8 ms·

My first year freelancing

174 points by Alan01252 13y ago

scottshea 13y ago
Totally agree on the price. There have been many of these types of posts on HN in the time I have been following it and all have said the same thing.
- a-priori 13y ago
  The important part of that is that the OP says "This is the minimum rate you should charge per day." You should actually charge as much as you can get away with, as much as people are willing to pay you.
  - scottshea 13y ago
    Agreed. A friend of mine keeps raises his bidding price as he gets overloaded. If they pay the amount then great; if not it is better than saying "no" to potential business.
- Alan01252 13y ago
  Yet a year ago despite having the charge more mantra instilled in me by this community I was still charging too little. It wasn't until I realised that even very small companies could afford ( without hesitation ) the rate I was charging that I really started to raise my rate. Anecdote: A small company got in contact with me asking for one days help solving a few teething problems with their new e-commerce site. I was sceptical and so put my rate up thinking that would immediately put them off. It didn't, instead they'd stated at that price they'd prefer to pay for two days of my time and make sure everything they wanted was done properly.
deleted 13y ago
[deleted]
tptacek 13y ago
It's good to do the exercise of doubling your salary and backing it out to an hourly to figure out what your cost floor is, but it's easy to show how this still gets you an under-the-market result: consulting companies can pay market salaries, handle 70-80% utilization, and still have strong margins. The "correct" way to work out your rates is to raise them until you drop down to a target utilization rate by shedding the clients who don't value your work. It's awfully hard to do this in practice, but it gives you an idea of what you're aiming for. As always, let me remind you: don't bill hourly. You are not a furniture mover.
- effbott 13y ago
  >don't bill hourly I hear this a lot, but I'm not sure how to implement it. Some people have suggested that freelancers ought to bill for the entire project, but in doing so you run the risk of losing money by underestimating the amount of work and time involved. Some have also suggested billing daily instead of hourly, but if the client expects a "day" to mean "8 hours", how is that any different than just billing an hourly rate? How do you handle your billing?
  - tptacek 13y ago
    Without getting into a big long billing discussion, just change your minimum billable time from an hour to a day. If you spend less than a day working for your client, bill them the day anyways. Just make it clear up front that you bill in daily increments. Serious clients won't even blink. Most of the people you work with at serious clients aren't even spending their own money, and so daily or weekly billing simplifies their lives anyways.
    - effbott 13y ago
      Thanks for the response. I'll have to give it a try. And I need to stop working for stingy clients...
      - scott_karana 13y ago
akamaka 13y ago
Great blog post, and congratulations on your success so far. My biggest problem so far with trying to work as a freelancer has been figuring out exactly what type of work I should be pursuing. I've got a pretty broad skill set, from back-end to front-end web programming in several languages, adequate graphic design skills, and experience with native mobile platforms. While having more skills is a good thing, I feel like it makes it more difficult to market myself successfully. Has anyone else had this problem? Did you try to focus on one area that you liked the most? Did you pursue what seemed to be in greatest demand? Or did you find a way to successfully market yourself without limiting yourself to one type of work?
- miloshadzic 13y ago
  In my (very limited) experience I found that you should focus marketing yourself for what you do best. There'll be plenty of other stuff you can do for the same client once your foot is in the door.
- Wilya 13y ago
  I was in the same situation. I can do back-end web programming, and some lower level things in C or mobile apps. Right now, though, d3.js gives me 80% of my income. It's something I like, and I noticed a lot of demand, so I sort of happened naturally. Focusing in a single area has the advantage that you can become really efficient at it, much more than if you hop between completely different projects every two months. I still have a bunch of side projects in every language under the sun, because that's what I like, and because the market won't stay the same forever, but focusing professionally on only one area (that you reasonably enjoy) for a time simplifies marketing a lot.
  - skwosh 13y ago
