How To Set Your Rates As A Freelancer

Freelancing is becoming an increasingly popular choice to help make ends meet in both Malaysia, as well as the rest of the world. According to the Department of Statistics Malaysia (DOSM), there were 2.97 million freelancers registered in September 2023, which accounts for 18.2% of the nation’s workforce. 

Freelancing offers Malaysians an unparalleled level of flexibility to work on diverse projects and collaborate with clients worldwide. However, determining the right freelance rates can be a challenging task for many freelancers, especially those who are just starting out. 

You want to make sure you are charging enough to cover your expenses and make a profit. However, you don’t want to price yourself out of the market. In this article, we will discuss several ways to set your freelance rates in Malaysia to remain competitive.

Factors to consider when setting your rates

Before we discuss how to set your rates, there are a number of factors you need to keep in mind that will affect what you charge. These include:

Experience and skill level

Your experience and skill level will have a significant impact on the rates you can charge as a freelancer. Beginners will likely not be able to charge as much as a more experienced freelancer, but you will still be able to charge a fair rate as befits your level of expertise.

Niche

Certain freelancers specialise in certain areas. For example, a freelance writer specialising in lifestyle and cooking can certainly research and write a few articles on business. However, a freelance writer who specialises in business can certainly produce higher quality business articles, and thus charge higher rates for their work.

Location

Your location can also impact your rates. Freelancers who operate in areas with higher costs of living or may be able to charge more than those in areas with a lower cost of living. In addition to this, a lot of freelance work today can be done remotely. Greater internet access and connectivity has eliminated the need to prepare a physical workspace for freelancers, with the exception of certain more specialised work. Freelancers that can commit to a fully remote work setting can get away with more competitive pricing if they live in a region with lower cost of living.

Overhead costs

As a freelancer, you’ll need to consider your overhead costs when setting your rates. This includes expenses such as equipment, software, and other business expenses.

With these factors in mind, here are a few ways to determine your rates as a freelancer in Malaysia.

Proactive negotiation

Adopting a proactive negotiation strategy can be an effective way to touch base with clients and begin a working relationship. This is especially helpful if you are not too sure where to begin with setting your rates. A savvy approach will be to prompt clients to propose the first offer, then work from there.

Understand the client’s expectations

By allowing clients to take the lead, freelancers can gain invaluable insight as to what the project entails, what are a client’s expectations, and how much a client is willing to spend. By prompting a client to outline their budget, freelancers can get them to propose an initial offer that serves as a basis for further discussions.

Find out the commitment required

Once you have been given an initial offer, freelancers can assess the scope of the work, the complexity of the project, and the time commitment required. Communication is key during these negotiations. The freelancer must clarify expectations, discuss deliverables, and address any additional services, tasks or resources that the client may require.

Understand your own expectations

After getting a full picture of the client’s expectations and needs, the freelancer needs to determine if they are able to deliver on said expectations. If yes, they must determine if the initial offer aligns with the freelancer’s own expectations for their work and value. If you determine that the initial offer is insufficient for the amount of work you will be required to do, you can begin negotiating for better rates.

Researching market rates

Another method for setting your rates as a freelancer is to go where the market takes you. Researching the market rates is crucial for any freelancer in Malaysia in order to set up a realistic and competitive pricing scheme.

There are a number of freelance websites you can look through to get an idea of what to charge. Check websites such as Fiverr, Upwork, Freelancing.my, or even Linkedin to identify freelancers with similar skills and experience to yours and analyse their pricing structures. 

By understanding the market rates, you will have a good benchmark to ensure that your own rates are competitive and reflect the value that you can bring to your clients.

Calculate your own rates

This is where the previously mentioned factors really come into play. Sure, external factors such as market rates and client offers play a significant part in how freelancers set their rates, but sometimes it is essential for you to calculate your own rates based on your own financial situation, goals, living expenses, and the value you provide. 

Hourly vs project-based

When determining your own fees, freelancers most often either charge by the hour or on a per-project basis. Different approaches will have their own advantages and disadvantages, and your decision should align with the nature of your services. For example, writers can sometimes choose to charge by word count or per page.

To illustrate, let us assume that a freelancer works at a rate of RM100 per hour. A project that takes 100 hours to complete will nab the freelancer approximately RM10,000 in total. However, if you can complete the project sooner, then the client will have to pay less and the freelancer will end up earning less as well.

On the other hand, freelancers who charge on a per-project basis are guaranteed an amount that is agreed upon beforehand. Thus, if a freelancer agrees to take on a project for RM10,000, it doesn’t matter if it takes 80 hours or 200 hours, the freelancer will earn the agreed upon RM10,000.

Asses the scope of work to match the rate

Generally speaking, hourly rates are not the best method for both the client and the freelancer as both will not know how much the project will cost until the end and the freelancer is punished for efficiency. However, it is much easier to calculate. Project-based rates are favourable to both parties as they will know how much things will cost upfront. 

However, the biggest challenge with it is ensuring that the scope is defined well. If a freelancer gives a price based on one understanding of the scope, but then it turns out to be way more work than they expected, then they may have been better off with hourly pricing.

Value proposition

Remember to clearly define the value you can bring to a client’s project. Highlight your own unique skills and accomplishments as well as your level of expertise and experience in your field. Higher levels of skill and experience often command higher rates in the freelance market. Also, getting to know your clients personally can help a little. If a client knows that you live in a high cost of living area, they may be more sympathetic to your plight and accept higher rates.

Conclusion

In the end, setting your own rates as a freelancer in Malaysia can be challenging in its own right. However, it is important to do so in order to build up your own brand. Consider the factors that can impact your rates. Beginners will likely be more beholden to market and competitive rates. However, the skills and experience you accumulate over time will help to build your brand reputation.

This will eventually allow you to establish higher rates that better reflect what you can bring to the table. With time and dedication, you can build a successful freelancing career that allows you to achieve your professional and financial goals. 

Check out this article if you want to know more about getting started as a freelancer in Malaysia. You can also learn how to build a financial safety net as a freelancer with this article.