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Comment by arrowsmith | Hacker News Reader

You make $500k/year from freelance contracts as a solo developer?

What kind of companies and tech stack do you work with?

I pay my sales person 80k base and <20% commission. Rest i pocket. I have literally no expesenses besides email and domain subscription.

It's not clear if that's revenue or profit. Due to that intentional ambiguity I had to presume the latter.

Maybe, but how big can the expenses have been?

I've worked as a freelance solo dev (sadly for far less than $500k/year) and the difference between my revenue and profit was close to zero. Expenses included accountancy costs and the occasional new laptop or whatever bit of hardware I could justifiably call a business expense, but it was a tiny fraction of my revenue.

That assumes your time costs zero.

But if you assume as I do that your time is the most valuable thing you have, then there’s no way to generate profits when all you sell is your time.

You can generate cash, sure. But profits as in selling something for more than it cost you, never. You can never get that time back, and it’s worth more than anything.

I would guess many will disagree with this perspective.

Maybe, but that's completely irrelevant to the original question of whether the quoted $500k was OP's gross cash revenue or net financial income.

If you're a solo freelancer, there's no difference between paying yourself for your time and paying yourself out of the profits. The money goes to you either way.

And either way, you’re not paying enough cash to cover the value of what you’re selling, so the net result is not profitable.

Good luck explaining that one to your accountant.

If you are paying taxes, you should get a new accountant.

What do you mean by this? When I was freelancing the taxes were very steep (US). I felt the system promoted people working for corps.

It means you are not "expensing" or deducting everything possible. Technically, yes, your only expenses are a laptop. But a good account will find way more: home office, legible meals or travels, investments, etc.. This should reduce your tax bill. You should never pay over 10% total, otherwise you are not maxing the system.

Oops. I meant to say, former. The 500k is likely revenue, not what's left after expenses.

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