In the early stages of your freelance career, when you are pitching to a new client, you often tend to offer your services at a low price in order to at least close the deal.
In later stages, when you know how good you really are and you have positive references, you can offer your services according to these established types of pricing:
- Pay per use – you get paid (by the minute) only when the customer needs your services. This type is often found in IT and with expensive lawyers.
- Hourly fee – but not only for sitting with your client, but also for preparing/writing/building/creating things for them. Exception: you are a psychologist, a doctor, a physio, a trainer who can only work in the presence of the client.
- Project fee – here the completion of the project counts. But if you underestimate the volume of the task, you tend to charge too little. Usually the client is happy that you spend more time on him than he has to pay, so make sure that there is a fixed time quota, exceeding which allows you to enact type 1.
- Retainer – Your client pays you a fixed amount each month for the probability of ordering your services. If a fixed amount of time is exceeded, type 1 kicks in. In the retainer model, you usually do not have to pay your client back for unused time allotments; you may adjust the fixed time only if the client consistently goes over or under the limit.
- A happy mix of all 5 types.
A resource problem occurs when you have few employees and many retainers, and due to some external coincidence (like the Y2K bug), all of your clients want your services at the same time. In this case, you should have built up a strong network of qualified freelancers (whom you pay above market rates) to fill in for you.
However, it is important to contract all terms (fees, deadlines, override strategy). In times of trouble, misunderstanding or litigation, you can refer to it. Templates for such contracts can be found on the Internet. If you are a member of a professional association, they can often give you free advice or put you in touch with a trustworthy lawyer who will review your proposed contract.