How to Set Your Hourly Rate — Business Pricing Strategies for Entrepreneurs and Freelancers

How To Set Your Hourly Rate — Business Pricing Strategies for Entrepreneurs and Freelancers

How do you set your hourly rate as a freelancer or entrepreneur online when you’re looking to be hired? If you’re trying to hire people online as employees or contractors, how do you work with people pricing to get the best service for the lowest amount or to pay an amount you feel is really good about, which might be higher?

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I’m Jerry Banfield and I’ve hired hundreds of freelancers and contractors online to work with me and what I’ll do now is share my experience with setting an hourly rate. I’ve also been hired to work for others by hundreds of clients in more than 20 different countries.

How To Set Your Hourly Rate — Business Pricing Strategies for Entrepreneurs and Freelancers

Therefore, I’ve got a very good experience on both ends of hiring and being hired. I currently have my hourly rate at $297 an hour and I obviously worked my way up.

I was working at $10 an hour after graduating from college, risking my life as a corrections officer for $10 an hour. How did I work my way up from $10 to $297 an hour? How can you get hired at the best rate and work your way up with employers?

I highly recommend you watch my video “How to succeed at everything online” to learn generally about how to level up your entire online presence and how to level up your hourly earnings.

Watch this video on YouTube.

If you’re new to working online, you might wonder, “Well, where do I start my hourly rate?”. You might look around at other people, try and see what their hourly rates are.

For me, there are 2 key factors that go into setting your hourly rate.

#1 is what do you feel really good working at?

It doesn’t matter if everybody else is working at $10 an hour. If you know you won’t do a good job at $10 an hour, the trick is to find what’s the minimum you feel excited to work at.

How To Set Your Hourly Rate — Business Pricing Strategies for Entrepreneurs and Freelancers

For me, the current minimum I feel excited to work at is about $200 an hour and I will make that rate available if clients order 27 hours with me at once.

I like working with the same client on the same project. That’s where I feel I can truly leverage my skills and that is the minimum hourly rate I am willing to accept now because I would rather do something else if it were going to be less than $200 an hour.

That is a handicap in some ways because I’m sure I could easily get full-time work at especially $30 an hour or maybe even $50 or $100 an hour. I could probably get full-time work if I wanted to with no expenses at those lower rates.

How To Set Your Hourly Rate — Business Pricing Strategies for Entrepreneurs and Freelancers

Thus, having a minimum that is higher can in some ways be a burden but at the same time, if I were to go on Upwork and start trying to work at $30 or $50 an hour, I expect I would not be happy doing that. I wish that I could do my own business and guess what?

If I do that, I’m taking the time and energy working for somebody else that I could put into working for myself. That’s how resentment builds up and all these negative feelings.

By doing that, we get sick and it’s a really negative feedback loop if you put your hourly rate lower than you think is what you are happy to work at.

How To Set Your Hourly Rate — Business Pricing Strategies for Entrepreneurs and Freelancers

How do you set your hourly rate?

That’s not to say lots of people don’t do this on a regular basis but the key starting point is to find if you want to get hired, what is the minimum hourly rate you would be very excited, grateful and happy to work at?

I’m happy to put what I’m doing aside when a client wants to hire me for 27 hours at once and pay for all of that at once at $200 an hour. I’m very happy to put what I want to do aside and take a little less time to do what I want to do because that’s a lot of money to me right now.

I’m very happy to get $5,000+ to do a week of work for a client.

How To Set Your Hourly Rate — Business Pricing Strategies for Entrepreneurs and Freelancers

When I started my business, I would have probably put in a month for $5,000. I didn’t have this much to do and maybe in a few years, I wouldn’t accept $200 an hour because of all the other things, the other financial opportunities and all of the other work I would be doing.

Thus, the hourly rate is something that’s very flexible. What you charge today may be different than what you’ve charged yesterday or tomorrow, but it’s essential you get that foundation point that is unique to you.

If you see jealousy or envy coming up by reading this like, “Wow! What a jerk. This guy wouldn’t work for less than $200 an hour. My Gosh! What an ego. When an attitude”.

How To Set Your Hourly Rate — Business Pricing Strategies for Entrepreneurs and Freelancers

Remember: I was working at $10 an hour risking my life 13 years ago as a corrections officer. I understand what it’s like to just take any kind of work to make ends meet, feed myself and have a place to live.

