Over the last year, I have been gradually scaling up and seeking new clients, and utilizing Upwork more and more to build my client base. Though I had already established myself with some ongoing gigs prior to leaving my job, Upworknow represents about a quarter of my income and I am always seeking new contracts in writing an editing work as one of my income streams.
While I myself have been tempted to underbid merely for the purpose of securing work (I started at $20/hr and probably should have raised that bar right off the bat) I have on occasion taken fixed price jobs that resulted in a much lower hourly rate and found that it just wasn’t worth it.
Bear in mind I am speaking from a US based perspective, speaking as a contractor that primarily solicits new clients on Upwork.
1. There’s always a smaller fish.
If your sole value proposition is how cheap you will do the job, you are in trouble. The Upwork Plus perk lets you see the low, average, and high bids from other freelancers for the job.
Guess what? Someone always bids $3/hour, the lowest possible bid on Upwork. Without fail. That certainly isn’t a livable wage in the US by any means. Even if you want to charge under the minimum wage, you’ll still get clobbered.
Think of it this way: there are a lot of clients looking for high-quality work and willing to pay well, and there are a lot of clients looking to get it done as cheaply as possible and fix it in house or on their own later if needed. There are very few clients looking to score what they perceive as “meh” value from a “meh” price point. Putting yourself right in the middle appeals to neither of the largest client pools on the site, and if you are in the US at least, you will go broke very quickly working at the low end of the pool — especially given Upwork’s 20% initial cut plus connection fees.
2. After the initial rush, you will resent the work if you do get it.
It is hard to put your best foot forward on a job that you know that you underbid for. I feel I have a strong work ethic (at least my feedback reflects it, if nothing else) but for clients that I felt were paying me less than I was worth, I would deprioritize their work and feel justified in doing so, even if it was not fair to them, and this weighed heavily on my conscience. It certainly wasn’t the client’s fault for this dissonance — they only selected what they felt was the best person for the job. The negativity was my own creation.
Getting a contract at a rate you value is such a blessing; but being underpaid feels like a curse.
3. It occupies time better spent on self-development and training.
As a freelancer, you are responsible for your own career path. You do not have a manager to provide stretch assignments; your stretch assignments are looking for opportunities to sell existing clients services with new products or technologies that you have learned. It is infinitely easier to pitch this to a client you have an existing relationship with rather than trying to pitch to a new client blind.
Learning new things takes time, which will be unpaid for, but it is an investment you have to make. As a simplified example, working 40 hours at $15/hr, and spending 20 hours earning nothing while studying and training and 20 hours working at $30/hr have the same end monetary result, but one path gives you a new marketable skill while the other does not.
4. Clients are savvy and will review your history to see what others are paying you.
While this may not as be as big a deal with fixed price jobs due to the lack of visible information, your hourly rate billing is much more readily visible. Delivering the world for a client for minimum wage may be a noble endeavor, but if you ask for $20 an hour from a new prospect, they will wonder why they are not getting double that.
If you have found yourself in this kind of rut, all is not lost. You can break out of it by slowly edging up your rate over time when you find new success. If you previously worked for $20/hour, and suddenly jump to $80/hr, that will send up a red flag to a prospective client. Climb the ladder by increasing your rate about 10% each time, and then show that you are capable of competing at that price point; and then raise it again. Do this until you feel you’ve reached an equilibrium where you have a comfortable inflow of work and are not spending too much of your time searching for more.
5. Opportunities to re-negotiate existing rates may be difficult to come by.
There may be times in which you can ask for a higher hourly rate; new skills are needed that weren’t applied before, or maybe the scope of work changes. Barring any extenuating circumstances, though, when business is proceeding as normal, randomly asking for more money out of the blue to perform the same work is unlikely to work at best, and at worst may be seen as a strong-arm tactic and cost you some level of capital with that client. Once you