U.S Freelancers - Pricing

Part
01
of two
Part
01

U.S Freelancers - Pricing 1

In the US, approximately 16.4 million freelancers don't feel comfortable establishing prices, mostly because they're not sure of how to price their services. Also, 17.5 million freelancers don't feel comfortable dealing directly with clients about financial matters.

HOW MANY US FREELANCERS ARE UNSURE ABOUT HOW TO PRICE THEIR SERVICES?

OVERALL FACTS
PRICING THEIR SERVICES — RESEARCH
CALCULATIONS


RESEARCH STRATEGY:

CALCULATIONS

Based on the total number of freelancers in 2018 (about 56.7 million Americans), we calculated:

  • 29% of US freelancers that are unsure about how to price their services: 56.7 million X 29/100 = 16.4 million freelancers
  • 31% of US freelancers that don't like dealing directly with clients: 56.7 million X 31/100 = 17.5 million freelancers
  • 44% of US freelancers that don't have a contract model: 56.7 million X 44/100 = 24.9 million freelancers
  • 36% of US freelancers that don't know how to market their skills: 56.7 million X 36/100 = 20.4 million freelancers
Part
02
of two
Part
02

U.S Freelancers - Pricing 2

Bonsai Inc, Payscale, Glassdoor, and Indeed are existing services that help guide freelancers determine how much to charge or whether a job is worth it. Each of these four companies provides products and services to assist freelancers such as designers, photographers, writers, and developers to position themselves based on their experience, skill, role, and location. Bonsai Inc. has an annual revenue of $33.2 million, Payscale has an estimated annual revenue of $50 million, Glassdoor has an annual revenue of $170 million, and Indeed reported an annual revenue of $2.6 billion.

SERVICES IN THE UNITED STATES THAT GUIDE FREELANCERS

#1: BONSAI, INC.

  • Bonsai’s Freelance Rates Explorer helps a freelancer position himself against others within the same field, community, and industry. The Freelance Rate Explorer enables a freelancer to develop rates based on location, skill, and experience level. Bonsai, Inc.'s competitive advantage is its unique database that helps people compare their rates.
  • Bonsai, Inc. helps freelancers know their worth by analyzing factors such as skill set, experience, and demand for the skills in the corresponding market. The company also offers advice on how they can further improve their freelance rates. Other products include making proposals, drawing contracts, time tracking, expense tracking, invoicing, and payments.
  • The quarterly revenue of Bonsai, Inc. for the period 2018-2019 was reported to be the following,
  • Therefore, the estimated annual revenue of Bonsai, Inc. is $33.2 million.
  • Therefore, the estimated annual revenue of Bonsai, Inc. is $33.2 million.

#2: PAYSCALE

  • Payscale has over 54 million people who have filled out the company's Payscale Salary Survey. Payscale currently has the world's largest database of individual compensation profiles.
  • Payscale helps both freelancers and non-freelancers know their ideal hourly pay based on their skill, location, years of experience, and other factors. The company's website has a “What am I worth? Get pay report” option where one can comprehensively enter the required details of the job offer and be advised if the job is worth it or not.
  • Payscale provides freelancers with tools such as salary calculators, pay and career charts, and data visualizations, helping people to evaluate their earning potential.
  • According to Crunchbase, Payscale has an estimated annual revenue of $50 million.
  • Payscale was acquired by Francisco Partners on April 25, 2019.


#3: GLASSDOOR

  • Glassdoor serves as a platform for freelancers where they can find the right job, research companies, compare salaries, apply for multiple positions, and review interview questions. This platform is considered to be one of the world's largest recruiting and job sites.
  • The company has over 67 million monthly visitors, 11 million job listings, 49 million reviews and insights, and over 900,000 active employers. Freelancers can determine their rate by searching for salaries similar to their current roles, experience, and location, among other options.
  • Glassdoor launched its “Know Your Worth” option where users can determine their worth in their current market as well as determine if they are being paid fairly or not. It also helps freelancers explore various ways to increase their pay.
  • Glassdoor also publishes articles that are specific to guiding freelancers to set competitive rates.
  • Glassdoor reported an annual revenue of $170 million in 2018.


#4: INDEED

  • Indeed is a job and recruiting platform that enables job seekers and freelancers to research companies, review and search for work, and post resumes for companies to review. Indeed has over 250 unique monthly visitors, 12 million resumes on its platform, and 10 million reviews and ratings.
  • Indeed also offers salary estimates for freelancers depending on their skills, location, experience, and other filters.
  • While Indeed does not have a “Know Your Worth” option on its official website, it has a dedicated twitter page #careerguide to help freelancers know exactly how much value they can give their employers.
  • Indeed has an estimated annual revenue of $2.6 billion.

RESEARCH STRATEGY

We began our search by looking for the pricing models for freelancers. We found two models namely, Hourly Pricing and Project Based/Fixed Pricing. Hourly pricing is much simpler as one would determine the hourly rate based on the target annual income. The second model is project-based or fixed pricing. Here, the freelancers are paid not on the billable hours but the final result.

We then researched one of the largest platforms for freelancers, Payscale. We found that this company helps users determine its hourly pay but not on value-based freelancing or fixed pricing model where freelancers determine their pay based on the actual value. It was found that it is difficult for services to gather information regarding a fixed pricing model since several factors such as the ability to acquire leads and the skills in closing deals are difficult to quantify. Thus, this research is focused on companies that help freelancers determine their hourly rate. Payscale, Glassdoor, and Indeed were found to be some of the largest and most popular platforms that are used by both freelancers and non-freelancers. Bonsai, Inc., on the other hand, is specific for the needs of freelancers. This company has a tool called "Freelance Rates Explorer" that helps freelancers determine their worth based on the current rates within the community.

We then researched each company's website, press releases, and media reports from websites such as Forbes to determine their annual revenue. However, an exhaustive search through these channels provided no information on the companies' financials. The revenues of the four companies were identified from company profiler websites such as Zoominfo and Crunchbase, and industry reports from websites such as Reuters. During our search, we found that Payscale was sold to Warburg Pincus this year. Since Warburg Pincus is a private company, its revenue figures and annual reports are not publicly available.


Sources
Sources

From Part 02
Quotes
  • "PayScale was acquired by Francisco Partners on Apr 25, 2019. This deal was done in Stock."
Quotes
  • "According to Recruit, Glassdoor had revenues of $170 million and a net loss of $22.2 million for the year ended March, and currently employs 750 people."
Quotes
  • "Over 54 million people have filled out the PayScale Salary Survey, meaning we have the largest database of individual compensation profiles in the world. Find out how PayScale data can help you."
Quotes
  • "Know your worth! It’s important you know exactly how much value you can offer an employer before you begin the process of negotiating salary. Use our #CareerGuide to help you go in strong. #EqualPay https://indeedhi.re/2VycUGZ "
Quotes
  • "Warburg Pincus LLC is a leading global private equity firm focused on growth investing. The firm has more than $45 billion in private equity assets under management. "