    > Right now, though, d3.js gives me 80% of my income. It's something I like, and I noticed a lot of demand Very interesting. If you don't mind my asking, what kind of work are you typically doing with d3? Visualising what kind of data and for what purpose?
bmac27 13y ago
A potentially stupid but relevant question as I'm just getting my feet wet in the consulting arena: does discipline matter at all when it comes to this doubling/tripling of day job rate formula?
- karamazov 13y ago
  What do you mean by discipline?
  - leecbaker 13y ago
    Programmer, artist, technical writer, etc.
- napoleond 13y ago
  If by discipline you mean "type of work" then no, it doesn't matter. If by discipline you mean "self-discipline", ie. "how much time you actually spend working in a day" then it does matter, with the caveat that clients pay for results, not time-in-chair.
  - bmac27 13y ago
    Sorry for the confusion. I meant the former, as in my case, search marketing (SEO/inbound marketing) vs. programming. Most people I know working full-time in search don't approach the salaries/rates that developers make and speaking broadly, I know a lot of skills translate better in consulting than others do. That said: bottom line is that I should be charging a lot more than I am now. :)
- Silhouette 13y ago
  does discipline matter at all when it comes to this doubling/tripling of day job rate formula? Yes, but you may find it is more favourable (sometimes much more favourable) not to let yourself be pigeonholed as a certain kind of worker at all. Where possible, I'd recommend presenting your offer in terms of value it generates for your client, the way another business would rather than the way an employee would. Angle for them to be interested in results and not in any particular skills or technologies you use to achieve those results, and you change the way the discussion is framed. However, this advice comes with the caveat that presenting things that way isn't always possible. Many clients really are looking for a certain skill set to fit in with an existing team, and you can make decent, if usually unspectacular, money with that kind of gig too. In that case, ideally you want to offer a credible rate but one toward the high end of the spectrum for your market, which brings us back to "yes".
timjahn 13y ago
Some great advice in this post. I think the importance of staying in touch with colleagues cannot be overstated. Your network is your greatest asset.
6twenty 13y ago
Great article. One thing I'm struggling with as a freelancer is finding clients - I'm based in a small town in New Zealand, so I'm a long way from the opportunities in the UK and USA. How do you track down and approach new clients (who are likely to be happy with your rate)? I also feel like being in New Zealand hampers my ability to charge a higher rate. I don't know for sure, but I suspect that companies here are used to paying lower rates simply because there's less talent here than overseas.
- svmegatron 13y ago
  It sounds trite, but have you tried contacting companies in the UK and USA? If written communication between you and the client is strong, it's often an advantage to the client to have someone working out of sync with them. At the end of their day, they dump some stuff into $ISSUE_TRACKER_OF_CHOICE. When they get back the next morning, it's done.
  - 6twenty 13y ago
    No I haven't, but that brings me back to the first question - how do you research which companies to contact?
    - miloshadzic 13y ago
      Try asking the ones you'd like to work with.
- umami 13y ago
  Get in touch with me, I am interested in talking. Details are on my profile.
- pablasso 13y ago
  It's harder to do, but you don't even need to be in same city. Build a strong portfolio, for us it's several good projects on Github and jobs will come by themselves.
shawnee_ 13y ago
Retainers are a great way to add security to what is ( or can be ) a pretty uncertain financial path, however they don’t come without risks. You have to make sure any retainer you agree to works for both you and the client. If the client is asking for 24/7 on call support you either need to refuse, or charge enough for this support that you could then afford another two of you to look after the customer. The best solution I've found is to require a Good Faith Deposit. ( http://www.hackeress.com/goodfaith http://www.hackeress.com/goodfaith ) For this, charge ~ what you'd charge for 1 day of work, even if the client just wants to meet "for coffee". It's really hard to draw the line where the chitchat ends and the actual work / scope-framing / brainstorming begins. How many times have interviewers brought in or set up phone interviews with people they have zero intention of hiring, just to "pick their brains"? I ended up learning the hard way that this happens way too often. By the time I figured it out, I was out a lot of wasted time. (WePay and a couple other companies did this to me after my post here on HN awhile ago). I call it a Good Faith deposit because even though non-contractual meetings of Good Faith should be the norm, they're _not_. Getting viciously screwed over as an employee and a contractor (and even as an interviewee) more than a couple times brings this harsh reality into focus. So I made a decision going forward: the ONLY kind of clients I want to team with are those willing to respect my time and experience enough to work with me in Good Faith.
