A report suggests that 72% of freelancers do not get paid on time. This is why choosing the right payment method for freelancers with clear payment terms and conditions becomes necessary.
Selecting the right payment options allow you to put the structure in place and ensure that you get paid on time and get full for your work. However, there are numerous ways by which you can get paid. Here are some of the common ways to get paid and choosing the best one.
But let’s first find out.
Who is a freelancer?
A freelancer is a person who works for themselves and gets paid for each job they do. Freelancers often have a particular skill or area of expertise. For example, a freelance writer might do content creation, editing and proofreading, while a freelance graphic designer might do logo design, illustration and website design.
They have the flexibility to choose the work they like to do, working with different types of clients.
Freelancers are responsible for their own business costs as being independent contractors such as marketing, taxes, and health insurance. They often work remotely and utilize digital platforms to connect with potential clients and receive payments.
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How do freelancers get paid?
There are a number of ways in which freelancers can get paid based on the agreement with their clients.
Hourly Rate:
The freelancer invoices the client for each hour of work completed. This method is typically employed for ongoing or long-term projects for which the scope of work is not clearly defined at the outset.
Project-based fee:
The freelancer charges the client a fixed fee for a specific project. This is typically negotiated and agreed upon before the work commences. It is based on an estimate of the time and effort required to complete the project.
Retainer fee:
Often clients and freelancers agree on a certain monthly fee for work. The retainer model provides the freelancer with consistent income and ongoing demand services for the client.
Per-word or per-page rate:
Some writers or editors’ freelancers charge clients based on the per word or per page.
Commission:
In a commission-based model, the client pays the freelancer with a percentage of the revenue their work generates. This approach is frequently used in sales-related freelancing.
Value-based pricing:
This pricing-based model works on bringing value to the client and does not take the time to complete. For instance, a freelance software developer who specializes in particularly complex work might charge more than other similarly experienced developers who spend a comparable number of hours doing easier or less important work. It is important to understand the client’s business and the potential impact of the freelancer’s work.
Common Methods getting paid as freelancers.
Being a freelancer, it is important to understand the various payment methods to charge clients. Each model has its own advantages and drawbacks. Let’s understand them.
Bank Transfer:
Bank transfers are a common way for freelancers to get paid. For example, a freelance event planner might get paid this way. The client would pay the planner by transferring money from their account to the planner’s account.
Peer-to-peer payment network:
Many digital platforms like PayPal, Zello, and Venmo offer quick money transfers. For example, if you are a freelance illustrator for game development for another country. Then in case the client could send the payment using PayPal or other similar applications to send the payments quickly as it supports international transactions.
Freelance marketplaces:
Websites like Upwork, Fiverr, and Freelancer have payment systems. A web developer could use Upwork to connect with a client that may need a website overhaul. After the developer completes the project and the client approves it, the client pays the developer through Upwork. The funds are held in an escrow account during the project, which adds security for the developer.
Stripe:
Stripe allows freelancers to take debit and credit card payments directly, as well as bank transfers, usually through their own personal website. For instance, a freelance business consultant with her own website might use Stripe to take payments for her online courses. Clients can pay directly on the website, and Stripe processes the payment and deposits the funds into the consultant’s bank account.
Choosing the right method
Freelancers need to consider several factors while considering the best payment methods to accept payments from clients. Whatever you choose, make sure you let your clients know what your payment options and terms are from the start. That way, you can avoid any confusion or delays in payment.
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