How Do Freelancers Charge for Their Services?

Hiring a freelancer to perform some kind of work is a common part of running a small business. However, many small business owners are unaware of how freelancers charge for their services. This article breaks it down to ensure you can understand how freelancers work.

What is a freelancer?

A freelancer is most simply, someone who performs freelance work. Freelance work is where someone works for themselves as a contractor, as opposed to being an employee for a company. A freelancer may be a writer, performer, translator, photographer or consultant, amongst other roles. In short, it’s anyone who performs contract work for someone else.

How do freelancers charge?

There are numerous ways a freelancer may charge their clients. These often depend on the type of work done, and the profile of the freelancer. Below, we break down three kinds of billing models: hourly, project-based and retainer.

Hourly charge

An hourly rate is arguably the simplest, and most common method of how freelancers charge. Furthermore, it’s the most flexible method and is generally preferred by most freelancers and businesses. Basically, the freelancer can charge whenever they perform work on the product for the client. This can include physical work, or even communication on the topic.

However, issues arise with charging by the hour. It can incentivise the freelancer to prioritise taking their time with work, as opposed to getting it done quickly. Similarly, if the scope increases, you may be footed with a larger than expected bill. Developers, personal trainers and labourers often utilise hourly rates.

Project-based

This involves a lump sum payment for working on a single project. Generally, it will have a start and end date, with 50% of the payment received at the start, and the rest of the payment received once finished.

It allows the scope of the project to remain well-defined, and the price to be easily accounted for in cash flow schedules. It incentivises the freelancer to finish the work as soon as possible, providing benefits for both parties. Furthermore, website developers, writers and videographers commonly utilise project-based fees.

Retainer

Retainer based work involves regular billing: hence the term ‘retain’. It’s an agreement between a business and a freelancer to perform work on an ongoing basis.

Retainers are useful as it provides predictable work for both parties, ensuring security in their work. However, due to it being a retainer, freelancers can potentially spend less time on their clients due to their ongoing commitment. The retainer model is often utilised by businesses who require ongoing work, which may include cleaning or website maintenance.

Final thoughts

Freelancers have numerous different methods they may use to charge for their services. Understanding these different methods is important to ensuring you’re able to make the right decision for your business. For further enquiries, a business lawyer may be able to assist your decision.

Don’t know where to start? Contact us on 1800 529 728 to learn more about customising legal documents and obtaining a fixed-fee quote from Australia’s largest lawyer marketplace.

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