Pricing your work as a freelancer can be difficult, especially when you’re just starting out. There are several factors you might want to take into consideration before you invoice freelance work for clients.
- Time is money, but how much?
The freelance life can be anything from a creative opportunity to an endless slog. If you’re just starting out as the next great designer or writer, then pricing your work can feel like walking on tightropes without a net – it can be tough!
To put things into perspective, we all know that time equals money, right? So you need to consider the value of your time, skills and education.
The following 10 tips will help guide you in producing both a fair price to invoice freelance work for yourself and your clients.
Disclaimer: This post may contain affiliate links that are at no additional cost to you, I may earn a small commission. I only recommend products I would use myself and all opinions expressed here are my own.
- How Do I Calculate My Freelance Rate?
- Pricing Options For Freelance Work
- Quote Before Invoice
- What Is An Invoice Exactly?
- What Should A Freelance Invoice Include?
- How Do You Invoice Clients For Freelance Work?
- How Much Do You Charge For Invoicing?
- How Do I Issue A Receipt For A Freelancer?
- Overdue Invoices Notice Letter
- Invoice For Freelance Work Template
How Do I Calculate My Freelance Rate?
Let’s dive straight in. The first thing you need to do is grab pen and paper and calculate and consider the following.
How much do you need to live?
- First, calculate how much you need to live and cover all of your basic living expenses.
- To determine the most appropriate rate to charge. You should also consider and include what standard of living is most important to you.
- Next, calculate your business expenses. List out the cost of the materials, equipment or software and other necessary tools and expenses to calculate your costs.
- Now figure out how much time you will have as workable hours. The total hours you have to work each month is your billable time.
- Compare your prices with your competition. This will give you an idea of whether you are pricing fairly by looking at how much they charge and compare this amount with how experienced they are. But, remember that your needs and skills may be different from your competitors. You will still need to calculate your needs and consider a rate that will work for you financially.
- Don’t forget the taxman; they will want their cut. You should put aside at least 30% of your income each month to cover any tax.
Your expenses may include:
- Advertising and marketing
- I-Cloud storage and s/ware
- Printing & stationery
- Travel and subsistence
- Education and training
- Computer equipment
- Website development
- website hosting
- Rent and utilities for home office. (if working from home)
So how much do you need? If you have calculated everything, you should be able to determine a rate from what you need to make.
Pricing Options For Freelance Work
Once you determine your pricing, consider how to package or charge for work. For freelancers, there are, generally, three ways services can be priced. By the hour (or day), by a specific project, or monthly retainers.
Price Per Hour pricing is a process where you set your hourly rate for your services and keep track of how much time you spend on the project, and then bill your client after finishing work. Toggl is a great tool to use for tracking your time.
Some clients prefer a price per hour, as they know and understand how much time and money to spend on their task, especially if they only have small projects to complete.
Fixed-rate with a project-based package. Clients are charged an all-inclusive one-time fee for the project. This works great for my web design projects that contain the full scope of work to be done. I include a detailed and itemized quote/invoice. My client then understands the value and how long it will take to complete the job.
Retainer Packages are monthly plans for individuals who require regular help with their business. A fine example of this is where I offer monthly website maintenance plans for clients to keep their website secure and up-to-date.
The best way to price and invoice freelance work is the one that works best for you and your client. You may need to be flexible to suit your client, but there’s no right answer when it comes to this topic – everyone has their own take on it. When pricing your freelance work, you should find what’s best for you.
Once you have your pricing options, you may want to create a pricing spreadsheet that includes the rate for each service that you offer. Keep it simple.
- price list
- description of services and what they cover.
Of course, the rate for your freelance services does not need to be set in stone. After figuring out your pricing and what services are now included, make sure to update your spreadsheet when necessary.
When you begin, you may decide to charge less to build up your clientele base and gain more experience. Nevertheless, you should increase your prices as you start to improve; and yes, you can and should give yourself a pay rise. You deserve it. We, freelancers, work hard. ??
You may want to consider specializing in a niche area of work to increase your potential earnings. If you are good at something, then you can charge more for it. If people need a profession in a specific area, then they will pay more for that work. Remember that you are the expert in your field. You know how much hard work goes into it and what level of skill is required, so don’t be afraid to charge for those capabilities.
Quote Before Invoice
I often give my clients a price quote. This is an estimate or proposal for work that may or may not be accepted by the client.
When a potential client approaches me to build them a new website. I will usually include the quote within an email along with a proposal laying out the full scope of work and time frame to be completed. If the client then accepts the quote and proposal. I will then send out a web design agreement along with an invoice asking for payment.
I have a system in place that automatically sends out a quote. If the client accepts the proposal. Then at a click of the button, the quote is automatically turned into an invoice. Making it simple and easy for the client to accept
What Is An Invoice Exactly?
