Small truths about freelancing that I've learned over the years.
I've been at this for a fair while, and this is some of the wisdom that I've been told or learned, often the hard way.
The typical full-time employee costs a company 2-3 times their nominal salary
Use this as a basis for deciding your rate. $90/hr might sound like an expensive replacement for an employee getting paid $30/hr, but that $90 is the total cost, and stops immediately when the project ends.
A client asking for 6+ hours in a day will cost you 8 hours
You will achieve nothing useful (read: billable) in the remaining 2 hours. They've taken your whole day, but only paid for 3/4 of it. Charge a day rate instead in those situations.
Make time for downtime
Burnout is real, and it sucks. If you burn out, you'll lose weeks (even months) of work, so it's better to plan for time off instead. Try to build "annual leave" into your rates.
You're a business, not an employee
Some negotiation is fine, but ultimately you're engaging in a business transaction, so the client doesn't get to dictate working hours, rates, etc. They can suggest or request them, but ultimately you get to decide when and under what conditions you work. Which leads to...
Unreasonable requests deserve unreasonable rates
For me, "emergency"/"urgent"/"rush" work adds 30% to my applicable rate, with a minimum of 2 hours billed. If I have to drop my current project to "urgently" add a line of text to your website, you're paying me minimum for the two hours of lost productivity and delay on that other project. I find that if it really is an emergency, clients will happily pay, and if not, they'll prefer to schedule it in like any other change.
Set business hours, and stick to them
I work pretty sporadically through the day, and in the evening, but as far as my clients are concerned, business hours are 9-5, Tuesday-Friday. Any requests to work outside of those hours gets met with a 30% increase in rate. Note that this also stacks with the emergency rate (midnight emergencies will cost a minimum of 2 hours at 160%, even if it takes me 15 minutes). If I choose to work outside of these hours, I'll still charge my standard rate, but explicit requests will hit the higher rate.
Be upfront, honest, and candid
The worst time for a client to hear about problems with the project is the day before (or after) it's due. If you encounter problems, talk to them early and manage expectations. Maybe the feature you're stuck on isn't actually important enough to delay the project, or maybe the delay is simply communication issues. Either way, talking to your client earlier is always better than later. Often they're understanding, and will approve a minor adjustment to the timeline.
Hungry doesn't mean desperate
Don't bother chasing contracts that look like they're going to be trouble. All you'll do is spend valuable time on heartache and frustration. It doesn't matter if you're on your last dollar (and you shouldn't be, if you're charging right, but still), "no client" is better than a "bad client", because a bad client costs you more than doing nothing.
If you can't do it, somebody else will
If you can't fulfill a request from a client, you can support your freelance community by helping the client to find the person who can, or better yet subcontracting them yourself. Again, be sure to manage your clients expectations, but trying to take on work that you're unqualified for is a fools errand, while being open about it with the client breeds respect and good will.
Your project is infinitely more important to you than your client
This takes a little bit to really sink in, but ultimately this: every business owner is primarily focused on running their business as it is right now. For you, your business entails that project, so it's your primary focus. For the client, it's selling widgets, or booking llamas, or teaching sign language to squids. Whatever their business is, your project is not it. This is why clients sometimes seem disinterested, or take two weeks to respond on something that you think requires urgent attention. They're busy running their business, and you're just a risky expense. The only time when the client cares more than you is when they're losing money because of a problem with the project.
I'm sure that I could spend hours more dispensing my version of wisdom, but I hope that this at least gives you something to think about.
e: so uh, this is a thing. Thanks guys/gals!
This is like an hour-long TED talk minus the bullshit. Seriously, great job and thank you for passing on wisdom.
If there was a "freelancer" meetup in my city, I'd consider doing a version of this as a talk, but I haven't been able to find one.
Maybe I should start one. My wife may kill me if I start spending more time on other things, though...
I'd watch a series of youtube lectures based on this stuff if you made them. Although, I'd probably meter it out if they were long, but only because I'm lazy.
I'm fine public speaking, but point a camera at me, and I can't string two words together coherently.
If you can't do it, somebody else will
I would add "and it's not a bad thing".
When I was starting out, I had the feeling that I had to do everything myself. It was recently that I learned how much better I can work when more people deal with the things I'm not great at. Saves time and the final product is much better while supporting your freelance community.
Great post, thank you.
