Freelance Pricing Models Explained (retainer, hourly, project)

Hello, hello! Welcome back to the Freelance Friday podcast. I want to talk about pricing today. There is a lot to say about pricing. I've got a couple pricing videos on my YouTube channel. If you want, kind of like me doing the math, I also have an in-depth pricing workshop in the Social Media Management Accelerator. If you want to check that out, but I wanted to first just kind of like break things down, go back to basics of the different pricing models that exist for freelancers, for any freelancer. So I want to talk about the three most common pricing models today and share my pros, my cons for each of them. I've worked on all of them and I have preferences. I I go back and forth sometimes. So let's talk about it. Metricool is the sponsor of the Freelance Friday podcast. Metricool really is the Swiss Army knife for social media managers. If you've been looking for an all-in-one social media management tool, Metricool is your answer, and it's free today, tomorrow, and for life. Their free plan is absolutely amazing. With their free plan, you get access to in-depth analytics to make more strategic decisions. You can plan and auto-schedule up to fifty pieces of content per month to save time. You can promote your posts in seconds by creating and managing ads directly through the platform. They also have this really cool best time feature, so you can see when your followers are more active and know when to post. You can review and reply to all important social media messages with Metricool's inbox feature. You can analyze up to five competitor profiles to spy on brands you like and so much more. It truly is a tool that you'll want to add to your social media toolkit. And if you think the free plan is jam-packed with features, you have got to check out their pro plan, which you can get access to for free for thirty days using my code Latasha and the link down in the show notes. So first off, there is hourly pricing. I think this is the one that's probably the easiest for everybody to grasp because I'm sure we have all probably worked an hourly job at some point in our life, right? I worked retail in high school and college. I worked at restaurants and freelance hourly pricing is exactly the same, right? You set a rate for your work and you get paid based on that. The thing with hourly pricing for freelancers compared to like my job at the mall in college is hourly rates should automatically start much higher than whatever minimum wage is or whatever even just an acceptable hourly rate is at like a store or something like that. And the reason for that is because of course I'm sure you know as a freelancer you have to account for taxes, operating expenses. So when I worked at the mall, there was workers' comp, insurance, whatever in case I got hurt on the job. All of the supplies were and and product that I was selling was purchased by a company. Um, my taxes were taken out of my paycheck, right? So those were all things that. The company was providing for or or taking care of on my behalf. Whereas when you're a freelancer, you have to think about all of those things. You have to buy a camera if you're going to shoot video content. You have to buy a laptop. You have to pay for internet service. You have to save thirty percent at least for taxes. So you definitely do not want to be charging ten dollars an hour. My first freelance gig ever, like my first long term freelance gig, was like twenty dollars an hour, which is still probably way too low. When I actually do the math on that, yeah, I was making about minimum wage after all was said and done. But you can look up your average hourly rate for freelancers in your category on lots different websites. Like I'm pretty sure Upwork shares for some of the more common categories their average hourly rates. You can use a site like PayScale or Glassdoor. But again, just remember that those salaries, those rates, are probably going to be more focused on in house employees. So do your math accordingly. Let's talk about the pros and cons though of hourly. So the big pro is that it's really easy to forecast. It's really easy to quote. It's really easy for clients to understand. If you say, "Hey, client, this is going to take me five hours, and I charge fifty dollars an hour," they understand that, right? Like, there's no complexity. There's no variables involved. Like it is what it is, and it's also nice because. When you're first starting out, at least. This is when I charged hourly the most was when I was first starting out, and I really didn't know like how to create a package, which we'll talk about in a second, or retainer. I just didn't know how long things were going to take me. I didn't really understand the value of what I was offering yet. So, some of those more complex pricing models were just intimidating to me. And I think you know we often talk about like packages, right? We talk about these long packages are going to be the best value for you as a freelancer, and that's probably true. But when you're first starting, you haven't yet developed that confidence in your offer. You haven't yet proven to yourself or to anybody else that you can actually get the results that you're saying that you can get