I love this—I’d been mulling over a post about figuring out how to set your rates as a freelancer, and then a long-time reader of mine sent in the perfect question to get this discussion started. It’s fate, I tell you!

Alexa writes:

I currently work full time as an Events Director and do a little freelancing on the side. One organization that I do a project for every year, just approached me to do several more stories as well as pulling together editorial, managing submissions and proofing an insert for an event. The other jobs I’ve done I’ve been told how much I would be paid. For example the local paper in the area pays $50 per small article. When I first started the other job I do for this organization I knew how much they charged the person who did it before me, and I came in at a comparable rate. This job they asked me to give them a quote, and I was stuck. I came up with one, and all though I think it is a fair rate, I’m now wondering if I screwed myself.

Is the amount of work I’ll put into this worth the money? Although I think the dollar rate per estimated hours put in is more than fair to both of us, I still got a sick feeling in my stomach when I hit send. I think I felt sick because I knew I’d be a little overextended taking on this project. I went with a lower overall price than I wanted because it doesn’t seem fair to charge more because I’ll be stressed. How did you put together quotes when you started? Did you ever get a little nauseous while doing it?

I’d really appreciate any advice on this, or even just a link to a good resource. Thank you!

I’d like to start with the end of Alexa’s mail and work backwards. She said “… it doesn’t seem fair to charge more because I’ll be stressed.”

Is that a true statement?

I understand that the knee-jerk response to that, for most people, will be “That’s correct, your stress level shouldn’t figure into your rate.”

To me, that’s too simplistic. Do you get to gouge a client because of your stress level? Absolutely not—nor will the market bear that. Unreasonable fees are unreasonable fees, and you’ll soon have all the feedback you need to confirm them as such, because you’ll be sitting at home wondering why no one will hire you.

However, do you get to charge more for a job that’s extremely time-consuming, or stressful, or otherwise life-sucking? I say yes. Here’s the thing about freelancing: You’re the boss. You set the tone, you set the schedule. If you’re your own boss, why in the world would you willingly take on a project that both doesn’t pay what you’re worth and stresses you out? I mean, sure, sometimes you’re in a situation where you absolutely need the money—either you’re first starting out and building up your business, maybe, or business is very slow—but this is clearly not Alexa’s situation, because she has a full-time job already.

The over-arching question, of course, is how do you set your rate, in general?

Appreciate peer pressure. You need to know what freelancers in your field generally charge. That means finding out a nationwide average as well as what folks in your local area tend to run. You are looking for a range of fees; I know of no field in which everyone charges exactly the same amount. Maybe when you’re hiring Borgs-R-Us that could be true, but in the real world it varies. And hear me on this point: resist the temptation to bid lower than the usual range just to land a job. There are two reasons for this. First, if being paid less than what is normal is the only way to get that job, it isn’t a job worth having; and second, undercharging hurts everyone in your field (as I’ve discussed before).

Honestly assess yourself against the competition. Where in that range of values should your fee fall? If you’re just starting out, it should be on the low end of the scale. Obviously. If you’re a seasoned professional with the resume and client list to back up charging more, you’ll be higher up in the range.

Evaluate the mitigating factors. This is my favorite point, because it’s so variable, and yet it is so important. Very few freelancers I know have a fee schedule set in stone. We have a general approach, most of us, and then each job is evaluated against that and a determination is made. So what are your mitigating factors going to be?

1) Time: If it’s going to take a lot of hours in a short period of time, typically you’re going to charge more, because this job will be taking precedence over the other jobs you’d normally be able to work on during that slot. Conversely, if it’s just a few hours a week, but a long-term contract, many freelancers will “trade” a bit of their typical fee for that job security, and charge a bit less.

2) Usage: This won’t affect everyone (and I don’t know exactly what sort of freelancing Alexa does), but for writers and graphic artists and photographers—basically anyone who produces something which will be reproduced for the general public—you have to consider usage. The person who designed the FedEx logo gets more money than the person who designs a logo for a website no one’s ever heard of, right? And writers for Forbes get more money than writers for some ezine this dude started in his basement, right? Bloggers do not make as much as feature writers; I charge more for static articles than for blog posts. It’s all about how many people will see it and how long it will be around. [A quick side note here, and this could be a separate post but let's just leave it at this: I do not advocate signing away rights to your own work under any circumstances. If for some reason you do decide to sign over your rights, please make sure you are compensated accordingly.]

3) Aggravation: Oh yes. Yes, I did. Anyone who tells you they don’t factor this into their fee is either naive or lying. Again, you don’t get to just make up some outrageous fee and expect anyone will pay it, but an aggravating job should pay more, or why would you do it? And I won’t get into what makes something aggravating—that’s a very personal determination, and again, you have to factor it in amongst everything else.

Know thy client. A giant national conglomerate can (and will) pay you more than the mom-n-pop operation around the corner. Again, this doesn’t mean gouge the big guys and work for peanuts for the little guys, but it’s something to note and take into consideration. (Especially if a large company seems to expect you to work for nothing.) Large companies may have more guidelines, check-ins, and red tape than smaller ones, too—all of which should be considered in the “aggravation” component of your mitigating factors.

Know thyself. That nauseous feeling Alexa mentioned is a great indicator that she’s overlooking this point. Look, unless your kids are starving and this is the last job on earth, no one should be taking a job that makes them feel nauseous. Some jobs aren’t worth taking at all. Some are only worth it for a whole lot of money. You’re the only one who knows how a job fits into your life, and you need to be honest with yourself if you want to survive. Ignoring those niggling doubts and intuitions about situations only results in bad experiences (been there) and early burnout.

I don’t mean to hammer Alexa with that last point (particularly as it sounds like she’s already committed to this project), but it’s something to remember, going forward. At the end of the day, you have to live with yourself. Don’t brush aside what is real and true for you in favor of what you think you “should” do or feel. It’s not worth it—there will be a toll on your work and ultimately on your health.

So there you have it. All of the foregoing and a buck will get you a cup of coffee.