Comment by zipfle | Hacker News Reader

Comment by zipfle | Hacker News Reader

I really like this idea. I'm planning on starting to freelance in a few months, and one of the things that really worried me was setting rates. I know how much runway I have to make it a success, and I'm confident I can get work pricing myself below market rates (anyone can sell $5 for $4 forever). But I've heard a lot of people say you shouldn't try to be the lowest-priced option, because then you end up with clients who don't respect your time. I was worried that I might have to choose between market rates and be outcompeted by people with better portfolios, and low rates and clients I didn't like. This seems like a great third way. Start out below market, and raise my hourly rate by $1 for every 100 hours. I'll have plenty of time for portfolio building, even if I have to hustle for people who aren't my ideal clients (which actually sounds like a necessary experience anyway). Then when my rate goes up, if those customers don't think my time is that valuable, we can just part ways.

Instead of aiming for a 'market rate', aim for a target utilization rate (# of billable hours / # of working hours) of something like 70%. The remaining time should be spent pursuing new work. If your utilization rate is higher than that, raise your rates.

Edit: If it's less than your target, you'll automatically be spending more time finding new work. Use the extra time to figure out how to make yourself more valuable to your customers to bring in more work. As a last resort, lower your rates (maybe the market has changed?).

With freelancing I started out below market rate and suffered for about a year. The problem is that the majority of people looking for a "deal" are not fun to work with. They often care more about a good price than a quality end result.. it is often a battle to prevent scope creep..

Realistically success as a freelancer is down to how well you sell. You may have the best portfolio but if you cannot connect with clients you are going to lose out on work.

In the end I focused on improving the way I sold myself to clients and things improved drastically. My portfolio was fairly average but I did well by simply instilling confidence in clients that they were in the right hands and a project would run smoothly with me charge.

I'd suggest something like: pitching new clients at last_rate * 1.2 if you're starting more than three weeks out, last_rate * 1.1 if you're starting more than 1 week out, last_rate if you can start immediately, and last_rate * ( .95 ^ num_weeks_since_last_project) if it has been a while since you had work.

Also, avoid round numbers: $110 says "this is my market rate" $100 says "I am rounding up, let's negotiate"

The two keys to making this work are: 1) always be over delivering and learning and 2) keep utilization up, when your time is scarce you have real credible negotiating power on rates.

Yep, this is the typical way it is done. Low rate if you don't have clients, then raise the rates constantly to keep your amount of work down to something you can complete.

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