skilled at what they do. Both have highly satisfied clients. And both set freelance graphic design rates of about $6,000 per month.
But there is a difference. Tim works more than 60 hours per week and juggles more than 30 clients at once. Tom works less than 25 hours per week and limits himself to a handful of clients. Tim is still an amateur freelance graphic designer. Tom is a professional freelance graphic designer.
I know this because I was Tim. And I became Tom. Well, I'm Jake … but I’m making a point. Whether it’s sports, business, or creative endeavors, professionals get paid more than amateurs. That’s why setting competitive freelance graphic design rates is so crucial. Because while amateurs have more clients, work more, and earn less, professionals earn more income in less time with fewer clients.
I was an amateur my first six months of my freelance design career. I made a good living, but it took long hours and lots of clients. My life changed when I became a professional. I had the same skills, produced the same great work, but I worked less and served fewer clients.
All because I changed how I set my rates.
Changing how I set my freelance graphic design rates was about more than the money. It’s allowed me to work less, enjoy life more, and create meaningful things. You can follow a similar path. Here's how I did it.
The eye-opening moment
Like most freelancers starting out, I charged an hourly rate for design projects. I started at $30 per hour and eventually raised my rates to $60+ per hour.
At $60 per hour, I began working with higher-quality clients. These clients began changing my mindset on setting my rates. They didn’t care if it took me 20 minutes or 20 hours to complete the work they needed — they just wanted it done well.
One great client provided me with my eye-opening moment. He paid my $60 hourly rate and provided everything I needed to do a great job on the project. It only took me three hours to complete his website, and he was more than pleased with the work. He was also pleasantly surprised by the $180 invoice for something he would have gladly paid thousands of dollars for. It was then that I realized I had to change the way I set my freelance graphic design rates.
Your hourly rate is harming your business
If you intend to get really good at what you do, you’re doing yourself a serious disservice by billing hourly. Projects will likely take you less time as you develop your skills. If you continue to set your rates based on time, you’ll end up needing more clients and projects to earn the same income. But when you begin setting project-based rates, you have the potential to earn the same, or even more, income on fewer projects.
Your rates must be tied to your client’s end result, because in the end, that’s what they really care about.
Thirty days after my $180 project, I landed another web design project. This time the rate was based on my client’s end result and not the amount of hours I worked on it. The client happily paid $4,250 for a website he loved. It took approximately five hours to complete the project, which I would’ve earned $300 for at my amateur hourly rate.
Not sure where to start? Here are two don’ts to consider:
- Don’t base your project rates on the time you’ll spend. In doing so, you’re still billing by the hour.
- Don’t base your rates on what “the market” charges and try to match that.
Both of these mistakes can keep you stuck in the amateur category of low pay and lots of work.
3 questions to ask
Here's the meat and potatoes of setting freelance graphic design rates. First, know that while there is no perfect formula for setting your rates, there are a handful of questions you can use to guide you.
1. Do I like this client or project?
This might seem ridiculous, but stay with me for a moment. This is an extremely important criteria to follow. When you take on a client, they become a part of your life.
How well you get along can affect the work you do on their project, other projects and even other areas of your life.
It can also influence the rate you’re willing to accept. You might have lower rates for clients and projects that you enjoy more and get other benefits from. And you might have higher rates for clients and projects that you want to work on, but enjoy less.
2. How much do they expect to pay?
As you transition from hourly rates and work with higher-quality clients, rates based on their expectations are better than rates based on yours. For example, if Startup Sam expects to pay $300 for a project you would absolutely love working on for $300, set your rate at $300. If Corporate Connie expects to pay $3,000 for the same project you would absolutely love working on, set your rate at $3,000.
So, how do you know what your client expects to pay? You simply ask.
I always ask a series of questions when talking to a potential client. One of the questions I always ask is, “Do you have a budget set aside for this project, and is it more than $X,XXX?” Some people will share their budget with you. Some won’t. But you’ll only find out if you ask. Some will ask you for a quote on the project. I always answer this with a wide ballpark figure by saying something like, “It could cost anywhere from $1,000 to $8,000, depending on the scope. Did you have a budget in mind that you were looking to spend?”
Remember, your goal is to set your rates based on their expectations, not your hourly rate.
3. What is the true value I’m providing?
Your client doesn’t care how many hours you put in or what you expect to earn from the project. High-quality clients care about getting the work they need done well.
The finished project has more value to them than the money they are willing to pay you for it.
So, always do your best to base your rate as close as possible on the value your client will receive. And remember, the value they receive has nothing to do with how much time the project is going to take.
There are no rules for rate-setting
There is no governing board that’s going to fine you or send you to jail for setting different rates for different clients and projects. Clients are the only ones who decide whether they want to pay your freelance graphic design rates. So, decide how much you’ll enjoy working with a client on their specific project, do your best to discover what they expect to pay, and set your rate as close as possible to the value of what you’re providing.