I’ve started digging into the issues others are facing too.
I’d be keen to hear what problems others have in this area? I put together a little survey here: https://adamfarah.typeform.com/to/abznqs
Learn about positioning - horizontal and vertical markets. A good resource is https://philipmorganconsulting.com/the-positioning-manual-fo....
He also has a bunch of free video interviews that you can watch https://philipmorganconsulting.com/dev-shop-marketing-briefi.... I was one of the guests, talking about long tail search engine marketing.
And finally, remember that success in this space is a marathon and not a sprint. You do not have to start out as the fastest, you just have to run longer than everyone else who drops out. In a few years the fact that you are still in the market will be seen as social proof of your trustworthiness and success.
Even if you don't incorporate and are uncomfortable presenting yourself as a brand, never call yourself a "freelancer".
Call yourself a "consultant". I've seen that people take you far more seriously when you call yourself that as opposed to a "freelancer".
So it really depends on what business and the market that the business is going for if the "consultant" label is any better than the sub-optimal "freelancer" label.
In the rest of the business world, consultant means "freelancer, but professional".
If you choose to let the local stereotypes hold you back in life, then you won't succeed. End of.
I think the point is to have a consulting company even if you're a solo consultant there.
There are some very huge consulting companies in the Atlanta area for sure. That is a different scale altogether.
Consulting: $150/hr Contracting: $200/hr Freelancing: $250/hr
It'd be interesting to see if people would start referring to you as a consultant instead of a freelancer. After all, if they refer to you as a freelancer then you might charge them a higher rate!
Good freelancers tend to be well paid. Even mediocre freelancers seem to make more money than employees.
Of course it depends on the kind of industry you work in. In art and writing, things seem to be pretty bad. In software development, however, the market is great. In Amsterdam for people with my experience, at least.
Where I live, too many low quality people offer to be "consultants". It's the equivalent of a suit; while it's a way to look professional, it can also look sketchy.
I find that being a "freelancer" appears a little friendlier and also lands projects with more friendly pricing and deadlines.
A few tips:
1. Don't work for people unless you can help them make a lot of money.
2. Avoid freelancing marketplaces. These tend to have terrible rates, small projects and some of the worst clients. Most of these clients are beyond help, and you will never be able to help them earn a lot of money.
3. Do not charge an hourly rate. You do not want hourly jobs. Charge either a daily rate, a weekly rate, or a project rate. If you have a good client who regularly needs small tweaks, charge a monthly retainer instead of an hourly rate. I'm told that some really smart consultants charge a percentage of the of the improvement they make for the business.
4. Require half payment up front, or for longer projects, a milestone-sized payment up front. This will immediately eliminate all the clients who are allergic to writing checks, and I've never seen anybody serious reject this.
5. When setting your daily or weekly rates, plan on charging at least 2x what you would receive as salary, or up to 3x in some cases. This depends partly on the average size of your projects. If you charge less than this, your annual income will wind up much lower than you'd think. You will have lots of downtime and non-billable hours.
EDIT: 6. This should be obvious, but always write down the project deliverables and agreed-upon payment, even if it's only in an email for smaller projects. Even if you totally trust the people you're doing business with, they will forget what they agreed to. (Ideally, you should have a standard contract where additional work items can be attached as an Exhibit A.)
Aside from all that, one big challenge is balancing your pipeline. You'll have 2 months of no work, followed 3 simultaneous offers for highly-paid jobs. You need to find a way to manage this that's fair to the client and sustainable for you.
The one time I did this that was a mistake was for a university. It was dumb, and just delayed the whole project by 6 weeks while finance processed it. There was never any risk of the university not paying, so I shouldn't have bothered.
Basically, beyond a certain size, it's more trouble for an organization to cheat a vendor than it is for them to pay as agreed. Non-payment may require getting their lawyers involved, pulling in higher management, etc. (This is based on experience in the US. Things may be different elsewhere.)
The idea of a freelancing marketplace is nice, but holy cow how terrible they actually are.
I tried to hire someone through one for some graphic work for a generous rate (compared to what I generally saw on the site). I picked one well-reviewed user with hundreds (or maybe thousands?) of 5-stars and... they just Googled for an image.
I looked through some of the "jobs" there and the "employers" seemed just as incompetent as the freelancers themselves. "Need an app for $100"
They are trying to disintermediate agents, without ending up in a race to the bottom, IMO.
I like splitting work-pay-cycles into thirds or sixths, because it's easier for a client to buy into and helps to keep the ball rolling with overlapping plan / review / work / pay cycles.
It gives more room to prove the work / track progress, and it incentives iteration and client involvement, while also being small enough increments that there doesn't need to be a delay if one partner needs more time to think about something while the other continues fulfilling on their end.
And, it helps build trust, for example when a client can see things rolling well and makes an upcoming payment in advance, raising the work prepaid buffer ratio(?).
I think tau might have something to do with these ratios:
- https://www.reddit.com/r/visualizedmath/comments/7nyclx/grap...
- https://upload.wikimedia.org/wikipedia/commons/a/a5/ComplexS...
