The global market doesn't care about your local rate, but I do.
Many think the rate should be reflected based on their location or experience outside of freelancing or freelancing platforms like Upwork.
It’s also a huge misconception when it comes to hourly rates on platforms like Upwork:
“Just be ready to get paid 20 bucks per work done.”
“$20/hr is ...not a competitive rate for a professional”
“Personally $20 is not much for anything, in all due respect.”
For context, $20/hr was my example rate in a previous post on pre-freelancing.
Here is what to keep in mind when thinking about your initial rate (let's continue to use $20/hr as an example) on Upwork:
When someone is looking for a freelancer, their location takes priority. Not yours. If someone in Iowa comes across a developer in Silicon Valley, they don’t need to accept that's the going rate of that area. Would it be nice if they did? Absolutely, but they're acting in their best interest to get work done.
Your competition is global now, no longer local. This is a potential client, not employer. The average hourly rate in San Francisco isn’t globally accepted.
Everyone needs to start somewhere. Just like in the corporate world, entry-level jobs are necessary before senior roles. Your accolades outside of freelancing help you land clients but it’s not often the deciding factor. They will be much more valuable in the long run.
But when starting off? Nobody cares if you worked at Google/Facebook/Netflix/Bob's Burgers, you could still suck at freelancing on your own. Time to show and prove otherwise.
This is oddly common. Many people think freelancing is a replacement for a full-time job, and although it can be, it’s not. In most cases, it’s used as supplemental income. As in you're home from work (or it's the weekend) and need a few extra bucks for a vacation trip, what are you going to do?
You can freelance for a temporary lower rate or you Uber people around. Nothing against Uber but, freelancing is a more scalable solution because you can build the relationships and reputation to go full-time.
This is so common that I named my personal site freelance after five. The operative word is after as in after your 9-5 job :)
Here are some ways to get to your ideal rate ($80/hr)
Make your initial projects smaller. Offer a lower rate and time box it for a limited time
Let's say you land a $20/hr project and complete it within a month.
Land two of these projects in your most comfortable development area (front-end, back-end, etc) to keep it simple for you.
After that month has passed, raise your rate $5-10 for the next batch.
Now aim for a couple $30/hr projects.
Once those projects are completed, you can now be a little more confident in charging $45-55/hr, and it only took you two months. Imagine what can happen in a year.
It would take years to get this type of growth in the corporate world, the average is 2%-5% increase annually unless you switch jobs. With freelance, it's not uncommon for a 100% increase.
Let’s hack the first tip of smaller wins. What if you have a project and it’s lasting longer than expected. You're valuable to the project because you are still on the project. Ask your client to increase the rate. No magic. No explanation. Just ask. Ever heard of the coffee challenge? (watch, don't skim)
You: Hey, are you ok with the current quality of work?
Them: Yep, it’s great!
You: Mind boosting up the rate $5 or $10. I’d really appreciate it!
What are they going to do? Kill the contract because you want to be compensated for your growth? The most they can do is say “No”. Just follow up with “Ok, thanks!”.
I was going to give a neat example of how to ask AND provide a good reason why. Then I decided, screw that, time to learn to deal with rejection! It will only make you stronger. Sorry, maybe next time :)
I would consider this a hack but, Upwork has a program to bring clients into Upwork as a referral. For bringing them in, they wave fees.
For someone who has been using this platform for a pretty long time, I find this to be great. When people reach out to me to start a project, I always point them to the signup page on Upwork first. Why? It’s simply more convenient for both of us.
Once you have a decent Upwork profile, make it public and share it with people outside of Upwork. The problem you're solving is universal, not Upwork specific. Only people who worked with you can review, so It holds much more weight, this is why it's more powerful than google and facebook company reviews.
I’ll leave you with some fun things to ponder for next time you’re feeling defeated about your initial low hourly rate:
- This is your lifetime initiation fee into freelance
- You’re competing globally NOT locally
- This also will help outside of Upwork
I also have pretty unpopular opinions on free work if you are interested in a change of perspective.
Hope this helps, let me know if otherwise!