4 Payment Models for Freelance Digital Marketers
As a freelance digital marketer, you have to be aware of the different payment models that are available to you. In this video, I'm going to break down 4 of the most popular ones so that you can decide which one is right for you.
4 Payment Models
Hey there, digital marketers, just because you choose to be a freelancer, it doesn't mean you are limited in how you get paid. That's one of the big benefits is the flexibility and options here. Now there are multiple choices when deciding how to get paid as a freelance digital marketer, I'm going to go over four popular ones that I've used personally in my career, by the way, I'm Rich Ux, digital marketing consultant, and over at richardniche.com.
Me and my team have been helping people just like you transform themselves into freelance, digital marketers, and in some cases digital marketing consultants, but that's enough of that. Let's get started with today's video and talk about payment models.
Let me outline this video for you. There are three really common models. That's hourly billing, project billing and retainer-based billing, but there's a new and fourth model emerging. Make sure you stay until the end of the video to find out what that is because I think it could be career-changing for some of you, but let's break down those first three, the traditional options.
Number one. Hourly billing. Most people shy away from this at higher levels, but when you are getting started, hourly billing can be very effective. And the number one reason for that is clients can solve. Get work done at a smaller dosage. Hey, four hours at $75 an hour. Hey, six hours at $50 an hour. They can control their spending.
And they're gonna be very aware of how much they're spending. Now, when you think about it, why would a client really want to pay per hour? It suggests that the longer you take. The more benefits for you as a freelancer. So what incentive is there for you to complete the job? Quit. And I think ideally both you and your client should find that you are to be rewarded the faster you go, the faster you get the job done.
Why would we want to reward slow effort? We don't. And so I think that's the big downside of hourly billing, but as I said, it's used in very small client engagements. It's used for single deliverables. Hey, I need to get a webpage done. Hey, I need an email copy. Hey, I need a flyer or a graphic design here.
Hey, I need just one or two videos edited. This is not a big project. I'm going to give you an hourly rate. Let me know how much that turns out to be. I'll pay you and we're done. You PR you might not even have a contract, right? You might not even have a big project scope. So this is really used in more casual relationships and smaller-oriented projects.
Now, speaking of projects, that is the second payment model project-based billing. And of course, this is going to be a predetermined amount. Where you work with your client to say, here's the deliverables you've requested. And here is the total amount of money I'm going to charge you to complete all of those deliverables.
So it has nothing to do with time anymore. And now you're going to be rewarded. For your speed, because if you can complete this quickly it's not going to take a lot of time and you're still gonna get paid the full amount for the project clients. They like this because they understand the scope.
They understand what they requested. There's no fluff, there's no wasted time. At the end of the day at the specified timeline, they're going to get what they requested and they know how much they spent. And I think in a project. They get a good sense of how much ROI could potentially get from this project.
So if I set up a brand new website for $5,000, how much money can that website lead me over the year, maybe 50,000, maybe 200,000. Looking at a 10 to 40 X. If I get, 10 videos produced, edited, uploaded to YouTube, managed each video, costing approximately two, $300, looking at two to $3,000 for that 10 video project, how much traffic can I generate from those videos?
How many rankings will I. How many leads can I generate through those videos and how many sales will likely come from those leads? So the client can do some math in their head. And unlike hourly, if the hours get a little too high, they're not going to be able to get that same ROI with project-based pricing.
They're going to say, I know how much this cost me. I know what I'm going to. Now, of course, the better you are, the faster you are, the higher quality of deliverables you offer, and the higher you can charge for your projects. It has nothing to do with time. It has everything to do with your skill and your ability to deliver what the client wants.
So I think project-based is great. I think most people should be working on project-based because I think it's clear between. Freelancer and the client what's going to be done. I think it's nice to have an endpoint. Even if you want to do more projects, it's better to separate them, complete them, and then start a new one.
And you're going to see in a third project, a third payment model, why that's a benefit. And that third model is retainer-based billing. So unlike a project that has a start and endpoint, maybe 30 days, 60 days, or 90 days, Retainer-based billing is going to be on a monthly or quarterly basis.
Now, the obvious reason a freelancer would want this is because it has a recurring sense of income. You can create your lifestyle around a certain amount of money that you're making every month. Say you have three clients on a $4,000 retainer. That's going to be $12,000 a month in revenue, minus your costs, taxes, et cetera.
You're going to say I've got a lifestyle around $8,000 here. I can save a little bit, invest a little bit and live a great life. And I think, a lot of freelancers aspire to this sort of retainer-based billing model. And certainly, I have as well. And I think that if you do anything related to content marketing or traffic driving services YouTube videos, Instagram content, article, writing, SEO link back building.
I think that retainers are good because the client always wants more. They need more, they really can't stop. That's one of the best reasons to be involved in content marketing. Is it never really. And clients are aware of that, and that's a big portion of their budget these days. So I think if you like the idea of a recurring retainer-based billing model, I would go more into content-related services, as opposed to say funnel building, and website design.
Those are definitely going to be project-based and that's fine. You might be really good at getting new clients. You might find clients who want to create new funnels on a regular basis. You might have. Have clients who have clients and they're going to refer your business. So I think that's where it splits.