- auctiontheory 13y ago
  It's a nice idea, especially if the client is an individual, but most corporate HR and accounting systems are not set up to pay this kind of deposit in advance of considerable paperwork. I hope I'm wrong - counterexamples welcome.
  - damoncali 13y ago
    Every accounting department (that is, every company big enough to have an accounting department) I've ever worked with wanted a contract number on my invoice. If you're not in the system, you aren't getting paid. And you're doing well to get net 30, let alone upfront. I don't think this would fly with my individual clients either. Interesting thought, though. I've always considered the first few hours as part of the cost of sales. At some point you just stop and say, "we need a contact". Until then, it's marketing. Not saying that's the only or best way to do it, but it seems to be the usual way.
tunesmith 13y ago
I've never understood all the salary-to-hourly conversion formulas. In my experience, they are different markets and different kinds of workers. It sounds like this particular formula roughly equates a $100/hr contractor (working at fulltime) as a $100k/year employee. Other people say that you should take your salary (in thousands) and then double it to get your freelance hourly rate, but to me that seems ridiculous. $100/hr sounds great to a 50k employee, but 50k sounds laughable to a $100/hr contractor. Others say to take your salary (in thousands) and add 20% overhead, but that still seems pretty ridiculous. At more senior levels, it seems swapped. Contractor rates seem to have a pretty strong resistance point around $120/hr (if you go by a recent hacker new survey), I think partly because if you go above that point, that's what agencies and consultancy firms and teams tend to charge. Meanwhile, salaries for the same general technical fields seem to go higher than that pretty easily. I'm seeing 130k - 150k pretty commonly in java enterprise positions, more when you figure in bonuses with big companies. Seems like people at around that level would be well-served to switch to daily or weekly billing, but when you're working with larger companies or vendors, that's a pretty big switch for them. I've tried that approach with a Very Large company and was shut down pretty quickly.
- gknoy 13y ago
  $100/hour * 40 hours * 50 weeks (fulltime) is $200k, not $100k -- that's where the doubling comes from. (2000 billable hours, roughly.) If you're doing freelance, you also have to cover downtime, business development, benefits, and all the stuff that a normal employer might cover, so you would probably be prudent to charge more than ($YourSalary/2000) per hour.
- nerveband 13y ago
  Hah, I can barely get clients to pay $50/hr an hour for Graphic Design and Web Design work let alone $100/hr. These formula conversions baffle me as well.
  - roel_v 13y ago
    Not to be an asshole about it, but design work is not software engineering (which I assume the GP was talking about).
deleted 13y ago
[deleted]
illdave 13y ago
If you're looking to start freelancing - keep in mind that you'll need some money in reserve as it can take quite a bit longer to be paid (i.e. if you do a month's work and bill at the end of it, you can't rely on them immediately paying that invoice). From my experience, invoices that say "Payment due within 14 days" have a greater chance of being paid quickly than invoices that said "Payment due on receipt". Also, the general rule of thumb is - if you're not sure you're charging the right amount, you're almost certainly undercharging.
justplay 13y ago
I am also freelancer but not so experienced. But my client love my work and They use to come back to me when ever they need help. Usually I don't charge my client as hourly rather the work I did.
SkyMarshal 13y ago
>A lot of freelancing is being able to understand who a good client is and a bad client. We as developers are incredibly privileged right now, supply seems to be heavily out striping demand and therefore we can afford to be picky. I suppose what you mean here is that supply of work is heavily outstripping demand for it, but a better way of saying that is demand for developers is heavily outstripping supply of them.