Simply put – an invoice is a document that a client receives from you. As a freelancer, It is good practice to provide your clients with an invoice for you to receive payment.
- It should detail what the invoice is for
- how much the service cost
- when it should be paid by.
Providing invoices makes your business look credible, professional, and trustworthy. Not only that, It will make it much easier for you when it comes to dealing with your business accounts.
What Should A Freelance Invoice Include?
Typically, an invoice would include:
- – The job task and description.
- – Your name or business name.
- – Date created.
- – Base rate for how much time is included in the project (hourly rate).
- – What you are providing to them such as logo, design services etc.
- – The total cost of the invoice.
- – Any additional information that will help explain the work to them if they want or need it.
How Do You Invoice Clients For Freelance Work?
Payment Expectations and Boundaries
Additionally, you should think about how you will get paid by your clients. Will they pay before or at the end of a project, or will it be periodically throughout? Setting payment expectations is incredibly important for freelancers.
I recommend that you do not reduce your price for a client. Unless they are a non-profit or something that you are passionate about. If someone cannot afford your services, you should not devalue or diminish yourself to maintain their business.
As a freelancer, you need to pay your own bills and provide something of quality without sacrificing what makes your work unique.
I personally think it’s always best to charge a deposit before doing any work. I charge:
- 40% deposit, followed by the full payment on completion, or
- For larger projects, a deposit followed by 3 or 6 automated monthly payments to help spread the cost.
However, for my regular clients that I have built a good rapport, when doing small tasks for them, I will send an invoice and then wait to be paid.
- For small tasks. simply draw up an invoice for clients that includes an email with the pdf invoice attached requesting payment be made by bank transfer.
- For large projects. I use an automated payment system with Invoice Ninja connected to Stripe. The payments are taken out automatically each month, and I don’t have to worry about when the next payment is due or if it has been paid.
How Much Do You Charge For Invoicing?
When composing your invoice, you might want to consider the time it takes to process and any charges it may cost you to send an invoice. You will need to take any payment processing fees into account. With most payment processing services, such as Stripe, you will pay a small fee for each transaction, something to take into account when pricing your work.
Will you charge an admin fee for the time it takes you to process and manage the client fee? You may choose to incorporate these costs into the price of the project. Whatever you choose to do; when sending the invoice, make sure it includes all costs and fees so there are no unexpected surprises for either party when they pay or receive the bill.
How Do I Issue A Receipt For A Freelancer?
A receipt is often issued to a client to confirm that the invoice has been paid. It’s polite to also send a “thank you” for their business on the receipt.
This is all done automatically when I use Invoice Ninja and Stripe. They will email the receipt when a client makes a payment.
Invoice Ninja is a great software to use if you are looking for an invoice and receipt management system that has many other first-rate features such as
– invoice creation
– time tracking and expense management
– email automation for receipts, invoices, estimates and more
– payment reminders via text message or email.
Overdue Invoices Notice Letter
If someone owes you cash, and they’re not responding to your emails or phone calls, you must send them an overdue invoice notice letter.
The overdue invoice notice should identify what you’re trying to achieve, which is for your customer to pay their outstanding debt.
It’s also crucial that you have a clear timeline so they know when you are expecting payment.
You could explain why paying the overdue invoice is critical and what will happen if payment isn’t made. For example: “This is a final notice. If payment isn’t received by 30th June 2021, I will take further action.”
Sending an overdue invoice notice letter is the best way to make sure they understand how serious this problem is.
Invoice For Freelance Work Template
Having an invoice template for your freelance business will save you time. You can either create your own template in word. Or, you can download any of the many free online templates and tweak them to suit your needs.
As I have already mentioned, Invoice Ninja is a top-rated invoice and timesheet software for freelance workers. The software allows you to build an invoice with four simple steps: Add a client, add the work you did, set your rate (in hours) and click “Send” to generate your invoice.
They have a selection of free invoice and quote templates that you can use. Just edit to suit your needs and download them as a PDF to send to your clients.
Freshbooks provide a free invoice template and have a noteworthy invoicing program to help you track your hours.
In the past, I have used Quickbooks to keep track of my accounts. They also have a free invoice generator. You will find it is really straightforward to use.
You’ve just read a blog post about how to price and invoice freelance work. I hope you found these tips helpful. But, if not, please let me know as I am always looking to improve the content on my website.
If freelance work is something you would be interested in, here are some more posts that might interest you. Creating Your Freelance Business Plan is a Piece of Cake! or Problems With Freelance Work From Home, And How To Fix It.
Thinking about working from home? Grab the 30 Jobs You Can Do From Home As A Freelancer below. It goes over all of the different types of jobs you can do at home for money.