Let’s take a look at some of the ways you can increase your income by raising rates and working smarter.
Depending on how long you’ve been freelancing, you may not even remember the thrill of getting that first contract. You know, the one where you seriously low-balled yourself and had that moment of “I should have asked for more” clarity. So you did start asking for more, and your clients have been happy to pay it. But now what? How do you make more money as a freelancer?
Beware of rate calculators
Rate calculators feel like the quickest and easiest way to find out what fair market value is for the work you do, but they can be deceiving. Without a way to dig into all the nuances of what it is you do, they could be leaving a lot more money on the table than you bargained for. Does a rate calculator know how many years of experience you have? Not likely. Does a rate calculator take into account the niche service you provide under the banner of “software developer”? Probably not.
So, while rate calculators are a good baseline, they absolutely should not be the only tool you use to determine your value. Start here, and then take into account things like how much experience you have, what you bring to the table that others can’t, and how many billable hours you want to work each week.
Speaking of billable hours
There is a LOT that happens behind the scenes when it comes to freelancing. It’s not all sunshine, rainbows, and working from the beach (though these are undeniable perks); there is a lot of time spent sending out invoices, searching for new clients, attending networking events, marketing yourself, and the list goes on and on. And you know what nobody is paying you for? Any of those tasks. When you’re not getting paid, how do you make more money as a freelancer?
Let’s say you are charging a client $75 an hour, and you have around 30 billable hours of work for them in a single week. Sticking with the 40-hour work week, you use those remaining hours to complete non-billable tasks, which means you’re now effectively paying yourself $56.25 an hour instead. Bump your rate by $10, though, and you wind up paying yourself $75/hr for ALL 40 hours that week (plus a little extra!).
Charge by project
Admittedly, this one can get hairy pretty quickly, but if you have enough experience under your belt, it will become easier to estimate what a per-project charge looks like. Maybe your niche is building interactive storefronts for small businesses. The first time you build one, you charge $75 an hour, and it takes you 140 hours to complete. That works out to $10,500 for this one site.
But you keep building the same site, over and over again, with changes that suit the customer, until you’re so efficient, you can get it done in 100 hours. If you’re working on an hourly rate, you’re now getting paid drastically less for the exact same work. Should your efficiency be rewarded? Yes, it most definitely should. Once you realize this is happening, start pricing by project. If a client is happy to shell out $10k, and you are happy to keep improving your efficiency, you’ve basically just raised your rates to $105 an hour, and nobody is the wiser.
The very obvious pitfall here is the dreaded scope creep. When you offer a per-project rate, make absolutely certain that the work that you’ll do is clearly outlined, and anything that falls outside of that work will incur extra costs.
Automation and outsourcing
There’s no shortage of products that will automate things like scheduling and billing, but there is a tendency to think that they won’t be any more useful or cost-effective than doing it yourself. In reality, sometimes you gotta spend a little to make more money as a freelancer. And the truth is, these products were created to serve this very specific–and very real–need, and utilizing them can free up your time to take on more clients, build out bigger projects, or even give yourself a much-deserved break from anything work-related at all (crazy idea!).
Don’t feel comfortable automating payments? Invest in an accountant. There are plenty of people out there who are comfortable chasing down your clients for money, sending out invoices, and letting you know exactly how much money you need to fork over in taxes. Outsourcing tasks like these is worth its weight in gold.
Rotate in new clients to make more money as a freelancer
Repeat customers are usually pretty easy to keep happy–you know what they want, you know how they work, and you most likely have a relationship that fosters good communication. But then again, you also have a customer that is used to your $75/hour rate, and bumping it up to $100/hour can be a hard sell.
Rotate in new clients every now and then, and you can hit ‘em hard with the $100/hour rate right off the bat. Without the prior knowledge of what you’re charging other customers, they’re happy to pay the fee. Eventually your new, higher-paying clients will replace the old ones, and your bank account will grow with you.