How much to charge for an Online Job?

One of the “must ask” questions when starting an online freelance career are how much should I charge for my services?, How much should be my billing rate?, How do I determine my bill on a per project basis?

If you work as a software programmer, web developer, data entry encoder, virtual assistant, translator, pro blogger, and copy writer one could easily acquire that information by looking at the rate distribution of Odesk providers.

Odesk Provider Rate Distribution (as of January 02, 2009)

How Should I Determine My Rate?

Now that you have the range, you could then determine what your starting rate should be on at least these following factors: the experience you have on that particular task, the certification or recognized credentials you hold, your command of English and the length of time you have been working.

A good strategy when just breaking into the business is to charge the minimum range then try to get customer feedback. As your “good” feedback increases (as with your online reputation) then you can consider increasing your rate.

How do I know when I should increase/decrease My rate?

When times are tough, money is scarce. To remain competitive you have to drop your pricing. When jobs are a plenty and labor is hard to find, then it would be good practice also to increase your rates. Use the Odesk rate distribution as your basis for computation.

By how much should I increase my Rate?

Most companies have a yearly practice of increasing pay rates by about 10% (usually), if you have a bad performance compared to others then you could get less than that. That could be a guide for you on how much to increase your rate.

Of course if you’re taking on jobs quickly and packing in the customers who give you good feedback, you should consider giving yourself a rate bump to maximize profits even further. When jobs become scarce however, you should then think about discounting your fee.

Just like any business, your prices should always be dynamic and seasonal. Because sometimes you will be just trying to get buy, but hopefully most of the time, you will be trying to maximize profit so that you will have enough left over to get you through the times when jobs are thin.

What if its a Project Based engagement and not Hourly?

If that’s the case, you could determine your project cost by estimating how much time it will take you to complete the project then multiply it with your hourly rate. Add in your discount to sweeten the deal and to be more competitive.

A little Caveat when taking on project based assignments is to make sure that all deliverables are well documented, specific and agreed upon.

This will protect you from buyers who keep asking for changes and features to the project that weren’t initially agreed upon but due to hazy descriptions of the project deliverables could be debated in easily as still part of the functional spec.

Instructions on how to get started at Odesk can be found here.