The Freelance Episode 💰

iteration

Iteration: A weekly podcast about programming, development, and design.

JP's Experience

• Minimal
• Often saying "yes" too frequently
• This year I only said yes to opportunities I could deliver on
• Doing consulting work for friends.... 🤔❌
• I come from a design background where I was known as the "design guy". To this day, people still ask me if I can make logos for them.

John's experience with freelance

• I started Freelancing in June 2015 (Small Rails work)
• The last 5 years I've built it into a small agency
• We did over $350k last year
• I've been able to travel, have flexible hours, and pick and choose projects and learning.

Pros of freelancing

• Extra cash (on the side)
• Flexibility
• Lot of different projects
• Less politics
• You have the power to negotiate and capture your full value with no lost efficiency or politics at play.

Cons of freelance

• No paid time off
• No benefits
• No growth opportunities - You have to be a self-starter
• Taxes, paperwork business development
• Sometimes you get boring projects
• Loneliness
• Hard to find work at first
• You have to be paid less than you are worth. That’s capitalism. There has to be a gap between what you cost and the value you provide.
• Moving from project to project gets hard. You need to be sure you really like / want shallow variety.

Getting started

• You need to pick a skill/stack/specialty.
• Make sure you have someone out there who’s paying people for it.
• People need to understand what you do and who you do it for.
• “I build Wordpress sites for dentists”
• “I do Ruby on Rails for medical startups”
• It positions you as a specialist. Specialists have more authority, less competition and make more money.

How to find clients (at first)

• Free or discounted work for Nonprofits
• Upwork / Thumbtack / Craigslist
• Portfolio work that's as close to a real project as possible
• Equity work for startups
• Open source
• Blogging (my top 2 biggest clients were from my blog)
• This season shouldn’t last for more than a year. If it does, you may want to consider a "joby job"

Once leads are coming to you:

• Raise your rate by at least 20% or so every estimate until your rejection rate is over half.
• If you are landing every bid, it’s a bad sign. You are too cheap.
• JP's Formula = Hourly rate at his "joby job" ~ $50/hr — double it or triple it

Billing approaches

Fixed Fee

• Milestone payments
• You get to a point of your hourly being diluted

Value based billing

• Milestone payments
• Understand the business enough to get a sense of the potential value you can provide.
• Ask lots of questions to really understand their business. Skim books, YouTube anything to be able to speak intelligently about their business needs.
• Once you quantify the outcome:
  • “You make $300k a year from your website leads now, you think my work could improve that by 20%. That’s $60,000. My services are just an investment of $12,000 that you’ve estimated will give you a return of $60k in your first year”
  • So instead of charging $2k for that static marketing site, you can be confident in charging $12,000 - it’s a small investment for the returns the client says they should get. It’s a deal.
• Charge more.
  • By pricing yourself “competitively,” you inadvertently signal to them that you’re “average” — and great clients, by definition, aren’t looking for average.
• It takes time.
• My average client lead to close has been about 2-3 months in the last 3 years. The average client revenue has been over $50k per client.

Hourly / Retainer Billing

• Pre-pay is the way I was doing it. Discounts for higher chunks of hours. This worked really well for ongoing development and maintence contracts.

Tools

• Harvest
• Upwork
• Catch
• Transferwise
• Bench
• Project Management software (notion, sheets, basecamp)

How to write estimates

• fixed price
• Retainer
• Hourly
• Value based fixed price

Mistakes / misconceptions

• it’s a numbers game. This is false! Don’t spray 300 people with a cold email and no context. I get these constantly. Spend 3 hours researching 3 clients you can offer value too. Build a relationship, be a resource, it takes time.
• Provide a ton of value at a sustainable but low wage.
• Selling outcomes you don’t fully control. Example: I want this rich interactive functionality on a square space site that I can’t give you admin access for. Not having copy, not having design assets, domain access. Etc.
• Fixed price billing with a lack of scope.
• Growing to quickly
• Having a closed mind to unknown domains.

Taxes + LLC's WTF?

• In the states - you have to pay taxes (I retain at least 20% of my income)
• LLC protects you
• Errors and omissions insurance is good to have as well

Links / Resources

• Seth Godin Freelancers workshop
• The business of authority

Picks

• https://www.llcuniversity.com/ - LLC University
• Stipe Atlas — Pay the money get an LLC