in most cases. And so, I think hourly work is actually a little less intimidating, and it's more just kind of like you get what you get, right? I showed up to that shift at the mall, and they had to pay me because I showed up, not necessarily because I sold thousands of dollars in products. I got the same when I worked at the mall, whether I sold thousands of dollars or whether I sold nothing. And I think sometimes it's easier to kind of rationalize and justify when you're new and you haven't yet developed that confidence in your offer and or in your pricing models and the value of what you're offering. Now, the con is pretty obvious. I think of hourly work in that it rewards efficiency, not impact. So I always use this example, right? When we think about like Instagram, if you're a social media manager. You can take high quality photos that are going to be able to be repurposed over and over again, right? Every green, or you can shoot like a beautiful brand video that's going to live on Instagram that again can be repurposed multiple ways. Maybe it's you know twenty minutes long, so they've got multiple different cuts they can make of it, or you can post an Instagram story that lasts for twenty four hours. It's typically shot, you know, on an iPhone, grainy, footed, right? And you could get paid the same amount for both of those types of creators if you were just going off of hourly. Think about digital marketing, right? Same thing. You can post an Instagram story, or you can build a website in probably the same amount of time. I'm pretty efficient. I've been building websites since I was like eighteen or something. They're not anything super fancy, but if if let's just say I don't know Microsoft hired me to build their website on Squarespace for some reason, I could be making them millions or billions of dollars from that website versus a mom and pop pizza shop who hired me to do Instagram stories for the same amount of hours. The value is very different for your time. You know, for for my time for those different services, even if they take me the same amount of time, so that's the big con. I think the idea is that you kind of graduate from hourly once you start to learn your impact, once you understand the value which you're providing, which you build up that confidence, time to start to build out packages based on that or retainers, which which we're going to talk about now. Okay, retainers are an interesting one, and I think they're a little bit less common, but they have been really good to me, honestly, over the years. I don't get them all the time, and and I'll talk about why when I talk about the cons. But first, what is a retainer? A retainer is basically reserving your time more or less. That's the best way I can think to put it. It is where a company will say, "Hey, Natasha, we would like to retain your social media management services, retain your video services, retain your marketing, whatever your consulting, any type of service for twenty hours a month at five thousand dollars a month." That's just an example. I had a video retainer client, for example, where there was basically a. Rubric essentially, or a list of deliverables and hours that I was able to work up until I don't remember the specifics of this one, but I think it was like up to two videos a month, equalling about ten hours of work a week or something like that. Don't quote me on that. Just using examples here, and that retainer was five thousand dollars a month. Now. They were a startup and they had a lot of things going on, so there were always delays. There were sometimes revisions, so I was sometimes working on one video for two months. Some months they didn't have any work for me. Some months they had one, but you know I did one video or I did an equivalent, like I did other consulting work that equaled out to that ten hours, and I still got paid five thousand dollars every single month. So there is a very obvious pro there in that you're getting consistent income, which makes it really easy to again forecast. Like I could easily project my revenue for that year because this client signed a contract for six months or a year, however long, at five thousand dollars a month. So assuming something really bad didn't happen and we didn't go separate ways, I knew I was at minimum going to make whatever that is sixty grand or whatever for the year. Off this one client alone. And I could also then easily figure out. Okay, well, they're reserving ten or twenty hours or whatever it was a month from me. So that means I have X amount of hours left over. That I could go work with other clients, so it's like easy to forecast both your time, your income, and it is consistent income. And the other pro is that you know some months are going to be like really, really chill and really easy for you. I mean, some months, like I said, I was just working on revisions or doing more consultative work, and I wasn't actually in the thick of it shooting a bunch of videos. But the con is other months I was using up all of those hours and really really busy. But I mean I think that just comes with you know freelancing in general. There's going to be really busy times. There's going to be slow times. So honestly that didn't really bother me too much. I really