Above All Else, Make Enough Money
Make freelancing more stable by prioritizing earnings.
You probably want to make more money. Pretty much everyone does, no matter how much they make right now (rightly, or wrongly). This is especially true if you’re a freelancer.
Income stability is the number one concern for freelancers, and for good reason. You need to make certain that you have enough work coming in, that you are being paid appropriately for your time, and that you are covering your costs, life-style needs and financial future.
If you want to make more money there are two things you can do:
- Charge more for your service
- Spend more of your time on billable work, and less on non-billable work
How to Charge More
The secret to charging more is in understanding why clients are buying your service. You need to know:
- What is the problem you are solving?
- How much is that problem worth?
The amount that the problem is worth is a function of risk and reward. The higher the risk, and higher the reward, the more the client will pay.
Principal 1 — Understand Risk
Risk comes in two forms: corporate, and personal.
Corporate risk deals with the tangible and intangible costs associated with the project. Larger companies usually have more risk, and also demand more in terms of requirements from their service providers.
Look at the downstream costs of whatever it is you are doing. Nike is going to spend a lot more on their next television commercial than the local flooring company, so Nike is also going to spend a lot more on writing, creative development, and planning to make sure things work out.
Personal risk is specific risk to stakeholders involved in the decision to hire you. They might be risking their jobs on this project. They are certainly risking their reputation and track-record. Generally the more they have invested in their current career and position the more they will be risking, unless they are completely autonomous — a CEO may be more willing to try something new than someone lower on the hierarchy. In my experience people who’ve been with a company for 15 years are far less likely to be change agents than people who’ve only been around for a few months.
Decision makers are more likely to approve budgets for companies that can mitigate their own exposure to risk.
Principal 2 — Understand Reward
Just like there is risk, there is also reward.
For companies this usually comes in the form of some sort of expansion into a new territory or market. Often there are good contracts to be found at many levels when this is happening. Companies going through change are taking on risk, but they are also addressing opportunity that they will want to maximize.
For individual stakeholders reward is obviously personal. Certain people will be less risk averse because they see that delivering the same old solutions will not allow them to stand out within their company. Showing these people that you bring something special to the table can get you a champion within the company — someone who could stand to benefit directly by hiring you.
How to Be More Billable
The other part to making more money as a freelancer is spending less time on work that isn’t billable. Stuff like sales, accounting, legal paperwork, and taxes.
Principal 3 — Automate or Outsource
Any service you can’t bill for, and even some you can, should either be automated or outsourced to someone who can do it more quickly. As much as possible your working time needs to be spent on maximum billable time.
If you can pay someone to mow your lawn for $25 while you work for $100, you’ve made $75 by not mowing your lawn.
There are a number of great tools for automating accounting, invoicing, and contracts. You can also evaluate whether or not sales and marketing automation are right for you.
Many of these jobs can be outsourced as well. Bookkeeping is relatively inexpensive, and depending on your needs approaching a marketing company to help you set up a pipeline can save you time and trial-and-error.
This is a process that will take you some time and experimentation to get right, but that investment will pay for itself as you increase your billable hours.
Principal 4 — Bid for Jobs You Can Win
The more time you spend selling, the less time you spend making money, so you need to reduce the sales cycle.
Being a fit for your clients needs and the opportunity they represent will help you win more work more quickly. There are times when you might see an opportunity to ‘level-up’, and that can be a great thing, but always be realistic in your evaluation and understand the potential effort and downside.
Being a fit for your client means that you are the size, skill-level, and reputation to fit their needs. By evaluating yourself, and targeting clients that are a match for your services you can shorten the sales cycle. You are more effective in your messaging, more relevant, and reduce the burden on the client.
Make it as easy as possible to hire you right from the start, and you’ll find yourself spending less time selling and more time working.