If you’re a freelancer, negotiating your rates is an essential part of doing business. It’s also something that many people dread and avoid at all costs.
Since you are working for yourself, you’re free to choose your own clients and jobs. In the beginning though, you may have no idea how much you could charge for your work. You might be tempted to make up a number in your head and hope that the client would be willing to pay it.
However, you have to get over your fear of asking for money and become more confident about negotiating rates with clients. You have every right to negotiate your rates as a freelancer. In fact, it’s often expected by clients who see themselves as getting “a bargain” by hiring an independent contractor instead of an employee so don’t be afraid to walk away if they refuse.
But it doesn’t have to be intimidating. If done correctly, negotiating your rates as a freelancer can actually be a straightforward process.
Decide how much you need to live on yearly
One of the most important factors in determining your rate is how much money you need to live on annually. You have to be able to cover all of your expenses, from rent and utilities to food, transportation and entertainment. If you’re not comfortable living off the amount that the client is offering, then it’s likely that this job isn’t for you.
You should also consider whether or not there are other expenses associated with taking on this project (such as marketing materials). This will help give an idea of what kind of profit margin you’ll be looking at with each assignment.
Research the Market
Once you understand your financial picture, you need to understand how much the labor market pays for your skillset. Look at the market and your competitors, see what other freelancers are charging for similar work, and look at how much you charge for the same work in previous jobs.
Understanding the market will allow you to make an educated guess about what your client might be willing or able to pay.
For example, if their budget is $250/hour but there are other freelancers doing similar work for $300/hour, it’s unlikely that they’ll be willing to pay more than a small premium over their budgeted amount (e.g. $275).

Consider your position in the market as a starting point
In order to negotiate your rates, you need to know what you can realistically charge. That means considering how much you need and want to earn.
You also want to think about how much other people are earning in your field—and what their skillset is like. If there’s a lot of competition for the same job as yours, then maybe it’s time for some serious research into what it actually takes to get that gig. Are they willing and able to do whatever work is necessary? Do they have any experience? How long have they been freelancing?
It might be worth asking yourself: What has my experience been like compared with theirs? What value am I bringing the table that no one else has brought before?
Think about what you can offer over and above the job itself
A good freelancer can add value to a project in many ways.Maybe you have experience that makes you a better fit for the job than other candidates, or maybe you know of a tool that would speed up their workflow. Maybe you’re even willing to do extra work for free if they’ll hire you—because it’s a new client and there’s time pressure on them, they might agree to this arrangement.
Or maybe they need help with branding and marketing materials, and because your portfolio includes some examples of those things already done well, they’re more likely to trust that they’ll look professional when finished by someone else.
Whatever the case may be, think about what kind of value addition might make sense here given this person’s needs. If nothing comes immediately to mind, consider whether any existing relationships might help here or if there are any tools connected with your work which could make life easier for whoever is hiring at no cost (or very little).
Calculate your equivalent hourly rate from your salary figures
To calculate your equivalent hourly rate, you’ll need to know a few things.
First, you’ll need your hourly rate. If you’re working a full-time job, this is pretty easy: just divide the amount of money your employer pays you in a year by 40 hours per week—this gives you the average number of hours that they value each day’s work at.
In addition, to get an accurate assessment of what your salary should be in freelance work, however, it helps to have some idea how much time and effort has gone into each project so far.
This can be done by putting together how much clients have paid you (or other freelancers) per hour/project, as well as estimating the number of hours spent on each project.

Remember that negotiating is just part of doing business
Remember that negotiating is just part of doing business – and accept that sometimes rates may not be negotiable, especially for short-term work.
If you’re going to negotiate, it’s important to know how much you can justify asking for. The more experience you have in the field, the less likely it is that people will try to talk you down from your rate.
If someone does try this with you, don’t be afraid to walk away from a job if they won’t pay what you think it’s worth.
Factor in perks and benefits that you may lose when you leave full-time employment
Don’t forget about other benefits you will lose when you go freelance, like health insurance and a retirement plan. It’s also important to factor in bonus payments or paid vacation days that come with full-time employment.
It's okay to talk about money - it's even necessary at times!
It’s okay to talk about money, and even better to negotiate your rates (or at least the terms of your payment). It’s also okay to say no. If a prospective client asks you for something that will take away from your quality of life, then don’t do it!
You’re in business for yourself because you want more control over your career and work/life balance. If someone is asking too much of you, they may not be worth working with anyway.
It’s also okay to say yes! Sometimes there are times when it makes sense to say yes because you might not get another offer like this again (e.g. an opportunity that could benefit your career), or simply because this particular project sounds interesting enough that it would be worth doing regardless of financial considerations.
Final Thoughts
There are so many benefits to being a freelancer, but the one thing that can be difficult is negotiating your rates.
Freelancers have the freedom to set their own prices and negotiate with clients, which is great – but it can feel overwhelming at first.
Remember that, as a freelancer, there will always be jobs you don't want to do at any price – so don't put yourself in that position by being too desperate to say yes.
The good news? Negotiation is just another part of doing business! As long as you know what you want and how much work it’s worth, there’s no reason not to get what you deserve (and even enjoy yourself while doing so).