How to be a freelance web developer, part 2
ryanwaggoner.com
ryanwaggoner.com
This doesn't just apply to developing, or other stuff you're particularly good at, either. In general, people suck at stuff.
My experience tends to be that if, as a hacker, you think you've got an okay grasp of a subject, you're probably in the 90th percentile somewhere. If you think you're pretty good at it, probably 99th.
The "keep raising your rates" advice is good for life in general. Never, never sell yourself short on anything.
My response years ago was to adjust the price down some (and I did it myself) and sometimes you'd get the job.
My advice now, typically, is ... don't go for that type of work. Don't bid on that project. If what you're bidding on is commoditized to the point where anyone can do it for 5x less than you want to charge, find another type of skill to enhance and sell that.
This approach isn't for everyone, obviously, but I'm finding it works. This might just be a variation of "go where the competition isn't"?
Another note is that rates should fluctuate depending on timelines from the client, their budget and requirements. A healthy balance of determining all those factors and your ability to estimate your abilities to complete work can result in a wider range of price ranges - either fixed/hourly/weekly/monthly, etc.
Most of this can only be figured out through lots of experience.
So now I have only one rate for myself. One consequence is that billing is easier and less error-prone :)
>> you think you've got an okay grasp of a subject, you're probably in the 90th percentile somewhere.
See http://en.wikipedia.org/wiki/Illusory_superiority "80% of participants had evaluated themselves as being above the average driver."
I'm all for raising rates and choosing discerning clients, but being able to explain your rates, your proposals, and the importance of investing in someone who isn't terrible is a skill that should not be overlooked.
The most valuable paragraph in the whole article, IMO.
I'd really like to hear from someone who's made this work to their benefit
Funny how you should know more about me than I do.
The company meanwhile has grown in to something very respectable, and even though I haven't been a shareholder for years (bought out many years ago) I never regretted my decision one bit. It was an established business in a different trade when I got there, they decided to pursue this crazy idea (putting photographs on membership cards and print them with laser printers).
I don't mind giving my time for no up front compensation and in exchange growing a really awesome idea or prototype into a lucrative business with a viable exit!
One of the biggest problems we are trying to solve right now is actually the problem of disconnect between business idea-generator types and programmers / engineers.
I know too many programmers that are good, but don't have ideas. So they go work for big firms. At the same time I know many entrepreneurs who's only roadblock to funding is a technical partner.
A coder is useless if he can't negotiate term sheets, get funding, and scale a business. Likewise an entrepreneur is useless if he can't code.
I think matching these people up via equity is exactly what we need to be doing.
Doesn't it suck watching a project you were paid 20 grand for rake in upper six figures going into the second year? I think that 5% equity is looking pre-tty good then.
Biggest reason - if a company is coming to you to build their whole product under a contract, they're making a major blunder out the gate. Any seasoned startup junkie will tell you that outsourcing early product development is a surefire pathway to failure. Don't be fooled by thinking your involvement will help turn them around, the motivations you have as a consultant differ greatly from the objectives of a startup.
What ends up happening is you're working with a client who you're putting in way more effort and hours for - on a discount - which is, by the nature of the fact you're working on it, destined to fail.
Get your normal fees on the project, define the boundaries between you and the company, and don't let yourself get sucked into their hype. No matter how high-profile or connected or wealthy the client is. Its not worth it.
If you found either of these posts useful, please email me at mail@ryanwaggoner.com. I have a couple questions about a related new venture and I'd love some feedback.
I keep track of hours using freshbooks, ask for 50% of estimated hourly fees up front, and use paypal for payments. It's pretty easy, and I never even built a website, lol.
This is sadly the case, I am worked on a project that was done by a developer and abandoned half way through. The code was atrocious and you could tell that this developer was in over their head.
The worst part about it is that this developer speaks at industry conferences and blogs about the subject matter at hand. All of the developers on the team for this company had very low opinions of the freelancer and the project was put in significant jeopardy by this developers lack of real world qualifications on the subject matter. When the freelancer was questioned about their high ego-to-talent ratio they blamed it on the in-house development team and abandoned the contract.
The worst part about it, is this person is friends with some of the best and brightest in a particular segment of the tech industry. I though to myself if this is the state of freelancing then no wonder I am beating away jobs. It goes to show some people talk a good game, but when the rubber hits the road they can't produce. The author hit this one spot on. If you are a consistent performer, you should consider freelancing.
Once you start feeling desperate, you'll make irrational decisions such as quoting lower rates, accepting more difficult clients, and the worrying will drive you crazy.
Don't feel bad about it.
In that instance, try and get a retainer, so that you're getting paid every 2 or 4 weeks for a set number of hours no matter what.
It's automatically a lot easier to get the rates you ask for.
It seems to me that you really want to have to work for yourself to do this. A decent programming job with benefits for someone of your experience is easily $120 - $150k. Assuming you can bill $100/hr and work 2000 hrs/yr, it beats that, but not by much, and frankly seems like a lot more work. So the motivation to freelance isn't a monetary one. Would you agree?
The thing that keeps me going is the thought : well, I can always go and grovel for a permanent job somewhere. But I think I'm pretty much unemployable now, in the traditional 9-5 sense. I get 2-3 requests for work per day at the moment, but pass on most because, like the blog post says, people aren't serious or are expecting low prices.
The following comments reflect what I hear/know about compensation in RTP.