174 points by Alan01252 13y ago

Totally agree on the price. There have been many of these types of posts on HN in the time I have been following it and all have said the same thing.

a-priori 13y ago
The important part of that is that the OP says "This is the minimum rate you should charge per day." You should actually charge as much as you can get away with, as much as people are willing to pay you.
- scottshea 13y ago
  Agreed. A friend of mine keeps raises his bidding price as he gets overloaded. If they pay the amount then great; if not it is better than saying "no" to potential business.
Alan01252 13y ago
Yet a year ago despite having the charge more mantra instilled in me by this community I was still charging too little. It wasn't until I realised that even very small companies could afford ( without hesitation ) the rate I was charging that I really started to raise my rate. Anecdote: A small company got in contact with me asking for one days help solving a few teething problems with their new e-commerce site. I was sceptical and so put my rate up thinking that would immediately put them off. It didn't, instead they'd stated at that price they'd prefer to pay for two days of my time and make sure everything they wanted was done properly.

deleted 13y ago

[deleted]

tptacek 13y ago

It's good to do the exercise of doubling your salary and backing it out to an hourly to figure out what your cost floor is, but it's easy to show how this still gets you an under-the-market result: consulting companies can pay market salaries, handle 70-80% utilization, and still have strong margins. The "correct" way to work out your rates is to raise them until you drop down to a target utilization rate by shedding the clients who don't value your work. It's awfully hard to do this in practice, but it gives you an idea of what you're aiming for. As always, let me remind you: don't bill hourly. You are not a furniture mover.

effbott 13y ago
>don't bill hourly I hear this a lot, but I'm not sure how to implement it. Some people have suggested that freelancers ought to bill for the entire project, but in doing so you run the risk of losing money by underestimating the amount of work and time involved. Some have also suggested billing daily instead of hourly, but if the client expects a "day" to mean "8 hours", how is that any different than just billing an hourly rate? How do you handle your billing?
- tptacek 13y ago
  Without getting into a big long billing discussion, just change your minimum billable time from an hour to a day. If you spend less than a day working for your client, bill them the day anyways. Just make it clear up front that you bill in daily increments. Serious clients won't even blink. Most of the people you work with at serious clients aren't even spending their own money, and so daily or weekly billing simplifies their lives anyways.
  - effbott 13y ago
    Thanks for the response. I'll have to give it a try. And I need to stop working for stingy clients...
    - scott_karana 13y ago

akamaka 13y ago

Great blog post, and congratulations on your success so far. My biggest problem so far with trying to work as a freelancer has been figuring out exactly what type of work I should be pursuing. I've got a pretty broad skill set, from back-end to front-end web programming in several languages, adequate graphic design skills, and experience with native mobile platforms. While having more skills is a good thing, I feel like it makes it more difficult to market myself successfully. Has anyone else had this problem? Did you try to focus on one area that you liked the most? Did you pursue what seemed to be in greatest demand? Or did you find a way to successfully market yourself without limiting yourself to one type of work?

miloshadzic 13y ago
In my (very limited) experience I found that you should focus marketing yourself for what you do best. There'll be plenty of other stuff you can do for the same client once your foot is in the door.
Wilya 13y ago
I was in the same situation. I can do back-end web programming, and some lower level things in C or mobile apps. Right now, though, d3.js gives me 80% of my income. It's something I like, and I noticed a lot of demand, so I sort of happened naturally. Focusing in a single area has the advantage that you can become really efficient at it, much more than if you hop between completely different projects every two months. I still have a bunch of side projects in every language under the sun, because that's what I like, and because the market won't stay the same forever, but focusing professionally on only one area (that you reasonably enjoy) for a time simplifies marketing a lot.
- skwosh 13y ago
  > Right now, though, d3.js gives me 80% of my income. It's something I like, and I noticed a lot of demand Very interesting. If you don't mind my asking, what kind of work are you typically doing with d3? Visualising what kind of data and for what purpose?

