Undercharging as a Freelancer: Why to Avoid it

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Undercharging clients for work is a trap many novice freelancers fall into, and one that’s hard to escape. This article explains why not to do it, and how not to do it!

The early days of starting out as a freelancer are tough. It’s natural to just want to get going. Writers are keen to get their names out there, creative individuals want to connect with others, and entrepreneurs are keen to start seeing people engage with them.

Why aren’t people flocking to our website or our door yet? Could it be the cost of what we are offering? Perhaps if we just reduce it down a little, to tempt people in? Perhaps even work for free, to raise our profile? Is that the answer?

Whilst profile matters and discounted beginnings can lead to fruitful ends, the perils of undercharging are huge.

Undercharging keeps you stuck

Sometimes it can be tempting to reduce your rates in order to get an ‘in’ with a company or customer. The danger is that once you start undercharging, it’s very difficult to raise your prices. If someone knows you will work for, say, £5 an hour, they won’t ever consider paying you £10.

Nobody else does it

In no other industry would working for free be considered, yet for some reason, people often seem to think that anything creative should be free.

For a recent (paid) commission, British artist Alistair Gentry decided to walk around Folkestone dressed in an ‘artist’s costume,’ asking other workers if they’d do the same. Would the window cleaner, bartender and refuse collector work for free? The answer was a resounding “no!”

It doesn’t matter if all you need is a pen and paper to do your job – you do put in time. ‘Time, whilst being one of the most valuable assets in today’s society, is also the most underrated,’ says Kate Tompsett, who started her gift company Happy & Glorious from home before growing to a bricks and mortar store.

You can’t work well if you’re undercharging

You won’t do good work if you’re struggling to feed yourself or heat your home.

It’s a simple fact very nicely demonstrated by Maslow’s infamous Hierarchy of Needs. At the bottom of the pyramid are the basics of food, shelter and warmth. It’s impossible to reach the dizzy heights of self-actualization, where creativity and full potential sit, if you haven’t got the basics.

Hierachy of needsIMAGE CREDIT: User:FactoryjoeMaslow’s Hierarchy of NeedsCC BY-SA 3.0

So, remember to take into account what else you’re paying for at home in order to be able to work effectively – the things that you usually take for granted in an office, such as electricity, heat, air con, WiFi and phone bills. These matter, and they need funding.

Price reflects quality

Price is often deemed to reflect quality. A cheap jumper is generally considered of poorer workmanship than a designer one, for example. If you’re too cheap, people will think that your work reflects that.

As a business, you need to be promoting yourself as offering quality services, and reflecting that in everything that you offer as a brand. Sorcha Kate MacKenzie is a writer, and says this:

“I think people forget that sometimes if you quote too low it makes the quality clients nervous because they don’t believe you’ll be quality. I certainly experienced this when I was the one hiring freelancers.”

Undercharging drives down prices

As freelancers we can be a bit like lemmings. We see one person do something, and we all jump to do the same. It’s the case with pricing.

As soon as one person starts undercharging everyone has to do the same in order to get work. As a result, the whole industry becomes devalued. We know this has happened with the growth in workers from other countries where the cost of living is much cheaper, who now offer what used to be specialized industry services through places such as Fiverr or Upwork.

Dont underchargeIf you care about your industry, you’ll care about making it work for everyone. Journalist Triona McBride explains that by undercharging:

“You’re lowering the price for everyone, which affects the expectations of the client, so the more people that do it, the more it becomes the norm. That results in an entire industry being undervalued.”

It’s not sustainable

Even if, to start with, you have to do some pro bono work or exchange based work (you write their copy, they build your website etc.) you will at some point need some real cash. That doesn’t make you mercenary – just human.

It’s particularly hard to ask for this cash if you’re working in the third sector, where voluntary work is common and necessary due to underfunding. Natasha Steer runs Creatabot and when asked to work for free kindly explains that she has an allotted number of volunteer hours that she has already used, but is available for paid work. “This can then show the value I put on what I do, make them think about how they value voluntary time, and maybe, just maybe, make them consider paying me for my time if they really want me!”

So what should we do about undercharging?

As freelancers or homeworkers, it’s very difficult to price ourselves. Especially as we’re often passionate about the work we are doing, making it not quite feel like work.

We’re not chained to an office for eight hours a day, so it’s harder to demarcate business with pleasure, and very easy to overwork, and so undercharge. Here’s some advice on how to set rates that work for you.

– Work out how much you want to earn an hour. Let’s say for argument’s sake, it’s £25. Next, work out how long something might take you. Perhaps, as a writer, a 1000-word article would take six hours of your time (including research, thinking, and editing – not just the time spent actually writing your piece). Then multiply the two together. It’s simple maths. If you find that you would be better off working as a chimney sweep in Victorian England, you probably need to increase your rate a little!

Calculating Charges– Check out resources such as the National Union of Journalists and Professional Copywriters, where they provide rates for magazines and jobs. This offers a great benchmark so that you can see where you stand.

– Do some research. If you’re offering workshops, what are others in your field charging? Look at good people working in your field, not the cheapest on offer. Use these figures as a ballpark for your own rates. Andy M Turner, a freelance PR, says that as well as the knowledge of what else is out there and the range of prices involved, it’s important to offer a “clear proposition of genuine value for whichever end of the price spectrum you position yourself at.”

– If the rates seem low, think of other ways to make them more reflective of the work you do. Perhaps you’ll only provide one round of revisions, not two. Or you won’t deliver a product to someone, they have to come to you.

Perhaps it will be an ‘off the shelf’ offering, rather than something personal. Samar Owais is a copywriter, and says that “If a client offers a low rate and you can’t afford to say no, respond with “Okay, here’s what we can do…”

Remove the bells and whistles. Lessen the word count. Take away revisions. Ask for 100% upfront payment. Do whatever you can to make this workable for you. Not bearable but workable. You’ll resent bearable. But workable? You can slog through that.

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