Excellent post! Truly. Reminds me of that time I wrote a huffpost piece about how freelancing isn't easier than "regular work". I wish people would just cut that thought process out!
I find it astounding the number of posts here that boil down to "I have no current skills or relevant commercial experience. How do I start freelancing?"
Freelancing isn't the easy track, and it's not a place for unskilled workers. The perception that it is really bothers me.
Freelancing isn't the easy track, and it's not a place for unskilled workers.
Nope, you're starting your own business. Period. I almost incorporated but ugh, the headache of having an accountant. I'm considering it, but might be moving to another province soon so I don't want to jump the shark.
I went corporate (created a limited liability company) about 3 years ago. Best decision I ever made.
I now pay myself a set salary, with provisions for annual and sick leave. Banks, rentals, and pretty much everything else loves it when you can demonstrate a consistent salary. It also makes tax time 50× easier.
Also I'm actually putting money into my superannuation account now, and my accountant knows ways to adjust down my salary at the end of the financial year so I get a modest return.
I absolutely want to, and my current accountant told me I should. I am in Canada, and these are done provincially. I actually filled out ALL of the forms, and never mailed it. I am considering moving to another province in the fall so I have held off. The thought of having to do a continuance after paying all the initial set up just sounds absurd.
Fair enough. In Australia, it all goes through a federal business register (ABR) and ASIC (Australian Securities and Investment Commission). Even if you change states, everything stays the same.
It might not be a good fit, but you could also set up a corporation federally: http://www.bdc-canada.com/BDC/Corporate/Corporate_FED.htm
Will look into it. Can't afford the fees right this second, but I'll see what my accountant thinks.
Because I now treat myself as an employee I can set a salary and know exactly how much income tax I have to pay in the year, then I can pre-pay it. My wife is also running her own business, which is owned by a trust that is technically run by my company, so she's also an employee of my company, and earns a set salary.
If our combined income gets to a certain level, we can cap our salaries and leave money in the company to get taxed at the corporate rate at the end of the year. That's a flat rate, which (at $80k/year each in salary) then becomes cheaper than our income tax rate.
Finally, because we're employees, my accountant can adjust salaries, etc. at the end of the year to get as a modest tax return.
You can also write off more stuff as tax expenses, right?
As far as I understand it, if I'm a freelance writer I can't write off a web design course as a tax expense. But a corporation can do whatever.
It depends on your local tax laws. In Australia, you could write off a lot of business expenses as a sole trader, and you can even write off business expenses as an employee. It's just that it's often more effort than its worth to keep track of expenses.
Couldn't agree more. But we live in a world saturated with social ads that promise exactly that "I'll teach you make your 1st million as a freelancer - no skills required". Every 'new' industry is an opportunity to exploit people. Be that Instagram, freelancing or ICO's. Then as the population becomes more savy those ads are less effective and they disapear.
All these tips ring true for me after going full freelance a year ago. Great tips OP!
This is really great. It basically gives most of the information a beginner could want to figure out if they should freelance. I'd go as far to say it should be stickied at the top of this sub.
"...a bad client costs you more than doing nothing." THIS x 1,000. You can repay regular financial debt much faster than the mental, emotional, physical, PLUS financial debt you will accrue by taking on a bad client.
Plus spending all the time and work only to have to spend as much time chasing the invoice.
Honestly, sometimes I'd rather not get paid so I can just cut and run.
Totally. Turned around just now and looked at the clock. 7pm. Realized I spent about 3 hours today dealing with a client who is dodging me about payment (posted on this sub about it). I'm not in cut and run or FYPM territory, so I'm at a loss. Fortunately, the productive part of my day was spent in a workshop on how to better define your terms and conditions in a contract. If this client decides to respond to me, he's going to have to sign a new, more specific contract and pay what he owes before he gets any more work out of me.
Definitely a pertinent guide to freelancing. I feel like I see this sort of advice given in topics daily by someone drowning because of some client dictating a project or refusing to pay for something while wanting additional services.
If you can't do it, somebody else will
I really like this. A lot of what I do is pitch work to other people, bring them in... I recognize that I'm very good at a few things, okay at many, but in the end, it's not economical for me to struggle at something I'm just okay with when I can support a fellow freelancer.
