Despite its appealing nature, freelancing in 2021 is anything but easy. Over the last few years, millions of people around the globe discovered the advantages of working remotely. Leaving their 9-to-5 jobs behind them, the idea of working independently has opened doors for many careers and became a reliable source of income for successful freelancers. Companies, on the other hand, understand the advantages of freelancers and contract workers, and new job openings are created every day.
However, as the market for freelancers grows, so does the competition. With millions of possible competitors, quality is no longer the deciding factor for winning clients and landing jobs. Nowadays, many freelancers try to separate themselves from the competition by offering the lowest rates; thus appealing to clients looking for a workforce while being on a budget.
This has led to some catastrophic consequences: Freelancers are unable to land jobs with quality pay, and clients are left with work results lacking quality. But despite the grim outlook, there are ways for the freelancing economy to recover.
Why Freelancer rates are lower than ever
As with many economic developments, the decline in freelancer rates has its reasons. While it would be easy to point the finger and blame the COVID-19 situation for this, the drop in rates is the result of multiple processes.
First and foremost: Yes, the pandemic certainly had an impact on the situation for freelancers. Companies from across all industries have suffered economic losses. As many of them are slowly recovering, budgets might not be the same as what they have been before the pandemic. Another factor that changed the freelancing landscape is the rise of the internet. As more people get access to high-speed internet every day, the number of potential competitors in the freelancer market grows, too.
As a result, many established freelancers blame people from developing or lower-income countries as the main reason for low rates. To a certain extent, this is true: A developer from Vietnam, India, or Peru can certainly offer his work at another rate than a developer from Toronto. The cost of living in these countries is oftentimes much lower, thus making it possible to work at a fraction of the usual price. While it might not be financially viable for an American or Western European freelancer to work at $10 an hour, a freelancer from Malaysia might be able to come to terms with the same rate.
For many freelancers from developed countries, this means either one of two things: Accepting the lower rates or sticking to their desired rates. However, both ways of dealing with cheap competitors do have their drawbacks: While accepting the lower rates may result in securing more clients, it certainly means that the freelancer has to do more work. If a freelancer usually charges $70 per hour, working on a $10/hour gig will mean that he/she has to do seven of those contracts to achieve the same income. However, as time is a rare resource and there’s only so much you can do in 24 hours, this is unrealistic.
Sticking to your desired rate, on the other hand, can create problems, too: Finding clients can become incredibly hard, since most companies will most likely choose freelancers with lower rates. While it may be possible to come across clients willing to pay more for your work, those clients will usually be rare, and the workflow might not be enough to secure a monthly income.
What Freelancers can do about low rates
The ones that are affected most by the low rates are the freelancers themselves. Struggling to find a gig with quality pay can result in numerous problems, financial issues being the main ones.
So, what can freelancers do about low rates?
Say ‘No’ to low-paying jobs:
Turning down a job might seem counterintuitive, given that freelancers need to make money. However, even the most interesting project is not financially viable if it does not pay the bills. Freelancers must know their worth and value their time as much as their skill. Many skilled freelancers don’t know how to estimate their value correctly and, as a result, undersell themselves.
A good guideline to correctly estimate your value is to look at industry benchmarks. No matter what industry you are working on, there will be plenty of information online about how much you can and should charge for your work.
Instead of trying to underbid the competition, stand firm and reason why your work is worth your hourly or daily rate. After a while, charging more for quality work becomes a natural trait that will result in your clients paying you better. Having confidence is a key skill in business, and being a freelancer is no different.
Showcase your previous work
Building a portfolio can be challenging, especially in the beginning. However, a good portfolio can become a client magnet and showcase the expertise of a freelancer. On the way to high-paying clients, freelancers should not be afraid to take some moderately paid jobs to build a portfolio. That means taking some jobs below your desired rate has to be done, especially when you are a beginner.
However, as your portfolio grows, so does your knowledge and expertise. After spending a couple of months working on lower-paying jobs, you should have a decent portfolio with (hopefully) high-quality content. This will give you leverage when negotiating with potential clients; make sure to point out how your previous work has helped other clients. Eventually, this can lead to clients recognizing your value and paying you your desired rates.
But it doesn’t stop with new clients; you can also adjust the rates for your existing clients. If you have proven time and time again that your work is up to the highest standards and that you deliver on time, raising your rate is a completely reasonable adjustment. When your current clients are initially hesitant towards paying higher rates, you can simply explain your value with time: Since more (new) clients are willing to pay you your desired rates, your work relationship with your current customers might become less financially rewarding. Therefore, if your client wants to continue working with you, a higher rate could
Work as a team
Oftentimes, freelancers complete jobs on behalf of an agency. However, the agency is usually the party that benefits most from the gig: They get paid the full budget by the client and can then choose to allocate as much as they feel justified to the freelancer. This often results in freelancers doing the heavy lifting, while only receiving a fraction of the budget.
Instead, freelancers should counter this coming together as teams and virtual companies. This way, freelancers can come together and bundle their skills to provide unique value to their clients. By offering more skills and services, freelancers can secure bigger projects with higher budgets.
Vicoland offers freelancers the possibility to form their own virtual companies and act as an agency. This takes third parties out of the equation and allows freelancers to offer their service in a professional package.
What companies should do about low rates
Notice how we said, “should do”, and not “can do”? This is no typo. Companies and clients are largely responsible for the decline in freelancer rates, effectively devaluing the market. By looking for the cheapest options available, clients are feeding the beast of bargain work. This trend has resulted in rates steadily dropping, meaning most freelancers potentially earn less and less each year.
While it is easy for companies and clients to give the job to the lowest-bidding freelancer, businesses should ask themselves: What am I getting for my money? This crucial question often gets overlooked, despite being the most important aspect of the hiring process. Too many companies are focused on minimizing spending, while not putting enough emphasis on quality.
This can result in results that are anything but satisfying: Many clients are often disappointed with the work of bargain-level freelancers. More often than not, companies need to hire additional freelancers to get the result that they wanted. For businesses, this means spending more money – defeating the purpose of the bargain-hunting altogether.
Instead, companies should be willing to spend more if the results are of good quality. No matter if you need a developer, a copywriter, or a designer: A good freelancer can take your business to new levels. So, instead of trying to fight over hourly rates, cents per word, or consultation prices: See the freelancer as an investment.
The Future of Freelancing
It might sound like being a freelancer in 2021 is a surefire way to end up working low-paying jobs. However, the recent developments in the fields of remote work are telling another story: Freelancing is, without a doubt, one of the most future-proof careers in the current landscape. The demand for skilled workers is steadily increasing and gigs are ready to be taken.
However, to keep the world of freelancing financially rewarding, freelancers must be able to negotiate their desired rates. Strong work history and a professional attitude are certainly key ways to negotiate confidently and secure high-paying jobs. Thousands of freelancers are proving every day that, with enough determination, landing high-paying jobs and creating a sustainable freelancing career is still possible.
Vicoland believes that remote work is the future of business. That is why we want to encourage Freelancers to form virtual companies and take control over their business. We want to connect like-minded individuals and create work relationships that result in high-quality results, all while enjoying the benefits of working from home. Sign up today and start taking business matters into your own hands.