Freelancer pricing models — how to charge for services

Is your pricing model hindering your growth?

Photo by Austin Distel on Unsplash
  1. Hourly
  2. Custom project-based fee
  3. Day rates
  4. Services Menu/Packages/Productized Services
  5. Hourly-based retainer
  6. Deliverables-based retainer
  7. Role-based retainer
  8. Performance Bonus
  9. Royalties/Partnerships

Short-term engagements

Level 1: Per word/image/page

Many freelancers, particularly writers, start out with this model of charging per word for their services. In a recent study, I discovered that only copywriters working less than two years listed “per word” or “per hour” responses to project estimates.

Level 2: Per hour

Freelancers (and those hiring freelancers) will often default to an hourly rate because the model is familiar to them. Most corporate jobs pay hourly and even salaried jobs are based on an estimated hourly output.

Level 3: Custom Project-based quote

The most common freelancer pricing model is project-based billing. After a prospect call (also called discovery call or introductory call), the freelancer creates a custom quote based on agreed upon deliverables.

Level 4: Day Rates

Day rates combine the benefits of the hourly and project-based models. Freelancers that bill by the day provide prospective clients with an estimate of work that can be completed in a “working day.” How many hours are in a working day varies per freelancer. It could be as little as four hours or as much 8–10.

Level 5: Services Menu/Packages/Productized services

When freelancers have a set services menu, this allows clients to know exactly what they’re getting for the price. It also allows freelancers to limit their service offers to what they do best and provide the best results for their clients.

Long-term engagements

Level 1: Hourly-based retainer

A retainer describes a monthly fee for regular and consistent work. This allows freelancers recurring revenue while saving the client time (and sometimes money) as each project is not negotiated separately. Retainers could include consulting, editing, writing, designing and more.

Level 2: Deliverables-based retainer

Similar to packages, deliverable-based retainers are great for clients that have a predictable, regular set of needs each month. A common use case for deliverable-based retainers are blog or social media content. Each month, a freelancer can produce weekly blogs and create associated social media posts.

Level 3: Role-based retainer

The role-based retainer is the model that most closely resembles a job. This is where the freelancer is hired to perform a variety of services on a regular basis in exchange for a set monthly fee.

Level 4: Performance Bonuses

Performance bonuses can be used in conjunction with any of the other pricing models as an incentive for the freelancer’s work to produce the desired outcome. It can be used to offset the risk of an hourly arrangement.

Level 5: Royalties/partnership

A Royalty (also called residuals or commissions) is a percentage of sales that a freelancer receives. This incentivizes freelancers to create the highest converting work possible. In practice, an looks like this:

  1. The copywriter writes a sales letter
  2. The client promotes or mails out the letter
  3. The copywriter collects a percentage of sales as long as the letter is being used by the client (in perpetuity). Although the copywriter may tweak or update the letter for higher conversions, they are no longer obligated to do any work to receive the royalty check.

Been a direct response copywriter since 7th grade when I wrote a 30-page sales letter asking my crush to the dance. freelancecoop.org