I'm working towards building a full blown agency off the back off subcontracting other freelancers to do the work that I'm not able (or, to be honest, willing) to. I've already worked with a designer that I met through /r/freelance, and I'm trying to delegate out tasks to other people when I can.
same... sort of. in my industry, managed services are a huge thing, great money year over year. i'm looking for opportunities to place people as full time contractors, try to get some passive revenue going.
That's a cool idea, I'm a web dev, ping me if you want to talk :)
Great post! Now where can I find someone to teach me sign language for squids?
You can get that done real cheap over on upwork.
I'm kidding! I'm kidding! don'tkillme
In my business, a client asking for 1+ hour in a day is going to cost 8 hours. A day is a day. If I’ve committed that time to Client A, it’s very unlikely Client B is going to come along and work around Client A’s schedule. Always a full day rate.
Having been on both sides of the desk (being a freelancer and hiring freelancers) I agree with these points, except:
The typical full-time employee costs a company 2-3 times their nominal salary
But this is fixed expense, where a freelancer is not. When diving into the fun world of managerial accounting, salary is not the same liability as payments made to freelancers. (This works as both an advantage and disadvantage to the freelancer).
A client asking for 6+ hours in a day will cost you 8 hours
So true. 25 - 33% of your hours spent working are not billable. Lawyers have this figured out.
Unreasonable requests deserve unreasonable rates
True. But beware of "rush" rates. If your client needs something done "OMG RIGHT NOW!!!1!!" don't throw a premium on your rates. Most likely, they're covering their ass (or their boss's ass) and tacking on a premium is only highlighting it. Do the math in your head and give them a bloated flat fee, if possible. Do a good job & they will gladly pay it.
Unreasonable requests deserve unreasonable rates Set business hours, and stick to them
I agree with this, but be tolerant. Understand that you're a freelancer. This means you're picking up workload that is beyond your clients' current resources. Off hours & some chaos is part of the deal.
Your project is infinitely more important to you than your client
Great advice. Especially in the creative community. To most managers (clients) they just need the job done - checked off the list. It doesn't have to be perfect, groundbreaking, or award winning. At the minimum, the first goals a freelancer needs to hit is (1) Done (2) On Time (3) On Budget... then comes the rest.
Thanks a ton for this post :)
What steps would you recommend to a new grad that wants to freelance as a side hustle? What kind of projects should one take up to eventually sustain on freelancing alone?
To sustain freelancing alone, you need to know how the business world works, which means getting commercial experience. Note that there may be exceptions to this but unless you yourself are exceptional, don't rely on them.
Honestly, the best thing to learn is how to learn. Being able to pick up a new skill quickly, or at least learn enough about it that you can have a meaningful conversation with another developer or a client is super important.
In your life as a developer, you'll be learning quite a bit about a lot of different industries, so being able to make informed decisions quickly is how you get ahead.
Thanks for your advice :)
Would you mind telling how long you have been working as a freelancer and how long did you have a "regular" job before you started freelancing?
I worked for about 5 years in a "regular" job, that gave me experience dealing with clients, estimating projects, etc. I've been freelancing for about 7 years since then.
Software, focussing on webdev, but I'm also trying to branch into management consulting (team organisation; refactoring workflows; improving technical capabilities of teams, etc.)
And how do you find your web design clients? If it's through word of mouth, how did you get going initially?
Initially, I tried a few approaches with limited success, but ultimately it was networking. My first major client (who I still do a ton of work for) came through a referral from someone in a programming IRC channel that I hung out in. It's not exactly a perfect plan, and it wasn't expected, but that's where it took off.
Before I started freelancing, but when I knew that I was planning to, I built a small open source project to demonstrate my skills. In my regular job, almost everything I was working on was backend, or proprietary systems that weren't open to the general public. The public things that I did weren't particularly impressive, and a lot of them were maintaining existing legacy projects. In order to show that I had skills in all aspects of systems development, I wrote my own piece of open source software, completely from scratch. I did it to solve a business problem that I had which annoyed me, but mostly as a way to showcase my skills in a way that was open, public, and undeniably all me.
Outside of that, I maintained a good relationship with my previous employer, and still do contract work for them (I just got another task literally 3 hours ago). They also referred some new clients to me that were too "small potatoes" for their agency, and those clients referred more clients, etc.
Other things I've done to gain clients include:
Blogging - Pick a topic that you either have a unique take on, or know more about than others in your industry. You might pick up clients due to people recognising your expertise.