- https://www.reddit.com/r/woahdude/comments/22f22j/gif_the_re...
- https://d2w9rnfcy7mm78.cloudfront.net/688961/original_ee19f1...
With MVPs I like hourly charges because it gives them a lot of freedom to pivot, and it helps to justify why we should put aside a few days early on to design UI/UX rather than go with the flow.
Also what I do is kind of a prepaid thing. They put in 10 hours into my bank account and I'll do 10 hours. After they gain confidence, they start putting a month in advance. It doesn't necessarily stop when the money runs out, but it doesn't start until the first paycheck. It also helps a lot with international projects, where payment can take a week to go through and might be held up by money laundering laws, etc.
I like this idea, how does that work? I have worked with clients who would (after completion of project)contact me few times a month for minor tweaks which require less than 30-40mins of work and I am unable to bill them logically for it until it accumulates to actually charge them in total.
I love contracting. But that is my experience. Other roles, areas, personalities it may not work, and other types of contracting it may be very different.
Good bits:
- If you work normal amount you earn a lot more (remember to expense everything!)
- Unlimited holidays. I take a normal amount of holidays during contracts, and then a few months off between contracts though depends on the length of the contract.
- No illusion of job security and no guilt if you leave at the end of a contract. But don't burn bridges or leave a bad impression. You likely will work for them again, or at least the same people.
- No need to work late/weekends, you are paid for the work you do, not to impress for a promotion. .
Bad bits:
- Pressure to find the next contract. It eases off as you build a bigger network of past clients and coworkers etc. I'm not concerned about that anymore but was the first few years.
- Extra paperwork. I have a near automated online accountant, but I still got to click the odd approval, and export bank statements, find insurance, sign contracts etc.
- Contract recruiters are the worst. It is their job to squeeze you not the client.
- Less startup contracts, more enterprise.
But in my experience contracting only works in a big market such as London. Or more accurate it works better in big markets with a big demand for skills that I/you have. I am not sure I could be a contractor in smaller markets where you would depend on remote contracts and an established wide network of clients already.
Also, remember to build a few months war chest before you start. And able to cut expenses if you need some bench time.
Ps. don't call it freelancing, unless you are a designer and then only if you really love the term.
To just quickly address your suspicion - I’m not a recruiter (or a designer). I’m a software engineer who’s just had a few ups and downs since December.
Contracting as a software engineer is usually worth it, though not always. But it certainly depends on location ie demand, unless you have a very good network already.
And also depends on experience. Contracting without 5-10 years experience is a big gamble as your CV is a harder sell to people that expect you to be running from the start. Though no need to be a guru, imposter syndrome prevails for contractors as well :)
Also from the survey questions remember contracting income is fluid. Payments to your ltd company often gets delayed a month or two due to missed accounts payable dates etc. Happens to me all the time but I have never had a non-payment, just delays. You got to have buffers (ie bank balance) enough so that you don't have to be paid every month, as a company and personally.
Seems like you have already dabbled in contracting so may not be relevant anymore but I did once write up an intro to contracting in the UK: http://blog.flurdy.com/2015/10/contracting-101.html
I'm not so sure this is true. Given today's market rates, you have to be charging a lot to get to break-even. Many people who do these breakdowns don't properly take into account the total income you can get as a salaried employee.
Now i live in a country where work is both heavily regulated, and with a very high unemployment rate, so maybe it’s different elsewhere.
1 - Is your skillset relatively rare or in demand in a freelance market?
2 - How easy or difficult will it be for employers to find you? This is related to how well you market yourself, how well networked you are within the market, whether an exchange (eg Upwork, Fiverr) of some kind exists for you to join, and whether or not you can use any "agents" or third-parties to broker deals and connect you with work.
3 - What is your 'end game' or primary criteria for the work that you want to do? Are you interested in work/life balance, money, control over what kind of work you do (and don't do), career progression, ability to take long breaks between work, remote work or digital nomad roles, etc.?
There are even more factors than this, but this is a start. I know countless people who have freelanced successfully for many years, and others who didn't like it at all. Every story is different.
Your survey is mainly about invoicing. In my experience that's a solved problem at least when dealing with smaller companies. In the freelancing gigs I have had over the past 10 years I either sent a PDF by mail, or committed it to a repository (10/10 for geek cred for WebFaction) or used an online timesheet program. Payment was made via bank transfer within a few hours and rarely more than a couple of days. Even in relationships with very large companies based in abroad (i.e. USA, I'm in Portgual) once the necessary paperwork was sent to get the information into the billing system the process was smooth.
Where I have experienced problems it was with slightly sketchy organisations and no amount of technology is going to solve that, other than an automated lawyer or strongman service.
The unsolved "problems" with freelancing are getting companies to feel sufficiently confident to do more of it and getting some kind of community to keep freelancers fresh. The ability to allow groups of individuals to organize themselves so that they can competently deal with companies on a peer to peer basis would also be pretty useful.
Thanks for your input.
But I dont want any of that. I'll pay my sick leave, my computer and my phone. Just give me the cash.
