How Is COVID-19 Impacting Freelance Rates, Pricing And Project Flow?
On March 19, WHO designated COVID 19 a pandemic. in short order, global industry collapsed. Over 30,000,000 Americans are laid off or furloughed. The ILO estimates the cost of COVID 19 equaling 195,000,000 lost jobs.
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In past reports of my series, the freelance revolution during COVID 19, platform CEOs and thought leaders have described how they see the arc of economic recovery for freelancers, the likely in-demand freelancer skills following COVID 10, and longer term prospects for freelancing and independent management consulting and coaching as distinctive careers. In this article we focus on an important concern: freelance pricing and rates. The question:
“What’s the impact of COVID 19 on pricing for freelancers’ time and projects? Has pricing remained steady or is it necessary to offer reductions in freelancers’ rates or other incentives? How varied by region and specialization? What do clients say about pricing post COVID, and longer term?”
Before reporting the perspectives of the 21 CEOs and thought leaders who participated in this survey, Payoneer, the payments company, generously shared new global freelance data:
- 32% say demand for freelancing has decreased following COVID 19; 40% described business demand as stable or continuing to grow
- North America and Europe reduced demand more than Asia and Australia (Africa data unavailable)
- Three quarters of freelancers say pay rates remain stable despite COVID. The remainder lowered rates
- Finally, Payoneer found the average 2020 freelance hourly rate was higher than 2018
Here’s what platform CEOs and thought leaders had to say:
Chandrika Pasricha, CEO of Flexing It (India): “We’re seeing no change on fees and pricing for existing and long term client contracts. Among newer projects coming after the Covid crisis, we see differences by client size. Larger enterprise clients and prospects are looking more strategically at utilizing freelance talent. Some are allocating significant resources gearing up for this workforce shift. Smaller companies are more focused on cash conservation, where we need to negotiate discounted rates, or to back-end billing. We’re also seeing many senior consultants taking a long term view, accommodating lowered budgets for companies that need help and proactively approaching mentoring and pro-bono opportunities.”
Pat Shreckengast, Co-founder of AceUp (US): “We’ve found it’s not necessary even in this climate to adjust rates for our coaches. Companies and individuals are investing with us in leadership development during this time. We’re also proactively adding ancillary services like group coaching to better support our clients and provide a sense of community amongst coachees.”
Emma El-Karout, CEO of One Circle HR (Mideast and Africa): “Freelancers are conscious about the situation most businesses are in and pitching in to help at a fair price. Some put in free time to start building a relationship with clients. We see more readiness from clients to hire freelance HR consultants virtually to help on their projects and our consultants are ready to negotiate prices. Current currency fluctuation makes freelance HR consultants from South Africa more affordable than before.”
Mert Bulut, Co-founder of Rimuut (Estonia): “From March 16 until April 25 (today), we have observed a 7% increase in the average invoice amount. The increase is not significant but it is not lower. However, in a survey conducted with our freelancers, a significant portion of freelancers expect less income (48%) and believe that they will need to offer better deals to find work (33%).”
Blessing Ijoma, CEO of Hourspent (Africa):”Employers hiring on Hourspent seem to be taking drastic measures to cut costs. For engineering projects, estimated hours on specific projects are cut down, not their hourly price rates, and some initial project features are sacrificed. Future pricing is uncertain, but there will likely be an increase in freelancers’ pricing as discussions on long-time contracts are underway between freelancers and employers.”
Sharekh Shaikh, CEO of CleverX (US): “Pricing of experts hasn’t been affected significantly. Most experts on CleverX are in North American and European markets and over 90% across specialization haven’t reduced their pricing. However, customer expectations are higher, they expect more value for the money spent on each engagement. Based on discussions with repeat customers, a recession will cut budgets significantly but likely to positively impact on-demand talent platforms because of the convenience, flexibility and lower cost of freelance expertise.”
Mansur Ziganshin, CEO of Pochmak (US and UK) : “Most of our experts are US and there are no rate reductions on our platform. We provide industry expertise to institutional investors and our pricing remains steady across all industries. On the other hand, we expect the recovery of the investment industry post Covid-19 will see growth in projects as more investment opportunities show up.”
Mac Mabidilala, MD of Pengo Insight (Africa): “On recent projects, we have seen a reduction in client budgets per expert consulting hour, dropping from an average of $200 to $100. Our business model allows for freelance experts to set and adjust their rates at any time, however we haven’t seen any significant changes on this end. A number of our experts allocate a portion of their earnings from future consultations to worthy causes in their communities in support of COVID 19 relief initiatives.”
Ben Huffman, Co-founder of Contra (US): “We aren’t seeing a major drop in average rates just yet, but one trend we are seeing is a greater concentration of work going to the top 5% of our community. Currently our most in demand skill sets are UI animation and frontend engineers specializing in Vue.js. It seems like more organizations are beginning to look outside of their traditional networks to find flexible talent.”