I learned the hard way as I got very sick when I was a corrections officer physically, mentally and was in the middle of my alcoholism. I had a rough life as long as I was willing to just do whatever it takes to earn some money.

Therefore, when you just show up, try, and do whatever it takes to earn money, there are a lot of negative consequences of that. Today, I would rather sit on the side of the road and do nothing than to do something at an hourly rate I’m not excited about.

How To Set Your Hourly Rate — Business Pricing Strategies for Entrepreneurs and Freelancers

That’s what I’ve come through going through things the hard way. I’m more willing to compromise on where I’d live. I’ll move in with a friend or a family member and each different life situation can motivate us.

Maybe if I lived with a friend or family member, I’d be more willing to accept a lower hourly rate. Who knows?

The key that’s critical is to accept exactly where we’re at today and in accepting where we’re at today, we know what to do and it’s up to us to set that minimum boundary.

How To Set Your Hourly Rate — Business Pricing Strategies for Entrepreneurs and Freelancers

If a client wants to hire us and we accept less than what we’re excited to work for then we’re setting up something that’s not good for anybody in the long-term.

For example, you say, “Well, Jerry. I’ll hire you full time for $100 an hour”. If I accept that and I don’t feel good about that then that’s not good for the long-term and while setting your hourly rate, you always want to think long-term.

How To Set Your Hourly Rate?

The second key consideration for an hourly rate is,

  1. What is your hourly rate today?
  2. What is the minimum you’re excited to work at?
  3. Think about the hourly rate for the long-term.

If today your minimum is $10, where do you want your hourly rate to be in a year?

If you want to be at $15, $20, $50 or $100, the question is, what do you need to do today to get on that path? If you accept to work at $10 an hour today, is that going towards your goal of being able to work for $15, $20, $50 or $100 an hour in the future?

How To Set Your Hourly Rate — Business Pricing Strategies for Entrepreneurs and Freelancers

The biggest limitation I see most people have is the work they have prevents them from doing more.

As long as I was a corrections officer working at $10 an hour, I was not on my way to working up my hourly rate. I had to take a job that paid a higher hourly rate and then take another job that paid a higher hourly rate.

Finally, I got to the point where I’m not taking a job that pays a lower hourly rate because if you look at the long-term trajectory, this is not going in a good direction. That’s how to set your hourly rate.

How To Set Your Hourly Rate — Business Pricing Strategies for Entrepreneurs and Freelancers

Ironically, there are fewer people available who are willing to set that baseline that I’m not willing to work for less than this because most people are very reasonable and agreeable.

Therefore, a lot of people accept an hourly rate that is lower and if you are one of the people who want to pay more and get the very best service, there’s less selection than you’d think.

Generally, if you want to work at a higher hourly rate, you have to have a refusal to work at a lower hourly rate. That’s how to set your hourly rate.

How To Set Your Hourly Rate — Business Pricing Strategies for Entrepreneurs and Freelancers

How to set your hourly rate?

For me, the key thing is, do you believe you’re worth hiring at whatever rate you set? I am certain that I am worth hiring for $200+ an hour. Why?

People who have already hired me for that much, I’ve seen that they pay me a few hundred dollars an hour. I help them make thousands of dollars extra. I know that I am worth that hourly rate.

When I graduated from college, I had very little confidence in what my hourly rate was. Had almost no confidence that I could help someone else earn money as a function of the money I was being paid and that’s how I ended up working risking my life for $10 an hour as a correction officer.

How To Set Your Hourly Rate — Business Pricing Strategies for Entrepreneurs and Freelancers

I didn’t see that I had much value to contribute except I would get resentful. I would look around at other people, judge and say, “This waitress is earning more money than me waiting tables and I’m risking my life as a correction officer. She’s making more money than me”.

I used to get a look around, get resentful and envious. That’s how you know you are not valuing yourself enough.

I am aware that there are people charging thousands of dollars an hour. There are people charging hundreds of thousands of dollars a week for their time. Today, that sounds great.

How To Set Your Hourly Rate — Business Pricing Strategies for Entrepreneurs and Freelancers

I’m glad people are charging that much because then it’s possible for me to charge a hundred thousand for a week if somebody else is already doing it. I’m inspired by seeing what other people are doing because I know that’s possible for me also.

