How To Calculate Rates in a Competitive Market

Estimated reading time: 3 mins

You may have noticed that has been focusing a lot lately on landing that top job. It’s no surprise these posts have received a lot of feedback, as in this global economy, landing a well paying job is something that is highly desired. But how do you perceive your worth? Do your perceptions on your competitors success or failures factor into your overall rate as a freelancer? If not, it should. Today, we will go over some tips for setting your rate based on how you perceive your competition and financial well being.

Thinking about the competition.

Are you in a freelancing niche that has a lot of competition? For example, you could be a premium WordPress theme designer (any out there that want to pitch for the next theme of, in which case, you certainly know your competition is vast and spread worldwide. How you perceive and react to this competition, however, is vital. Have a look at your competitors, are they undercutting you with your rates? Perhaps they charge much more but offer more services? Freelancers must take this information in and put it to an advantage and to gain more success/leads. Some tips for gaining information on and keeping up with your competition are:

  • Keep an eye on what your competition is up to and how you perceive their success level.
  • Contact your competitors and ask questions, they will be more friendly than you think and you might just meet some vital contacts.
  • Use your competitors pricing to your advantage. You cant always keep up with rates, so if they don’t charge very much, offer more quality instead.

Your perception of success.

Check out nearly any freelancer article/blog and you will find all kinds of advice for pricing. Most of these articles advise you to price for your overall yearly or quarterly budget. This is sound advice but there is a flaw in this logic. By setting your pricing by looking at your current budget, you neglect to take into account the future and your goals for the future. Instead of setting your rate per your budget, ask yourself, "What level of income would I be comfortable with in 3 years from now? ", "If I charged more, are there more things I can do/enjoy in my life? ". Questions like these will open your eyes and force you to look at your goals for the future, not just your budget of the present. Next time you sit down budget, consider your life goals (you do have some don’t you?) and you will find your level of happiness is likely to increase.

Quality, Speed, Price.

Three factors vital to any freelancer and to anyone who is going to hire a freelance designer/developer are: quality, speed, and price. These three items will play a huge role in the final price you charge. Freelance switch recently had a great article , in which the "Fast, Good, Cheap" pricing method was discussed. It would be nice if our clients (and ourselves as well) could have our cake and eat it too. However, in the real world, Great quality, extremely fast service, and a bottom end price are not very practical. So how does one balance the three factors mention and at the same time achieve success in todays market? The answer I believe, is a elegant balance of managing your competition and your goals for success. So we can use the techniques mentioned in the previous paragraphs to optimize out quality, speed, and price. For example, you know your competition can offer a very low price and fast work. This is where you come in, and offer quality and speed with your work, allowing you to successfully compete in the marker. In other words, pick the two you can focus on greatly and that you find your competition is lacking in, you’ll be sure to get a boost in your overall sales. Resources for pricing yourself:

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