It’s not easy being a freelancer. Not at all, actually. I have coached dozens of freelancers to take things to the next level, and I have noticed a horrible trend: services have become more and more commoditized.
A commodity is basically a thing that’s sold and purchased at a very specific price, based on market value. For example, an iPhone has pretty much a standard value. That also means that whenever someone wants to buy an iPhone, he knows pretty much its price point.
And when a service becomes a commodity, it means that clients have a perceived idea of what that service should cost based on market value, and they won’t want to spend more than that.
Things get even worse with freelance platforms such as Upwork and Fiverr where you can more or less find services sold like packages with a pre-defined price independently of the context.
Freelancers are at the lower end of the food chain
If you want to be successful at selling services online, you first need to admit something that’s uneasy to admit: freelancers at the very bottom of the food chain.
They’re the most commoditized service providers you can find across markets, and especially more so with platforms such as Upwork and Fiverr that establish pre-defined prices for any service.
For example, you can pretty much find someone to create a logo on Fiverr for around $50. So, why would a client pay more than that to have someone create his logo, right?
This kind of logic makes sense, and we cannot really blame clients for that line of thinking. After all, why would you pay more for something that you can get done for less? That’s a very simple mathematical equation and the basics of human reasoning.
Selling freelance services based on value
The most notable workaround that you can apply to your freelance career to avoid being “commoditized” is simple: you need to charge based on value, not pricing.
For example, let’s take once again the example of logo design. Someone may say that he can create a logo for $50. But what’s going to be the impact on the client’s business? What if that logo looks like crap and doesn’t convey professional values?
Now, let’s say that this logo looks so professional that it actually increases the client’s company branding and professionalism.
Imagine that it helps closing even a single client at $10,000 or whatever? Now, is that logo worth $50 anymore? Or is it worth $10,000+? See where it’s going?
But value is not enough…!
The main issue with being a freelancer is that you are on your own. And that means clients make a direct connection between how much they pay you and how much you make.
And nobody likes to pay people too much, and especially if it’s more than what society deems “enough”. For example, paying someone $10,000 for a logo is deemed indecent.
But the same company wouldn’t bat an eye paying the same amount to an “agency”, or a “team” of people. And that’s because there’s no direct correlation between money and how much money you make anymore.
In other words, the bigger your organization appears, the more money becomes “diluted”. And that makes it a lot more acceptable for a client to pay more money.
You should rebrand as an agency
That’s why, in my opinion, the best course of action for any freelancer is to rebrand himself as an agency rather than a lone wolf.
That will not only get you out of the commodity loop, but it will also let you charge a lot more. There won’t be any direct correlation between how much your “agency” gets paid and how much money you make at the end of the month.
Rebranding as an agency is not a quick process, and it takes a few steps and the right tactics to do so. But the idea is here: if you look bigger than yourself, you will make a lot more than what you are currently making.
As a freelancer, you will likely be underpaid because your services are perceived as a commodity, because you are on your own, and because clients don’t want to pay someone too much.
But if you rebrand yourself as an agency, it will solve all these issues entirely.