bmac27 13y ago

A potentially stupid but relevant question as I'm just getting my feet wet in the consulting arena: does discipline matter at all when it comes to this doubling/tripling of day job rate formula?

karamazov 13y ago
What do you mean by discipline?
- leecbaker 13y ago
  Programmer, artist, technical writer, etc.
napoleond 13y ago
If by discipline you mean "type of work" then no, it doesn't matter. If by discipline you mean "self-discipline", ie. "how much time you actually spend working in a day" then it does matter, with the caveat that clients pay for results, not time-in-chair.
- bmac27 13y ago
  Sorry for the confusion. I meant the former, as in my case, search marketing (SEO/inbound marketing) vs. programming. Most people I know working full-time in search don't approach the salaries/rates that developers make and speaking broadly, I know a lot of skills translate better in consulting than others do. That said: bottom line is that I should be charging a lot more than I am now. :)
Silhouette 13y ago
does discipline matter at all when it comes to this doubling/tripling of day job rate formula? Yes, but you may find it is more favourable (sometimes much more favourable) not to let yourself be pigeonholed as a certain kind of worker at all. Where possible, I'd recommend presenting your offer in terms of value it generates for your client, the way another business would rather than the way an employee would. Angle for them to be interested in results and not in any particular skills or technologies you use to achieve those results, and you change the way the discussion is framed. However, this advice comes with the caveat that presenting things that way isn't always possible. Many clients really are looking for a certain skill set to fit in with an existing team, and you can make decent, if usually unspectacular, money with that kind of gig too. In that case, ideally you want to offer a credible rate but one toward the high end of the spectrum for your market, which brings us back to "yes".

timjahn 13y ago

Some great advice in this post. I think the importance of staying in touch with colleagues cannot be overstated. Your network is your greatest asset.

6twenty 13y ago

Great article. One thing I'm struggling with as a freelancer is finding clients - I'm based in a small town in New Zealand, so I'm a long way from the opportunities in the UK and USA. How do you track down and approach new clients (who are likely to be happy with your rate)? I also feel like being in New Zealand hampers my ability to charge a higher rate. I don't know for sure, but I suspect that companies here are used to paying lower rates simply because there's less talent here than overseas.

svmegatron 13y ago
It sounds trite, but have you tried contacting companies in the UK and USA? If written communication between you and the client is strong, it's often an advantage to the client to have someone working out of sync with them. At the end of their day, they dump some stuff into $ISSUE_TRACKER_OF_CHOICE. When they get back the next morning, it's done.
- 6twenty 13y ago
  No I haven't, but that brings me back to the first question - how do you research which companies to contact?
  - miloshadzic 13y ago
    Try asking the ones you'd like to work with.
umami 13y ago
Get in touch with me, I am interested in talking. Details are on my profile.
pablasso 13y ago
It's harder to do, but you don't even need to be in same city. Build a strong portfolio, for us it's several good projects on Github and jobs will come by themselves.

shawnee_ 13y ago

Retainers are a great way to add security to what is ( or can be ) a pretty uncertain financial path, however they don’t come without risks. You have to make sure any retainer you agree to works for both you and the client. If the client is asking for 24/7 on call support you either need to refuse, or charge enough for this support that you could then afford another two of you to look after the customer. The best solution I've found is to require a Good Faith Deposit. ( http://www.hackeress.com/goodfaith http://www.hackeress.com/goodfaith ) For this, charge ~ what you'd charge for 1 day of work, even if the client just wants to meet "for coffee". It's really hard to draw the line where the chitchat ends and the actual work / scope-framing / brainstorming begins. How many times have interviewers brought in or set up phone interviews with people they have zero intention of hiring, just to "pick their brains"? I ended up learning the hard way that this happens way too often. By the time I figured it out, I was out a lot of wasted time. (WePay and a couple other companies did this to me after my post here on HN awhile ago). I call it a Good Faith deposit because even though non-contractual meetings of Good Faith should be the norm, they're _not_. Getting viciously screwed over as an employee and a contractor (and even as an interviewee) more than a couple times brings this harsh reality into focus. So I made a decision going forward: the ONLY kind of clients I want to team with are those willing to respect my time and experience enough to work with me in Good Faith.