In general, I've heard very little buzz about jobs in the $120K to $150k range here that are permanent positions. The few I know making that range are oddly enough managers, even at smaller shops. Some of the smartest lead devs/architect type hackers I know here can't locate opportunities at that salary level.
I do know a few contractors making in that range, but they are the exception rather than the rule. I also feel that there is some significant downward pressure on top salaries here in the RTP area. But I'm underexposed in my personal network to hackers working in consulting roles.
I'm consistently amused by comments on threads here saying someone should be making "$120K to $160K." Maybe in SV or Redmond, this is true, but I don't see it here.
Thanks.
I scoured Craigslist locally and most of them are looking for "Web developer, contract, MUST BE LOCAL".
Was wondering how was it out there.
A) aren't advertised around much - you have to have a strong network
B) Typically require you to be onsite for at least part of the time or at least periodic visits.
I've not yet found gigs that pay $150/hour for long extended periods (9-12 months) which didn't require any face to face or onsite time (where you could live in Thailand but charge US rates).
Not saying they don't exist at all, but I think they're rarer than your experiences might indicate.
Also, I don't think all clients tend to pay the rates where they are. There's a whole outsourcing trend, which many freelancers are exploring - taking on 'virtual assistants' based in other countries. They do this precisely because you can get reasonable professional-level assistance for $3-$5/hour - which is a good rate for where the worker lives, not where the freelancer is. If I wouldn't pay someone in Thailand $30/hour to do secretarial work for me, why should someonei n NYC pay me $150/hour if I'm living in Thailand? Because I'm a US-born white guy?
Again, your experience might differ, but this is what I've found.
Why would this be odd? Management salaries are always the highest and I know of no exceptions to this.
>I do know a few contractors making in that range
It depends on the area. If you live in a low cost of living area of course salaries will be lower. If the cost of living could some how be low and the salaries high then everyone would move there (driving salaries down and costs up). So the best is, as noted below, live in a very low cost area but work in a high cost area. Failing that live and work in a high cost area.
I'm a contractor, I'm well past $150k/year and I'm just getting started. My next contract should add at least $100/day.
Thank you for the two posts. The key thing for me, personally was (first post): "If you don't have any sample work at all because you haven't built anything, you're not ready to freelance."
Also, is there any reason "running a development agency" is not your goal? Do you simply rather doing the work yourself, than managing people?
I suck at UI design (for example making a good looking OK button in photoshop), but I'm a pretty good programmer. How would you approach that? Do you think subcontracting a UI designer would work? Or usually it's the other way around (UI designer subcontract the programmer to build the web site logic).
You still have the risk problem -- the designer might turn in terrible work, or might turn in great work that the customer thinks is terrible -- but I'm guessing that much of the risk is mitigated: image prototyping and UI sketching starts pretty early in the process and features lots of iterations, so you get early warning if something is going wrong; moreover, most web frameworks are designed around the assumption that design elements will change very frequently, because people have learned how much customers love to change the color of the bikeshed at the last minute. Oh, how they have learned.
The scary part of subcontracting is when you subcontract something tricky and coding-intensive, like the entire event-planning module, or the video-sharing module. Then maybe you end up a week away from launch with two weeks of programming left to do. Or maybe your subcon delivers something that looks superficially correct, but which falls over dead during load testing when it sees more than one query at a time, and now you have to rearchitect it under deadline...
It's not that hard, if you read a few books and practice a bit, to be able to cover 80% of design needs (and you can stay in the code these days, ie: work in CSS3 and take screenshots for instance - staying away from Photoshop).
You can also subcontract to a UI designer for the inspirational bits and do the rest of the work yourself.
When I feel a client is wasting my time, I try to gently remind them that, for a freelancer, time is money. Also, as Ryan suggested, having two clients/projects going on at once is the best scenario.
Freelancers on the other hand have to take taxes out of their income themselves, so what starts out looking like high pay is actually less than it looks. The danger in freelancing is forgetting about taxes and living right up to the extent of your means.
I'm simplifying here, but there's something called FICA, which is about 15.2% of your pay. Typically employees have 7.6% withheld, and employers chip in the other 7.6%. It's effectively never paid or counted to the employee in the first place. Someone earning 100k at an employer would see $7600 paid in FICA. A self-employed person has to pay $15200 on the same $100k income (but half of that tax is deductible for other tax calculations - it gets convoluted!)
So... self-employed people are paying 'more' , but the net effect of what the gov't get is the same. You just don't see some of that money as a typically w2 employee.
Mortgage interest (up to a certain ceiling) is always deductible in the US, whether or not you are working from home. If a certain part of your home is set aside for business use, you can also deduct a proportional slice of your real estate taxes, depreciation, and various other things, but not, it appears, the principal.
Self-Employment tax applies even if you wind up not owing any income tax. You get the benefit of being able to deduct business expenses, which employees can't do, but that usually doesn't make up the difference.
Thanks for explaining that! I've been self employed for 6-7 years and I never could figure out the reason why this was (never really took the time to)
Obviously that means employers offer lower salaries since they care about the total cost to them not the actual salary amount. So it's not really a bad deal for free lancers, just the amount you get paid has to be/sound higher to make things equivalent.
If you don't get paid with a 1099 does that affect your taxes in any way? Are you still responsible for payroll taxes if you don't get a 1099?