Latest / Freelance Careers with Fexingo: Independent Work, Consulting, and Self-Employment / How Freelancers Can Use a Client Price Floor to Stop Discounting
Transcript
- Lucas: Luna, I want to talk about something most freelancers never do but absolutely should — setting a price floor. Luna: A price floor as in a minimum rate you refuse to go below? Lucas: Exactly. Not a target rate, not an aspirational rate — a hard floor. The number where if a client can't meet it, you walk. And I think it's one of the most underused pricing tools in independent work. Luna: I can already hear some listeners thinking, 'In this economy, I can't afford to turn down work.' Lucas: Right, and that's exactly the fear I want to address. Because the data suggests the opposite — that having a floor actually increases your income over time. A friend of mine — freelance UX designer, let's call her Maya — she tracked her projects for two years. She noticed that every time she accepted a project below her floor, she ended up resenting the work, delivering less creatively, and burning out faster. The projects above her floor? Those were the ones that led to referrals and long-term retainers. Luna: So the low-paying work was actually costing her future income. Lucas: Exactly. She calculated that her effective hourly rate — factoring in unpaid client calls, revisions, and the emotional tax — was about thirty percent lower on sub-floor projects. Once she committed to a floor, her total income went up even though she took fewer projects. Luna: I want to get into how you actually calculate that floor. Because I think a lot of freelancers just pick a round number — like a hundred dollars an hour — without doing the math. Lucas: That's the key insight. Your floor isn't a market number. It's a personal financial number. Start with your minimum viable income — what you need to cover your living expenses, taxes, health insurance, retirement contribution, and a small buffer for slow months. Then divide by the number of billable hours you realistically have in a year. Not two thousand — more like twelve hundred, after accounting for admin, marketing, and downtime. Luna: So for someone who needs seventy thousand dollars a year and has twelve hundred billable hours, that's about fifty-eight dollars an hour. Lucas: Exactly. That's your floor. Anything below that and you're literally losing money, even if the gross check looks okay. Maya's floor was eighty-five dollars an hour because she lived in a high-cost city and wanted to save for a down payment. She had a specific number, not a vague preference. Luna: And how did she handle clients who pushed back? Because I know some listeners are thinking, 'If I say my floor is eighty-five and the client says their budget is seventy, the conversation is over.' Lucas: That's where the communication piece matters. Maya didn't say 'My minimum is eighty-five.' She said 'For this type of work, my rate is ninety-five dollars an hour, and I can offer a discount to eighty-five if you can commit to a three-month retainer.' She framed it as a concession tied to commitment, not as a hard line. Luna: So the floor is still a floor, but you present it with flexibility on the terms, not on the rate. Lucas: Right. The floor is for you. The client doesn't need to know it's a floor. They just see a confident professional who has a standard rate and occasionally offers a volume discount. That preserves your leverage. Luna: I want to push back a little though. I know a freelance writer who implemented a strict floor — eighty dollars an hour — and she lost a long-term client who had been paying seventy-five. The client felt insulted, like she was suddenly too good for them. Lucas: That's a real risk. And I think the mistake there was implementing the floor retroactively without a conversation. If you've been working with someone at seventy-five for two years, you don't just say 'My rate is now eighty.' You say 'I've been reviewing my pricing structure, and going forward I'm shifting my engagements to a minimum of eighty. I'd love to keep working with you — can we find a way to make that work over the next quarter?' You give them time and a transition. Luna: So the floor is for new clients or for renegotiations, not a surprise price hike on existing relationships. Lucas: Exactly. And even with new clients, you can be strategic. Maya used a technique she called the 'price floor ladder' — she had three floors. The first was her absolute survival floor, the number below which she would genuinely walk away. The second was her comfortable floor, where she felt good about the work. And the third was her growth floor, where she could invest in outsourcing or tools. Luna: So the absolute floor is non-negotiable, but the others are aspirational targets. Lucas: Right. And she tracked where each project landed. Over a year, she moved more and more projects from the comfortable floor up to the growth floor, simply because she became more confident enforcing the bottom line. The absolute floor only came into play twice in two years — and both times, walking away led to better opportunities within a month. Luna: That's powerful. I think the psychological barrier is the hardest part. It feels scary to say no to money. Lucas: It is. But the reframe that helped Maya — and I think it's useful — is that every time you say yes to a project below your floor, you're saying no to a project at or above your floor. You're occupying time and energy that could go toward better work. The opportunity cost is real. Luna: So how do you actually calculate the floor for someone listening right now? Walk us through the math. Lucas: Start with your annual living expenses. Rent, food, utilities, transportation, insurance, debt payments. Then add taxes — for a freelancer in the US, that's roughly thirty percent of your income. Then add retirement — say fifteen percent. Then add a buffer for irregular expenses — maybe ten percent. That's your minimum income target. Then estimate your billable hours. If you work forty hours a week but spend ten on admin and marketing, that's thirty billable hours a week. At forty-eight weeks a year, that's one thousand four hundred and forty hours. Divide your minimum income by that number. That's your absolute floor. Luna: And if that number is lower than what you currently charge, you have room to be aggressive. If it's higher, you need to either cut expenses or increase your skills to justify a higher rate. Lucas: Exactly. And the beautiful thing is, once you have that number, you stop guessing. Every pricing conversation becomes clear. You know exactly where the line is. Luna: Yeah, I think that clarity alone is worth the exercise. Even if you never enforce it strictly, just knowing your floor changes how you negotiate. Lucas: Absolutely. And on that note — and I say this because we've been doing this show for over a hundred episodes now, and it's only possible because of listeners who find value in it — if this kind of concrete, no-fluff advice has helped you think about your business, a handful of listeners already chip in monthly at buy me a coffee dot com slash fexingo. That's literally what keeps this ad-free and allows us to keep digging into these frameworks. Luna: Yeah, it's a small group, but it makes a real difference. We don't run ads, we don't have sponsors, so it's just listeners supporting something they find useful. Lucas: Right. And we don't mention it often, but given we just passed episode one hundred, it felt like the right moment. So if you've gotten value from the show, that's one way to keep it going. No pressure, just an honest note. Now — back to the price floor. I want to talk about a specific scenario where your floor might need to change. Luna: Okay, I'm listening. Lucas: When your costs change. If your rent goes up, or you have a kid, or you decide to save for a big purchase, your floor needs to move. Maya recalculated hers every six months. It went from seventy-five to eighty-five over two years. She didn't just let inflation erode it. Luna: So it's a living number, not a set-it-and-forget-it. Lucas: Exactly. And that regular recalibration also gives you a natural reason to reach out to existing clients. 'Hey, I review my rates every six months, and starting next quarter my rate will be X.' It becomes a routine, not a confrontation. Luna: I think that's the takeaway for me — the floor isn't a wall, it's a foundation. You build on it. Lucas: That's a great way to put it. A foundation, not a ceiling. Thanks for the conversation, Luna. Luna: Thanks, Lucas. Good topic.