like working on retainers. I guess yeah the inconsistency though can be a bit of a challenge. At my last corporate job we had an agency on retainer. They're just kind of like more advanced than what our in house me like in house marketing team was. So if if we had like questions about ads or if we needed them to run really high budget ads that I wasn't as knowledgeable about running or we needed creative work done, they kind of were like a full service agency that could help us with that stuff. And one of the things that I always saw as a negative for them, from the outside looking in, was that they kind of felt very corporate. Like it felt like they were a part of our team. Which I guess can be a pro or a con. It just depends on your working style. But yeah, if you're on retainer for a company for 40 hours a month or 20 hours a month or anything like that, you're going to be having random employees emailing you all the time. They're going to be inviting you to meetings all the time. That sometimes you know you just have to be on. So I personally don't know if that is. I don't know. It just depends on what you want to do. There are, like I said, pros to that and cons to that. The nice thing is that sometimes it is nice to feel a part of a team. It is nice to be included, but the con is that maybe you feel a little bit less like a freelancer and more like an employee in that role. I could definitely see that happening. When I've worked on retainer, that typically hasn't happened; like that hasn't been the case. But I've usually worked on retainer for companies that were like in other countries and way different time zones, so it kind of comes with the territory that there's going to be some communication delays and things like that. So I've felt a lot more independent in those roles. That's what a retainer is. If you are working hourly for a client and you're producing, you know, around the same deliverables every month and working around the same hours every month, pitching a retainer can be a smart thing to do, just so that you're not having to track your time any more, and you can also offer a discount to your clients that way too. Like let's say that you're averaging twenty hours a month, then you're charging. I'm just going to say ten dollars an hour, so I could do the math easily. Don't please don't charge ten dollars an hour, but twenty hours a month, ten dollars an hour that's two hundred dollars a month, right? Well, maybe you say, hey, if you're willing to pay me the same amount every month. Up to that twenty hours, I will charge you one hundred and eighty dollars instead of two hundred dollars. You know, so you can give them a little bit of a discount to incentivize them to offer you that consistency and that recurring income. Okay, and then the last. Pricing option that I want to talk about today is packages or our packages. This is something that I think is probably the most common for social media managers. For example, you know, you might say there is a silver package that has five posts per week on two different platforms, and I create the content and I write the copy and I schedule it for you. And then there's the gold package, which is seven posts a week on four platforms, and so on and so forth. And you kind of like itemize the deliverables that you're going to be providing. And it is the same rate, no matter. How many hours it takes you, no matter what type of client it is, it's twenty five hundred dollars a month, thirty five hundred dollars a month, or whatever that price point might be. So, the big pro of packages is similar to retainers. It's easy to project your revenue, right? I need to sign five clients at twenty five hundred dollars a month to make my revenue goal, or or whatever that might look like for you, for example. And that's really nice because it gives you like solid goals to reach for. Whereas hourly can kind of be like, oh, I signed this new client, but one month they're only using me for five hours. The next month they're using me for thirty, so it's really hard to get an average income. You know, the other pro is that it's very like productized in that you can kind of rinse and repeat this process. Unlike hourly and retainers, you're kind of working very reactively, right? You're like, oh, okay, if the client calls me into a meeting, I guess I gotta go. If the client has work for me to do hourly, I will do it. Whereas packages, you're really, you're really like leading the charge. I feel like packages are very. You're taking ownership. You are a true business owner. You know what I mean, and you are you are prescribing. You know, you are not being reactive. You're prescribing. This is what I am going to provide you. It's like if you think about. I don't know. Ah, Pilates, for example, I buy a Pilates package from a studio. I didn't go in and say, "Can I pay you, you know, fifty dollars an hour, a hundred dollars an hour?" They said we have a four class pack and eight class pack. We have classes on these days, and for me that was very helpful. I actually asked when I first got started with Pilates. I was like, "Well, what do most people do? Like, these are my goals. How often should I be coming in? What should I be?" Paying for if I want to reach those goals, and I look