Perhaps one of the most important aspects of dealing with your clients is setting the prices that they will pay for your services. This is a task which must be conducted with a great deal of care. If you set your rates too high, you may push away potential clients. If you set your rates too low, you will invite cheapos, and you will also have to complete an enormous amount of work in order to make real money. The first step in setting your rates is to spend time analyzing the competition. Studying the competition will give you a good idea of where your prices should be set.
However, when evaluating your competition, you will want to do more than simply look at their prices. You will also want to analyze their level of education, experience, and work in order to determine why their prices are set at the rate they are. I would recommend checking the prices of a group of competing freelancers in order to come up with an average rate. In case you forgot the mathematics behind finding an average, you would add together the total amount that the freelancers all charge for their work, and then you would divide it by the number of freelancers you tallied.
For example, if you have evaluated three freelance programmers, and one charges $16 per hour, the second charges $22 per hour, and the third charges $15 per hour, then the average hourly rate charged by these freelancers is $17.66 per hour (22 + 15 + 16/3). This should give you a good idea of how much you can charge per hour, and you can evaluate your own experience and work with those of the competition in order to set a reasonable rate for your services. It is absolutely crucial for you to research the industry in advance, because you will frequently run into cheapos who will attempt to pay you less than what you're worth.
However, if you've done your due diligence, and you are aware of the average rates which are charged in your industry, you will be one step ahead of them, and you will be able to charge a rate which is acceptable for your level of experience and skill. Of course, as your skills go up, so should your rates. You should constantly make a side-by-side comparison with yourself and other freelancers in order to decide when and if your rates should be increased. If your skills are equal to or greater than, say, a programmer, who charges $25 per hour, then you should consider raising your rates to this amount.
Another situation that can cause you to increase your rates is an increase in your client network. As you successfully complete jobs for more people, your skills and reputation will grow, and demand for you will be high. One inevitable consequence of this is a situation where you have multiple clients sending you projects simultaneously, where you only have enough time and energy to complete a few of them successfully. When this happens, it is a sign that your demand has gone up, and you should be prepared to give yourself a raise.
The best strategy in this situation is to get your clients to compete for you, to bid for you as if you're an item in an auction. For example, if you have five clients that all need projects done around the same time, and you know it is not possible for you to complete them all with the highest level of quality, you will want to email each one of them to let them know that you would be happy to complete their project, but that you have other clients that also need their projects completed on the same schedule. You would then tell them that you can give their project the priority if they are willing to increase their rates “for now.”
At this point, many of the clients will respond and offer you higher rates so that you can complete their projects first. At this point, all you need to do is simply pick the client which offers you the highest rate. If everyone offers the same increased rate, then you repeat the process again, until the price is right.