Thus, the attitude of setting an hourly rate is critical.

Setting up our hourly rate is essential for success. You need to set your hourly rate first and then look around to apply for jobs.

This is helpful because if you know what you’re not willing to accept, you know where not to waste your time. There are so many jobs and opportunities out there. If you know you’re not willing to work below a certain point, you know where not to apply.

From what I’ve seen, it’s more valuable to know where not to go many times than it is to know exactly where to go and what type of clients you don’t want to work for.

One reason I set my hourly minimum at $200 an hour is that I don’t want to work for somebody who’s paying less than $200 an hour. The kind of client that will pay me $200 plus an hour, the kind of client I want to work for.

I don’t want to work for a client who is shuffling around for $10, $20, $30, $40, $50 or even $100 an hour because the client is not ready to handle my level of service, experience, and ability.

Freelancers who apply at hourly rates they are not clearly happy with and then try to raise those hourly rates often double and sometimes even triple what they originally applied for.

To me, as an employer, I feel deceived that you applied for $6 an hour and now you want much more than that. It was not an honest application. It was an attempt to just get in the door and get hired based on a lower hourly rate and now you want to get way more than anybody else is getting.

Hourly rates obviously fluctuate. For example, if you’re in India, Bangladesh or Philippines, $10 an hour there is a lot different than $10 an hour where I live in St. Petersburg, Florida which is close to minimum wage.

If I hire someone in the Philippines for $10 an hour or Portugal, that’s probably equivalent to $20 or $30 an hour where I live, which is certainly decent. That’s enough to have your own place and to live comfortably certainly.

I obviously as an employer like to hire people if I don’t know them. That will do the best work for the lowest price. That’s natural. At the same time, there are certain kinds of work that I’m willing to pay much more for.

For example, if I’m paying to have someone edit and transcribe my videos into a blog post, well that’s something I’d rather pay the least possible for the best result.

I’ve hired a man in Pakistan for $10 an hour. He does a good job transcribing the videos into blog posts. It costs $40 to $50 to have one of my 10, 20 or 30-minute videos turned into a blog post which then has the opportunity for me to earn income indefinitely.

That’s a good deal for me and it’s a good deal for him because $10 an hour in Pakistan is probably about $20 to $30 where I live. That’s more than I made for the first several years of my career.

For trust-based work, I am willing to pay much more for that. If you want to get your hourly rate higher, you want to work that’s trust-based.

For example, if I’m allowing somebody to log into my computer then I want to pay more money. I don’t want to just hire anybody for that. I want to hire somebody that I trust and then I’m paying them more.

Therefore, having a trusting relationship with somebody is a good way to pay more and just applying for jobs where you don’t know anybody, you’re often minimizing the hourly rate and the potential you can get.

How do you set your hourly rate?

To set your hourly rate, you want to make sure you are putting yourself in the best position for success by having an hourly rate that is at/or above your minimum but once it’s at/or above your minimum, it also can obviously depend on what kind of work you want to do.

There are certain kinds of work I would not accept for $200 an hour. There are other kinds of work that theoretically I might accept less than $200 an hour.

For example, if you want me to go do something that’s really fun that helps promote my brand, yes, I might accept to work for less than $200 an hour for that.

Therefore, the exact kind of work you’re doing can have an impact on your hourly rate. It is up to you to decide what work you apply for and to figure out what skills you have that you can earn the most with.

Trial and error are unfortunately one of the main ways you go about this but you’ve really got to know yourself.

You need to know what skills you can help people with and where you can find people that need help with those skills and then you can often get a much higher hourly rate than just generically applying for jobs.

Many of the people I’ve hired at lower hourly rates are what I would say undifferentiated. It’s difficult to tell what’s special about them and the kind of work they’re doing is something that is easily done by other people.

If you want to get to a level where I’m at of charging hundreds of dollars an hour, your work needs to be differentiated where if someone looks to hire you, they don’t know of anyone else they could hire to do that specific work.

That’s how you can really level your hourly rate up over time and that’s how you set your hourly rate.

Thus, I hope this guide on how to set your hourly rate has been helpful for you. I appreciate you learning how to set your hourly rate with me. I love you. You’re awesome.

Love,
Jerry Banfield