I've been a contractor now for 3 years, essentially providing a service and issuing invoices to clients. Luckily for me, I've only had 2 clients in this period of time, because both contracts were ongoing on large scale projects.
I have no rights, my contracts don't pay holiday, or sick leave, but I charge a very high fee per day, more than every developer I know who works as a standard full-time employee.
The result is a much higher income, and I have saved more money in 3 years than most people I know.
Additionally, I'm not actually managing these projects, they have in-house product designers and owners for this, so basically I'm just there to build and maintain the thing, have meeting with other developers, and give a demo of updates.
My advice to you is: - To try to find ongoing work/projects rather than lots of smaller ones. It saves the headache of negotiating and finding clients. - Stay away from freelancing websites. You will be taken advantage of and get crumbs for jobs. - Under all circumstances, do not take upon any Wordpress websites, unless you are happy being at the bottom of the barrel for your services. - Don't work for friends, unless you both are very established in your professions. - If you are a web developer, specialize and only use the latest tech that you actually want to use. Don't take on legacy crap projects. - Unless you are given the task of managing the project, do not quote. Charge per day. - If they offer you a desk space to work on-site, be aware that you will be pulled into a standard working office culture, maybe you like this, maybe you don't.
Enjoy the freedom!
The pros:
1. Once you get good at what you do, you can command a premium, and clients will happily pay for it.
2. Over time, you develop enough case studies to win clients easily. I now no longer have to worry about finding clients.
3. You develop a LOT of ancillary skills. Though my core expertise is marketing, I've learned everything from Photoshop to building basic websites simply because it was cheaper to do it myself than finding and hiring a sub-contractor.
The cons:
1. Working alone isn't any fun, especially if you're slightly extroverted as I am.
2. I don't know by how much, but I'm sure it impacts your career negatively. I'm not sure how welcome I would be in a corporate role if I ever decided to move in that direction. I certainly don't have a traditional resume, and few hiring managers are equipped to evaluate it.
3. Taxes can be a pain. Most freelancers neglect to factor in the 30% that will end up going towards paying the government.
My advice:
1. Figure out if this is for you, and if it is, go for it 100%. The only way to build a lucrative freelancing career is to build up a large portfolio of proven work, and a network of clients. Neither of these can be done overnight.
2. Add 30% to whatever rates you decide are good for you. That's tax and shouldn't be touched.
3. Work for results, not for work. If you're competent at whatever you do, you will enjoy showing results (or finished products) far more than just sending a report of XYZ tasks completed for the month. It also gives you way more control over how and when you work.
4. Incorporate. I did this way too late and as a result, my financial history has a few missing pieces. This can impact how willing banks are to lend to you.
5. If you can, get monthly retainers. That's the surest you can get to the comfort of a salary.
6. If you can work from anywhere, take advantage of lower cost of living in other cities/countries. You'll save way more.
- A LOT of job boards and freelance marketplaces exist. I wasted plenty of hours to check them and find a relevant project. Approximately, I found a service that helps me to manage them. [1]
- Clients want to spend less money from a job. That's why you face a big competition on the freelancers market. Indian and European freelancers charge less money. Their rates are from $5 per hour till $40. When an American freelancer has to charge from $50 till $150+. [2] Fixed price really solve this issue.
- You can't anticipate how much money you can get for a month.
That's why I suggest finding long-time clients or full-time remote jobs as a contractor. Make your life easier.
[2] https://periodix.net/blog/which-developers-earn-more-corpora...
They're from a similar survey I conducted about 3 years ago.
Now on the other hand, I have no issue with doing W2 contracting with an agency, I get paid for every hour I work. I just make sure I negotiate a high enough rate to take into account gaps in employment, unpaid time off, and lack of a 401K match. I can always get insurance through my wife.
1. Find small to mid-sized companies who can't afford (don't need) a full-time SysAdmin, but could use one for say 2 hrs per day.
2. Be nice and attentive to secretaries and office managers!
3. Push clients to engage in contracts. Offer discounts on hourly rate for bulk commitments (e.g. offer 10 hrs per month at a 35% discount or whatever).
4. You need to oversubscribe yourself about 1.5x to make it work financially...also invest in decent time & billing software.
5. Never pay for advertising. Asking existing clients politely for referrals is 10000% more effective. Further, the kind of jobs you get from "ads in the paper" are never the jobs you actually want to do.
I've been tempted to write an ebook on the process, if anyone is interested, but somehow I feel like I don't know enough.
I used it a lot when I started freelancing.
Ask: The Counterintuitive Online Method to Discover Exactly What Your Customers Want to Buy...Create a Mass of Raving Fans...and Take Any Business to the Next Level https://www.amazon.co.uk/dp/1939447720/ref=cm_sw_r_cp_apa_i_...
Price accordingly, then over successive engagements, raise prices. As long as you can demonstrate the value, good clients are happy to pay. You don't want the not-good clients.
https://en.wikipedia.org/wiki/Freelancer
Can you explain how this definition differs from yours?