Freelancing is hard.
Especially when you don’t know anyone in the industry and are just starting out.
I know from past experience. After dabbling in freelance myself, talking to people in the industry, and consuming hours of content on the topic itself…
This will be a quick guide on:
- Things to think about before you start freelancing
- How to approach clients when you’re starting out
- How you should value your work
1. Before you start
When you start freelancing you adopt more risk.
You can’t guarantee yourself a stable income, access to clients can fluctuate, and you will have to spend time learning skills outside of your craft like sales, customer success, and operations.
Before you start freelancing, consider…
- Are you in a position where you can take financial risks?
- Are you comfortable with the idea of self-ownership and “becoming your own boss?”
- Are you confident in your current skills and ability to learn new skills e.g. sales, customer success, etc?
If you answered ‘yes’ to these questions, freelancing could be a potential career pathway for you, or something to at least tryout.
2. Ways to get your foot in the door
Ironically before you start freelancing, most people’s advice is to work for other people first.
The reasons for this are that it builds up your 1) personal confidence 2) experience in your craft and “how the industry works”, and most ideally 3) leads to potential referrals or clients.
The most important factor to getting more clients and referrals is through great social proof.
No one wants to hire someone who doesn’t have a track record of great results.
But it’s hard to get into the industry when you don’t have much experience. Seems like a chicken and the egg problem right?
These days there are plenty of ways to gain experience, like
- Freelance programming, do web development projects for charities (a lot of them need it!), or join programs like Develop for Good
- Freelance design, work on UX/UI projects like 100 Days of Design and publish them on Dribbble or Behance, offer to re-design logos and collateral for companies
- Freelance writing, start a Medium blog or offer to write for smaller publications
You might not get paid at the beginning as you build up your skills, portfolio, and case studies. That doesn’t mean you can’t be strategic though.
If you decide to do pro-bono freelance work for a charity, build a relationship with people who have a wide network or find an organisation that receives more eyeballs. There can be ways to increase your list of potential clientele while building up your skills and experience.
3. How you should price your work
So once you’ve decided to charge people for your work, how should you think about it?
The topic of pricing is always sensitive – so I’ll be giving you three no bs mental models to think about when pricing your work.
Price affects your perceived value
When I first started freelancing I hated the topic of pricing. Because I mainly worked with friends and off referrals I would low-ball myself.
When you low-ball yourself though, you don’t get fairly compensated and you affect the perceived value of your craft.
Low pricing shows the perception that you don’t value your work highly or that you’re new and inexperienced which they can take advantage of.
High pricing signals exclusivity and quality, making it appear more prestigious.
Take for example a luxury handbag vs one you can purchase in a local clothing store. The utility of each bag is exactly the same, but the luxury handbag is more sought out because the price and scarcity act as a signal of its quality.
I’m not saying you can easily charge six figures for your services to a business though. Just don’t undervalue yourself either.
If you’re finding it hard to gauge your price, show people in the industry your work and ask them: “how would you value the quality of my work?”
Why you shouldn’t charge by the hour
Another question people often ask about pricing their services is “how much should I charge per hour.” I’ll stop you there and say that charging by the hour is often a bad way to price your services.
When you charge by the hour, you punish yourself for being good and efficient.
Charging on a project-to-project basis can seem scary cause it means you can go off-track and spend way too long on a project. If that’s the case, try time tracking using an app like Toggl.
What some freelancers do is have an hourly rate, but charge on a project basis.
Some use formulas like:
(Hourly Rate) x (Estimated Time to Complete Project) x 1.2 (Buffer Time)
You shouldn’t be penalised for being fast, and a client shouldn’t be penalised for a freelancer not planning properly.
Price the client, not the job
When charging companies, don’t provide a flat rate based on each job. Every job should have a different price point based on the client.
Take the example of designing a new logo.
As you work with bigger companies, you have a greater license to charge more. Why? That new logo will be seen by more people, be on more printed material, appear in multi-million dollar marketing campaigns, etc.
The bigger the client, the higher stakes.
The reason why corporations pay thousands if not millions to MBB consulting firms for their service is that their reputation is a signal to businesses that by partnering with them, they are guaranteed to achieve their end goal.
They are paying for quality service as much as they are paying for risk minimisation.
So following that line of thought, your job is to:
- Appear as the least risky option for a client
i.e. gain more social proof, and referrals
- Price the client by how much quantitative impact you can provide
i.e. don’t affect nanny metrics, try improving client metrics
- Price the client by how much risk you can minimise
i.e. ensure good services, minimise back-and-forth
Clients don’t choose the best option, they choose the least risky option.