at my Pilates studio as the subject matter experts. I look at them as the people who are going to help me do what I want to do. I respect their opinion. I respect their expertise, and so I signed up for what they told me to basically. And so, similar thing for a business owner: you are the service provider. You are the subject matter expertise. So you should really be prescribing. That for them, you know, if you want to grow on social media, I recommend that you post five times a week. Here's the package. For example, now with that said, I don't necessarily think that this is like the gold standard, and that it works for every type of freelancing or even everybody or every season. Because the big con is that it can be very restrictive. I see this happen a lot. Social media managers will be like, "Oh, well, this client wants six posts this week because it's the holidays, and so I'm going to charge them extra because that's out of scope of our package." And it's like I get it. I definitely understand if it is consistently being abused, being taken advantage of. Absolutely, you should charge extra. But I think a lot of times it just comes across as very rigid. You know, if my client needs an extra post or an extra call or blah blah blah blah blah, I'm typically just going to do it as a service to the customer. Again, assuming it is not being disrespected. But I do think a lot of times service providers can get themselves in this state of kind of like. I don't know, being too rigid with the packages, and not every client needs the same thing with that side. You know, sure, I do technically have packages outlined, and this is what I teach in SMM. I teach people, you know, create packages, but really keep them for use so you can build your proposals off of them. I have my standard rates and my standard kind of deliverables in my head and in my computer, but I'm still going to approach every single client as a unique client with unique needs. Some clients need four posts, some clients need six. You know, so the packages kind of just a guide, and then the other con for both packages and retainers are that they're locking you in. Now that's again, it's a pro and a con. It's a pro for consistency, for revenue, recurring revenue, but it can be a con if you are looking for more flexible work. Like I'm kind of in a season right now. I just prefer one-off projects, like not recurring packages. I don't, I, I don't really want to sign anyone for six months, every single month at this state in this season of my business. That there will definitely come a time where I want that again, but right now it's like I'm kind of trying to travel a lot more. I'm figuring out kind of my groove with this studio and all of that, so I want to be able to some months work a lot and some months work a little. I'm also a content creator, so like I want to be able to focus on this podcast and all the things. So it can be a negative if I'm like wrapped into a retainer or a package for a long period of time, because then I don't get to work on my own stuff or my passion projects or or my personal life or whatever. So that can be a pro and a con. So yeah, like these days, honestly, I do one-off projects a lot, which you know is very much like a package. It is a package. It's just when we think about something like social media management, for example, typically that's a monthly package. Whereas what I do here in the studio is I do a one-off package, so you can come in and shoot thumbnail photos for your YouTube videos, or you can film one video or one month worth worth of podcast if you do my like VIP package, as opposed to every single month on the same day at the same time. We're doing this. I don't really do that as much just because you know my schedule is a little bit more unpredictable, and that's just kind of the way that I prefer to roll at this moment in time. And one-off packages or projects are a lot more common for different type of types of services too. So, for example, like a website design or photos, videos, what else? Hair and makeup, right? Those are like one-off projects or packages as opposed to recurring packages. So just keep that in mind too. So yeah, I would say those are the the most common pricing models for freelancers. They really do all have their pros and cons, and I personally don't think any of them are bad. I think some business coaches and creators are like hourly is terrible. There's a time and a place. There is absolutely a time and a place for it, and I still sometimes charge hourly if it's like a new service. I'm like I don't really know or. If I do just want something that's more flexible, I still sometimes charge hourly. So I don't know if that makes me bad. Actually, I don't care. I say here's here's the thing. Here's the thing I'm going to leave you with. Pricing is personal. This is what I tell all my coaching clients, all my students, and SMM. You really have to feel good about the rate and the type of pricing model that you are charging. No one else can tell you what is right for you. So keep that in mind and go with something that's going to make you feel good. But I hope this episode gave you a good starting point. So thanks for tuning in. I appreciate you, and I will talk to you in the next episode. Bye.