Go to tech meetups - this is just generally great advice anyway. Networking is super important in freelancing, and it helps to expose you to new ideas (or even just a different take on old ideas). I've picked up a couple of clients from people who I had a beer with after a meet-up. Also freelancing can be lonely, so you cannot underestimate the benefits of just... meeting other people a couple of times a month. You can talk, vent, share stories, etc. without client pressure.
Subcontracting and referrals - if you subcontract out work to other freelancers, they're more than likely to try to return the favour. Not only is it good for you to share the love, you'll also end up building a network of other freelancers who you're happy to recommend to clients.
Get business cards and keep some on you - I had a minor car accident this last weekend, and while talking to the tow truck driver, I found out that he runs three businesses, and is looking to get websites built for each. He has my card now, so there may be work from there. Last year I picked up a client when I went to get my clothes dryer repaired, and remarked to the owner that they didn't have a web presence. A month later, I was subcontracting a designer, and building them a brand new site for their three stores across the state.
That's awesome thanks for that! I love how you (potentially) got some work from your tow truck driver!
I think tech meetups is my next step, I always thought about this as more of a learning thing, rather than a place to find clients. Cheers!
Even if they're not direct clients, getting known/recognised helps a ton. People ask co-workers and friends for suggestions when they need to hire someone. Those co-workers and friends might just mention your name if they know you're the person who lives, eats, breathes that type of work.
Great writeup!
Just to add, if you work at your business skill for 8 hours a day, expect to work another 2-3 hours on average to run the business - this will include book-keeping, tax planning, cashflow planning, dealing with insurance companies and payroll or HR companies, dealing with employee issues, tracking vacation and official days off, dealing with beaurocracy at city, county, state and federal level, doing statement of information, etc. Even keeping timesheets, sending invoices, chasing up payments takes quite a bit of time.
I would say your goal should be to charge enough to work 5-6 hours per day at your "skill" thats billable, and another 2 hours (on average) on company stuff. Note its not always as uniform as this - my year end for the company, personal taxes, estimated taxes, distributions, SEPIRA payments etc all fall around March so I put in more business hours then than I do other times of the year.
That's built into the price (or should be). Part of that "2-3 ×" expense for employees is admin time, extra accounting costs, and general business management.
I think it might be built in via pricing but not via time management. If you work 8 billable hours per day and run your own shop, you really will be working 10-12 hours per day in your business. If you only want to work 8 hours total in a day, then only about 6 of them can be billable. This is for small shops with 0-8 employees. This has just been my experience.
Yeah. Typically someone will end up developing less, and transition to almost full management mode.
In regard to your first point, I agree with your statement. What expenses do companies usually cover with full-timers that makes their rate more than just salary, besides benefits? How do you frame to a perspective client?
Administrative costs, equipment, leave entitlements, retirement plans (401k, superannuation, etc.), possibly health insurance (in the US).
Also you have to remember that if a freelancer isn't doing anything productive, they don't cost anything, but unproductive employees cost the same all year long.
You're a business, not an employee
This took me the longest time to properly realize and to implement it in my approach to my clients.
However, since I started to adjust myself properly to this idea, my success definitely grew and clients take me more serious and are willing to pay me better rates just because of this.
Of course, adjusting requires some more work than just your conversation with your client! View yourself as a brand, a business, a multi-national company and adjust your profiles, CVs, cover-letters, e-mails, portofolio.... accordingly!
I freelance in an industry where you pretty much just throw things into the pool and hope they swim. A lot of this doesn’t apply, but the part that says “you are a business not an employee” was a great help to me. I agree. You don’t get into freelancing to be an employee who is paid less. You get into it to work on your own time and set your own hours.
This is a great post altogether!
Well. I wonder why it was removed? No messages from the mods, and I didn't think it broke any rules.
Turns out that I had run afoul of automod with an edit. Post has been restored.
My normal way to deal with this is to tell them something similar to this:
This task looks like it might take the best part of the day. In this situation, I find it's better if I bill for the entire day, so that way if it does blow out, your cost won't increase. If I do finish early was there anything else you needed me to work on for the remainder of the day?
This way I make it seem like it's a good deal for them, and I can knock over a couple of small tasks as well. My day rate is based on an 8 hour work day, so it's not going to seem like a significantly larger expense to them.
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