Deciding How Much to Bid

When it comes to determining how much to bid on a project, a friend of mine used to say, "I'll bid somewhere between the most you're willing to spend and the least I'm willing to take!" Cute yes, but rather vague.

When you're bidding for work on freelance job sites you've got to come up with a firm figure to place in the BID field. How do you arrive at that figure?

The simplest formula

As a freelancer, you've likely determined your "hourly rate" based on your previous experience. So the easiest way to determine your bid is to estimate the number of hours you think it will take to complete the project and multiply the number of hours by your hourly rate. If you charge $65/hour for programming and the project will take 10 hours, your bid is $650. What's so hard about that?

Nothing really, but since you're on some of freelance job sites, you have other issues to consider.

Factors that complicate your formula

First is the fact that you are new to the site. You have no work history and that means you have no established track record. Since you have not yet completed any projects on the site, you won't have any ratings yet, either. In other words, you have nothing to back up your claims of being the best.

You're a newbie and with so many other people bidding - people with one high rating after another and an established track record of quality work - most buyers will bypass your bid simply because of the fact that you're new. Ouch!

Now let's address the "so many other people bidding" issue. If you think back to the article that first introduced the concept of freelance job sites, I mentioned that these sites attract freelancers from around the world. These freelancers live in places like Romania, India, Pakistan, Australia, the US and UK and everywhere in between. And although you might need to earn $65 per hour to cover your cost of living, someone in another country can live like a king on $65 not per hour, but per month!

Remember, we live in a global economy and even though some people in developing countries might not have televisions, lots of them have computers with internet connections!

It won't take long to realize that plenty of the people you're bidding against are highly qualified freelancers who charge far less than your hourly rate; something you definitely have to consider.

If you can't beat 'em, join them!

Until you've built up a good reputation on a freelance job site, you probably won't be able to charge the rates you'd like to charge. Instead, you'll have to lower your bids, possibly quite a bit, just so you have a chance at getting a fair share of the available work. The first priority for most buyers is your ability to get project done, certainly not cheap price only. They must trust you first. But, if there are two equally qualified freelancers, the lower bid wins the project.

Lowering your bid and providing compelling reasons why you're the right person for the job usually is the best way to increase your chances that some buyer will accept your bid. Later, after you have several projects done, great ratings and comments, and impressive online portfolio, you can try with higher bids.

What happens after your bid wins is the topic of the next article.