Guillaume Lissorgues, CEO of Apy (Canada): “Covid-19 is detrimental to our freelancer population; all big projects were postponed or canceled and ongoing work is affected. Our freelance coaches and mentors are reducing their billable hours or going offline and taking forced holidays. In the foreseeable future, our success rate will go back to normal as the mass of freelancers is on an upward trend.”
Terry Madavo, CEO of Talentdesk247.com (South Africa): “We have seen a decrease of 35% in overall demand for freelancers domestically and regionally, and there is downward pressure on rates. The economic slowdown across the continent has resulted in projects put on hold. Most clients say they will relook in 3 to 6 months. Finally, there is a marginal uptick in demand for developers and cyber security experts. Their rates have remained largely unchanged.”
Niclas Thelander, CEO of Outsized (Africa and Asia): “In our markets, particularly Africa, freelancers in some segments are very keen to keep utilization high, and offer discounted rates. In our role as matchmaker, we try to encourage clients not to take advantage, but to continue to offer fair prices. We are firm believers in a market that works for BOTH sides, and to encourage behaviour that’s sustainable in the long run. Of course, in some segments high in demand, there has been no drops at all, such as specific digital marketing skills, and HR specialists.”
Rob Biederman, Co-CEO of Catalant (US): “Much of the work our experts do is directly connected to the organization’s most strategic objectives, typically overseen by C-level executives. So we haven’t seen and don’t expect to see much change to how those services are priced. We have been working with customers on payment structures to help them navigate any new financial restrictions. In this time, as in all, we are deeply focused on getting the maximum net possible take-home to our experts.”
Rishon Blumberg, Co-CEO of 10xManagement and 10xAscend (US): “We are living through unprecedented times: two factors – the pandemic and the economy – are certainly putting downward pressure on rates. There is still work that needs to be done, but companies are either waiting to do it, or looking to do it at a lower cost. I foresee this trend continuing until the world returns to ‘normal’.”
Nitin Kunimmal, CEO of Avvnue (US): “The pandemic hit freelancers hard and we are observing payment delays. Many freelancers on our platform reduced their consulting rate proactively anticipating a slowdown. In APAC, we anticipate a boom in freelance work as customers are more open to a blended workforce. From a cost point of view, these are difficult times for most businesses and they are expecting a break in standard rates as they recover from losses.”
Alex Hirst, Co-CEO of Hoxby (UK): “Hoxby had one of its busiest ever months in March, with lots of new work coming in from existing and new clients eager to tap in to our agile and entirely remote working set-up. Our pricing hasn’t changed as a result of COVID-19 and many of our services such as our “Future-proofing” offer are in more demand than ever as we battle with #remoteagainstcoronavirus by helping SMEs set up successfully during lockdown.”
Hugo Finkelstein, CEO of Rise (US): “Overall, pricing for design and copywriting services slightly decreased given the economic ramifications of COVID. Most community members have adapted their prices and seen a spike in projects. Businesses need to build up their online presence now more than ever, making designers and writers attractive. Moving forward, we expect demand to continue rising and prices to come back to normal.”
Jeff Tennery, CEO of Moonlighting (US): “Demand for freelancing is high but since revenues for most companies have taken a hit, hirers still have the leverage and are negotiating better rates. In general freelancers on our platform are doing more work but at lower rates.”
Alok Alström, CEO of AppJobs (Sweden): “COVID-19 has caused significant changes in pricing for freelancers. Earnings reached a high peak at the end of March. A significant fall followed this peak. More people are looking for ways to make money online. The higher supply has caused a decrease in earnings.”
Shib Mathew, CEO of YunoJuno.com (UK): “Day rates amongst highly skilled creative and tech freelancers have remained steady during COVID. Even with overall market contraction, clients continue to hire freelancers based on quality and experience rather than price. A major evolution within our sector is the acceptance of remote working. Traditionally, 95% of our freelance bookings were on-site projects but COVID has forced many clients to appreciate that remote working doesn’t affect the quality of output. I believe this will continue to evolve post-COVID.”
Lindsay Stewart, Co-founder of Stringr (US): “We are a global platform for videographers. Most of our client contracts are annual so we’re not having many pricing conversations currently; overall, payments to videographers have remained steady. What’s unique about our network is that pros are stationed everywhere. People with a high degree of creative talent live all over.”
Bottom Line: According to Payoneer and many other studies, most freelancers and corporate executives believe demand for freelance services will increase once the pandemic is over, suggesting that COVID 19 is likely to accelerate the global growth of freelancing. The freelance revolution has not been canceled!
Viva la Revolution!
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