auctiontheory 13y ago
It's a nice idea, especially if the client is an individual, but most corporate HR and accounting systems are not set up to pay this kind of deposit in advance of considerable paperwork. I hope I'm wrong - counterexamples welcome.
- damoncali 13y ago
  Every accounting department (that is, every company big enough to have an accounting department) I've ever worked with wanted a contract number on my invoice. If you're not in the system, you aren't getting paid. And you're doing well to get net 30, let alone upfront. I don't think this would fly with my individual clients either. Interesting thought, though. I've always considered the first few hours as part of the cost of sales. At some point you just stop and say, "we need a contact". Until then, it's marketing. Not saying that's the only or best way to do it, but it seems to be the usual way.

tunesmith 13y ago

I've never understood all the salary-to-hourly conversion formulas. In my experience, they are different markets and different kinds of workers. It sounds like this particular formula roughly equates a $100/hr contractor (working at fulltime) as a $100k/year employee. Other people say that you should take your salary (in thousands) and then double it to get your freelance hourly rate, but to me that seems ridiculous. $100/hr sounds great to a 50k employee, but 50k sounds laughable to a $100/hr contractor. Others say to take your salary (in thousands) and add 20% overhead, but that still seems pretty ridiculous. At more senior levels, it seems swapped. Contractor rates seem to have a pretty strong resistance point around $120/hr (if you go by a recent hacker new survey), I think partly because if you go above that point, that's what agencies and consultancy firms and teams tend to charge. Meanwhile, salaries for the same general technical fields seem to go higher than that pretty easily. I'm seeing 130k - 150k pretty commonly in java enterprise positions, more when you figure in bonuses with big companies. Seems like people at around that level would be well-served to switch to daily or weekly billing, but when you're working with larger companies or vendors, that's a pretty big switch for them. I've tried that approach with a Very Large company and was shut down pretty quickly.

gknoy 13y ago
$100/hour * 40 hours * 50 weeks (fulltime) is $200k, not $100k -- that's where the doubling comes from. (2000 billable hours, roughly.) If you're doing freelance, you also have to cover downtime, business development, benefits, and all the stuff that a normal employer might cover, so you would probably be prudent to charge more than ($YourSalary/2000) per hour.
nerveband 13y ago
Hah, I can barely get clients to pay $50/hr an hour for Graphic Design and Web Design work let alone $100/hr. These formula conversions baffle me as well.
- roel_v 13y ago
  Not to be an asshole about it, but design work is not software engineering (which I assume the GP was talking about).

deleted 13y ago

[deleted]

illdave 13y ago

If you're looking to start freelancing - keep in mind that you'll need some money in reserve as it can take quite a bit longer to be paid (i.e. if you do a month's work and bill at the end of it, you can't rely on them immediately paying that invoice). From my experience, invoices that say "Payment due within 14 days" have a greater chance of being paid quickly than invoices that said "Payment due on receipt". Also, the general rule of thumb is - if you're not sure you're charging the right amount, you're almost certainly undercharging.

justplay 13y ago

I am also freelancer but not so experienced. But my client love my work and They use to come back to me when ever they need help. Usually I don't charge my client as hourly rather the work I did.

SkyMarshal 13y ago

>A lot of freelancing is being able to understand who a good client is and a bad client. We as developers are incredibly privileged right now, supply seems to be heavily out striping demand and therefore we can afford to be picky. I suppose what you mean here is that supply of work is heavily outstripping demand for it, but a better way of saying that is demand for developers is heavily outstripping supply of them.