In Career, Discussions, Entrepreneurs, Money, Wealth

How to make money as a freelancer

I find that most freelancers run into the problem of being unable to ask for money.

I don’t know what the hang-up is, but it is as though they don’t feel like they deserve the money they are asking (yes, some feel this), or they are just uncomfortable when it is them, asking individually for themselves rather than on behalf of a company or a company with employees trained to do the negotiating for you (something a little more distanced and reserved).

It is as though if you ask for the money for yourself even on behalf of your company, it is basically asking for your salary, and someone you’re charging, knows how much you make and get, can make you feel strangely uncomfortable, as we don’t like to really discuss money in our culture.

Whatever it is, all I can give as basic advice is to GET OVER IT and fast.

How?

PRACTICE ASKING BEFOREHAND

The more you practice beforehand with a mirror or with a friend, the more natural it will feel when the real day approaches.

Nothing works better than experience though, so practicing in real life by talking to potential clients and to continue knocking on all the doors will do it.

MAKE SURE YOU ARE WORTH IT

By that, I mean is your price justified?

A good write of thumb to figure out what to charge is to first take what you would earn as an employee for a year and double it, then divide by 2000.

$40,000 x 2 = $80,0000

$80,000 / 2000 = $40

This means you should ask around $40 an hour.

Now if you charge a fixed rate for your services, you know it will take 2 weeks to complete it, so:

10 days x 8 hours a day x $40 = $3200 for the project

Whatever you quote, don’t quote it and then come back asking for more money if it took double the time and was really $6400.

Suck it up to experience that you underpriced yourself and learn for the next time to add more money.

You can also go down about 15% in the price or go up 15% in the price and get negotiated down a little (or add contingency money if you have a feeling they’re more work), and then see how it goes.

Experience is always the best teacher and once you learn how to price yourself and your project, it will be easy afterwards.

TRY MILESTONES WITH A PAYMENT PLAN

Of course, fixed rate projects mean that you have to deliver at the end and clients may not be able to pay the full amount all at once.

In that case, create milestones and fixed amounts to be paid upon satisfied completion signed and dated by both parties of said milestones.

If the first milestone is small in amount of work, then charge less, a fixed percentage of the total and related to that, the bulk of the work should cost the most.

Once you see for yourself that it is justified (the most work is the most money), then you’ll feel less embarrassed asking for it.

ASK AROUND FOR BENCHMARKS

Other people are doing the same thing. Ask them what they charge for a typical project and how they get to that price to see other alternatives on how people sell their time and expertise.

If you’re lucky, major consulting companies have consultants in your area and you can just use their rate per hour as a benchmark and give a 25% discount as you are going “direct” to the client (to account for the fact that they pay their employees a fixed yearly salary and then can tack on up to 100% as a profit margin).

Try not to undercut your price just to get some money. If you’re running into money issues, then learn how to save and budget your money better so you can refuse petty projects and take on the real stuff.

CONSIDER THE SUPPLY AND DEMAND

Are you a pet-sitter? Do you have MORE bookings than you can handle?

Raise your price until you get to a level where the demand drops off and you achieve a stabilized balance between work and money.

If you have tons of demand for your skills, it could mean you are undercharging and trying to appeal to everyone; the ones who don’t pay much and only look at price to the ones who actually appreciate your skills and are willing to pay more.

Don’t be shy and don’t feel bad for not catering to the low-income, low-cost group.

You’re not Red Cross, you’re a business and businesses are in it to make money and to turn a profit at that.

If you truly feel like you want to give your services pro bono or at a discounted rate, then set aside a portion of your time to do so and keep it limited; first-come-first-serve and once the slots are filled and the time is up, you’re done.

WORD OF CAUTION:

You don’t want to end up alienating your actual clientele by having them realize you’re charging less for certain groups and they’re footing the bill for them (in a sense).

This is a very tricky situation and I would advise to not make any exceptions unless it is a personal connection lest you end up discounting your entire business completely and lowering your prices across the board.

How do you handle freelancing?

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Sherry of Save. Spend. Splurge.

Am my own Sugar Daddy. Am a millionaire at 36 after getting out of $60K of student debt in 18 months, a little over a decade earlier, using TheBudgetingTool.com. I have worked 50% of my career (taking 1-2 year breaks), and quadrupled my income within 2 years of graduating, going from $65K to $260K with an average lifetime savings rate of 50%. I have 11 side incomes that are on track in 2020 to make me $50K - $75K. I could retire today if I wanted, but love my work-life balance as a freelancing consultant in STEM (Science, Technology, Engineering, Math). I am all about balance - between time and money, and also enjoying my money. I also post daily on Instagram @saverspender.

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3 Comments

  1. Charmi Gupta

    I m working as a freelancer from home.
    Great list.

    Reply
  2. Jen

    Great post, as always 🙂

    Reply

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