If you're developing sort of a page, a funny. Better go with the project. If you're doing content traffic, maybe go for a retainer base. Now I know you've been waiting for the fourth model and I think this model is really important. It's emerging. And I'm going to explain to you why that is, and that's simply the performance-based payment model.
Now I know there are some freelancers out there who are going to hate this idea because it really puts the onus on the freelancer to be. And perhaps when you're just starting out, you can't take advantage of this model. You have to go for some sort of hourly or project because you're not going to want to do endless projects and never get paid.
But the truth is if you're never getting paid it might suggest you're not driving any real results. Now that's the good thing about content marketing and those retaining. If you produce the content that is the result, the client requested you cannot be necessarily in control of how many people watch a video, and how viral a video goes.
How many times does an article gets read? You just have to produce that content, but let's talk about another area in digital marketing. That's really popular. That's lead generation. So it's like the next step after traffic generation, it's the next step after building the funnel, it's actually acquiring the client data.
So it's lead generation demand generation. It's about getting calls booked on the schedule. And what do all of those lead to while at some conversion rate, those are going to lead to? If I get a hundred leads, I'm going to get five sales. If I get 10 booked calls, I'm going to get two sales or two new acquisitions.
So performance-based payment models are becoming really popular for two real reasons, one, the client is extremely excited that they really only have to pay for the actual result they want. Now. So few people are capable of generating. Business results like sales. And I think that's what makes the full-stack digital marketer.
So powerful is you can not only create content the funnels, but you can build systems that literally put sales on the books. You can build systems that lead to calls being booked for the client. If there's some sort of service provider you can do the full gamut of marketing and sales, and that's very powerful.
And so I think in the past, Clients, they felt like I've got to hire a content person. I've got a hire, a video editor. I've got to hire a social media manager. I've got to hire this specific niche marketer. And so they struggled to realize that it can be done by one person, first of all. And there is a skill set out there that leads to real business results.
And that's really the demand generation marketer, the lead and sales generation model. And that's really what we teach. So clients are excited that there's someone out there that could actually generate the result they want because, at the end of the day, they don't really want the content. They don't really want the leads, even, they don't even want the.
They want the sales, and the more of that process, you are capable of completing for them, the happier they're going to be, the more you're going to get paid. And then if you're working with a client, whether it's a lawyer, a doctor, a medical clinic chiropractor, beauty, laser, these types of things where you're working with a coach or a consultant.
Some of these people charge $10,000 minimum for their services. If you are able to bring clients in, you're going to be able to request a commission of two, $3,000 per sale. So sure. Maybe you don't get paid occasionally, but if you're able to bring results, my goodness, you're going to be able to generate thousands of dollars in basically what are called commissions.
And that's what performance-based pay is that the client, the freelance. Are in a performance-based relationship. The client only pays for what they actually want, which makes them so happy. And the freelancer only gets paid when they bring actual results, which is value-driven, that's really what you should aspire to.
The second reason that makes this model so popular and emerging more than ever right now. As the cost of advertising on Facebook and Instagram goes up as the challenge of reaching decision-makers through advertising goes up as the competition of SEO goes up, freelancers, agencies, and consultants, they're looking for more effective client acquisition models, and what's really popular.
These days is cold email outreach. Not only is it free? Not only can it be personalized and both scalable. I think that people are looking for effective ways to make their cold outreach effective and the most obvious way to improve your results as a cold email outreach. Lead acquisition, a person or business is to have a wonderful grand slam winning offer.
And I think that if you're reaching out to people, offering a performance-based service is going to be a lot more enticing to people than hiding your pricing, hiding your packages. Like you're never going to send a cold email and say, Hey, I sell $4,000 marketing packages. You're going to say, I offer these benefits.
I offer these results, get on a call with me and they'll reveal the price on the call. You might not say that, but that's what you would do. Whereas if you're in a performance-based business model, I think you can come out right in front and say that's my offer. Are you interested in having a performance-based marketer work for you?
Risk-free let's get on a call and talk about partnering up here. And I think that a lot of businesses are going to be fascinated and intrigued by that kind of cold email. So something that I teach my lab students, where we transform people into freelancers in 24 weeks is. Why not think about the perfect cold email and work backwards into the service.
And when you think about that perfect cold email, a grand slam offer as needed. And so if you can make it a performance-based offer, how do you build a service that's performance-based yet? Isn't so intensive such that if you did all this work, you might not get paid. So we try and teach our students to craft offers.
That are a little bit more low intensity, but very highly to bring a result, specific result. And so that all works really cohesively. It synergizes both with the client's needs and how the freelancer can create a model that's effective. That's pretty much it for the four payment models for freelance digital marketers.
If you've got a question for me about these payment models, go ahead and leave that in the comments. I'll be happy to answer that. If you didn't give this video a like by now, it's probably a good time to do that. If you appreciate this content, let us know that you like it so we can create more for you.
And go on over to richandniche.com. Check out our digital marketing masterclass. If that's something you're interested in building those marketing skills on funnels, advertising content and website building. And if you like what I said about payment models, maybe you're ready to become a freelancer.
This year. We have a transformational lab program. You can read all about that on our website at dot com. That's it for me today. Glad to be back making videos again on YouTube. It's been a bit of a break as I transitioned from the west to the east now based in Belgrade, Serbia in Eastern Europe and going to be producing a lot more content for you guys.