4 Mistakes Freelancers Make When Setting Their Rates

Have you ever felt that setting freelance rates is like a high-stakes guessing game? Freelancers in the U.S. earn serious cash, with salaries ranging from $31,000 to $275,000 a year. With a pay scale as broad as that, nailing down the right number can feel like throwing darts blindfolded. And let’s face it, one wrong move could leave you overworked and underpaid.

The truth is that many freelancers stumble right out of the gate when setting rates. These early missteps make it harder to make money, forecast income, and grow your business. If you want to avoid common pricing pitfalls, here’s a breakdown of mistakes new freelancers often make and how you can sidestep them to start strong.

Forgetting To Factor In Admin And Opportunity Costs

While costs shouldn’t dictate your rates, they’re a big part of the picture. Unlike full-time employees, freelancers cover everything: tools, software, Wi-Fi, insurance, computer storage, web hosting, and more. Your rates should account for these expenses to ensure you’re compensated for everything you put into your work.

Then there’s the hidden drain of admin tasks: emails, billing, and project management. These tasks may not earn direct income, but they still take up valuable hours. Overlooking them can mean underpricing your services without even realizing it.

Opportunity costs are equally important. Say you’re an illustrator with two projects on your desk. One client offers $500 for a series of illustrations with a short deadline, while another project, offering $700, would require a bit more time but lets you work at your own pace. Taking the first job means you might lose out on the higher-paying one. In this scenario, that $200 difference is the opportunity cost. To set rates that make sense, break down your average workload, identify expenses, and ensure your rate covers all hidden costs.

Ignoring Time-Draining Clients

We’ve all dealt with the kind of client who, without meaning to, becomes a massive time drain. They message you at odd hours, expect real-time responses, and seem to think that scope creep is merely a part of the process. It starts with a friendly request for “a quick change,” which spirals into multiple rounds of revisions, and before you know it, you’ve invested hours of unpaid labor.

Setting rates isn’t just about setting a price; it’s also about understanding the hidden costs of clients who take more time than they should. This is where many freelancers falter: they set an hourly rate or project fee based only on the deliverables while forgetting to account for potential extras like additional meetings, feedback loops, and last-minute changes.

To combat this, be strategic about their rates from the start. Use time-tracking tools to visualize where your hours are going and reveal how much time is spent on unproductive tasks like over-communication. But tools alone aren’t enough. Set boundaries early with clear terms on communication, revisions, and overtime. That way, you control scope creep and protect your rate.

Setting Rates Based On “Average” Competitors

One of the biggest traps freelancers fall into? Trying to compete on price. Basing your rates on what others are charging is risky, especially when some of those competitors are working from places with a much lower cost of living. They can afford rock-bottom prices, but that doesn’t mean you should.

Instead, think of your rates as a reflection of the quality and value you bring to each project. Clients work with you for your expertise, consistency, and results, not just for a cheap price tag. Many will gladly pay your rate if you keep meeting or exceeding their expectations.

Anchor your rates to something that’s all about you: your business goals, your financial needs, and what it takes to deliver quality. When you peg your rates to someone else’s “average,” you risk undervaluing yourself without even knowing it. Worse, you could cover your expenses but never earn enough to truly support yourself. Sure, low rates might help you snag a few gigs, but it won’t build the kind of business that allows you to grow, sustain, or thrive as a freelancer. Think big, and charge accordingly.

Asking For Too Little!

Charging too little is one of the quickest ways to undercut yourself. It’s common, especially for beginners who aren’t confident yet or anyone battling imposter syndrome. But let’s be clear: if your work brings real value, that’s what your rate should reflect, not your self-doubt. Until you stand up for your worth, no one else will.

Low rates might attract clients quickly, but over time, they’ll drag down both your reputation and income. So, how do you determine a fair rate? Start by recognizing the value of your education, expertise, and skills. Reflect on your years of experience, track record, and what clients gain from working with you.

The longer you’ve been in the game, the higher your rate can (and should) go. For example, a freelance web designer with 10 years of experience should be charging more than someone with two years under their belt. Your rate will also depend on the uniqueness and depth of your skill set. If you’re a programmer proficient in three languages, that’s worth more than just one, and clients will recognize that difference. In the end, pricing isn’t just about what clients will pay. It’s about positioning yourself as the professional you are and ensuring your rates reflect the value you bring.

Setting rates isn’t easy, but it’s the backbone of a solid freelance business. By avoiding these common pitfalls, you’ll be on track to build a brand that’s profitable and respected. Think of your rates as a real reflection of what you bring to the table and what you want to achieve. When you do, clients notice, and they pay for it. After all, building a freelance career is about more than landing a few gigs; it’s about creating lasting success on your terms. Rooting for you!