Ask HN: Experiences of UK freelancers working with US clients?

Take what you read about freelancer rates online with a grain of salt. $10k/wk is $250/hr, at the high end of US freelancer rates. Some freelancers do get such rates but the US median is more like $60-$80/hr for typical software development. I’ve freelanced for US companies for 15 years while traveling all over the world and no customer ever cared where I live as long as I answer their messages promptly.

Companies outsource overseas mainly to save money. They may do it because they can’t get US-based employees or freelancers. If they have to pay US rates for foreign contractors they will prefer to hire Americans. The unfilled demand here is for experienced senior people, so if you can position yourself as well above average you can charge more.

Hiring freelancers overseas doesn’t present any actual new risk or overhead to either party. Companies may imagine it does out of ignorance or inexperience. Hiring foreign employees does create tax and labor law compliance issues, which is why outsourcing to freelancers and overseas contract firms is so popular.

The unfilled demand here is for experienced senior people, so if you can position yourself as well above average you can charge more.

This is the bracket I’m most interested in myself: people who are sufficiently skilled and experienced that you can send them a spec for something you need to build, communicate further as needed during development, and then expect to have a good product delivered when they’re done.

Yeah that’s what we all wish for.

In real life customers rarely have the ability to write a complete and consistent spec. That’s why we have iterative development and agile.

The model I use is much more incremental, with a list of clear deliverables and expected cost. Work with customer to define requirements, write those down with estimates, agree, deliver, review, repeat. My customers see constant progress and can change direction at any time, they never owe me so much money I would suffer if they don’t pay.

If you try to freelance with the waterfall/BDUF method you describe you’ll run into problems.

In real life customers rarely have the ability to write a complete and consistent spec. That’s why we have iterative development and agile.

Well, yes, that’s the “communicate further as needed” part, isn’t it? :-)

Maybe. You and the customer may have very different expectations about communication.

The number one complaint I hear from my customers is the last guy/firm stopped communicating, or took days to answer emails. The second most common complaint I hear is that the last guy didn’t listen to what the customer actually wanted. Customers ask for solutions to business problems. Freelancers too often think the customer is asking for thousands of lines of React code.

Sure, though all of this doesn’t seem any different to other freelance development work. Communication has always been key in client relationships.

My intended point was just that I’m talking about the level of freelancer with enough skill and experience to get a good job done themselves and with minimal disruption or drama. That kind of person isn’t likely to be charging sub-£500 day rates over here so I’d be very surprised if they were charging sub-$500 rates across the pond.

$500/day is about $62/hr, assuming 8 hrs/day. That’s in the median range for US freelancers. You can find people charging quite a bit less on sites like Upwork and Fiverr (many of them in low cost-of-living countries). $250+/hr is at the high end, though I know freelancers getting that rate, and I sometimes get that rate for specialized or emergency work. Freelancers I know with similar experience/skills (I have 40 years programming experience) get $100-$200 per hour consistently with US companies. One friend specializes in server/network security and gets $225/hr consistently.

I find I get better-quality customers with a higher than median rate. Depending on the niche you specialize in you have to find a rate that advertises your competence without going so high you exclude most customers.

I prefer not to work hourly, and I never take on big fixed-fee projects. My niche is taking over the big fixed-fee projects that fail (as they seem to most of the time). I charge by deliverable unless the customer can’t handle that and wants to go hourly. Even when they want to pay hourly I’m giving them binding estimates for specific deliverables and tasks so it works out the same.

I have worked through a US-based agency since 2014, they take care of contracts/legal, billing and payment, and marketing for 15% of gross. They get better rates than I was getting on my own before signing up with them so it works out.

What extra risks and overheads do you mean, regarding international relationships?

Enforcing a contract or collecting payment (or getting quality work) are problems with US-based relationships, generally too tedious and expensive for both parties to bother with.

You reduce risk by setting clear deliverables and expectations up front and not getting into the position of the customer owing you a lot of money. Other than the minor hassle of wire transfer and currency conversion I’m not aware of any significant overhead due to contracting from outside the US.

One example is that we seem to need to send clients a significantly complicated form they can use if the IRS ask to confirm that we’re paying tax on earnings here in the UK so they aren’t required to deduct anything at source.

Another is that my company’s professional insurance costs would apparently increase significantly if we did any business with US clients.

The IRS has no jurisdiction with UK taxes. If you aren’t US citizens or permanent residents you aren’t subject to US taxes. The customer is not obligated under US law to comply with foreign tax obligations. Paying your taxes in the UK is your responsibility — your US customers have no obligation unless you are considered employees or they have a presence in the UK that creates a tax responsibility there (usually called “nexus”).

What professional insurance does a freelancer need? In 15 years freelancing I got asked about errors and omissions insurance exactly once. I told the customer they would have to cover that since it’s an unusual requirement. Larger companies and government agencies demand that kind of thing, not my customer base.

The customer is not obligated under US law to comply with foreign tax obligations.

Are there not withholding obligations under US tax rules for the customer, though, unless they have something like a W-8BEN or W-8BEN-E? I’m by no means an expert in this area, but my understanding was that without providing the official paperwork, the customer would be required to deduct US taxes for US-sourced income before paying their bill.

What professional insurance does a freelancer need?

We carry professional indemnity, among other things.

I’m a US citizen and not a tax expert. You should get professional advice. The US and UK have tax treaties that may/should exempt you and your company from dual taxation. I’ve never heard of US companies withholding taxes for foreign freelancers but don’t take my word on that.

If you’re working remotely the only liability you can have is breach of contract, which is covered by law. E&O (errors and omissions) coverage exists but I have been asked about that exactly once and when I said I don’t have it and won’t pay for it the customer dropped the issue. Because of the time and expense involved even between two US-based parties in our legal system I think it’s best to avoid situations that can lead to such disputes. That’s why I don’t do green fields projects with big up-front payments or deposits.

It was the expert advice that warned me about the odd tax situation. My current understanding is that the UK and US do have a tax treaty and it does mean we don’t have to get double-taxed for this kind of engagement, but to avoid it there is a particular form we have to give to any US-based client that they keep as evidence of the above so they don’t have to deduct US tax at source before paying us. But as you say, if anything like this ever went ahead, this is definitely a taking-professional-advice situation, particularly if that form is at all tricky to fill out.

> Looking at the recent threads about rates here on HN, it seems rates of $10K-15K per week are not unusual for good freelance devs in the US

I don't know US market that well, but I imagine 15k per week is mostly for either short engagement (a couple of weeks) or for mid-term engagements of someone really senior that can come on-site often.