Time management tips, tales, truths.
“…Of course, even estimating the amount of billable hours you will work can be difficult. A year is a long time, and a lot of unexpected things can happen.
An inherent benefit to the customer for hiring a freelance worker is accessibility. If they need something completed ASAP, they are not confined to the regular nine to five working hours of a company. Most freelancers quickly accessible through personal cell phones or personal email. While getting phone calls at 10 pm may sound like a bit of an inconvenience to you, you can charge the client more because it is an additional convenience to them.
Most freelancers who succeed don’t go working for themselves without having a bit of experience. When a client hires you as a freelancer or consultant, they are expecting someone in the know. When a client takes on a large company to do work for them, they can’t really know what to expect. For all they know, the person responsible for their account just graduated college yesterday.
Oftentimes, employees working for companies have to follow company policies and guidelines. But is there really a one-size-fits-all policy? I don’t think so…especially when it comes to business. A company policy may always be the most effective, efficient, or even correct way to accomplish a goal. Which leads to efficiency and flexibility!
4. Flexibility It’s pretty normal for a company to operate like a big bureaucracy. And the bigger the company, the bigger the bureaucracy! Individual freelancers can make alterations on the fly. A company hierarchy doesn’t lend itself to flexibility.
5. Efficiency When you are your own boss there is no hierarchy of decision making. You don’t have to ask your boss how to approach a certain problem. And your boss doesn’t have to ask their boss. You are the decision maker. And while this may be a little daunting at first, it provides that work is more efficient. More efficient work means jobs get done faster. Which means you will probably bill the client less hours than a large company would. Which means you can charge them more per hour!
6. Income Sharing If you’ve ever had a job doing work for a client through a company, then you know that the company you work for is making a lot more off of you than you are getting paid. This makes sense. The company has to make a lot of money off of you so that they can cover operating expenses and still make a profit when all is said and done. A friend of mine works as an electrical engineer. He gets paid pretty well…in the mid 50,000s. On top of that, the company pays for the gas for his car, and covers his cell phone bill. Not a bad deal! Taking all of those benefits into account, we can be generous and round up his overall earnings to 65k/year. In a regular work year that comes out to be around $32.50/hour. Pretty solid. Until you consider that his company charges over $300/hour to send him out to some clients. Of course, the company does leverage its contacts and perform all the marketing duties. And then they have to cover their expenses and send some of the profits upstream to pay higher-level employees. There is a lot of profit-sharing going on! But as a freelance worker, you don’t have to share your income with anyone. An independent electrical engineer could charge over $200/hour and still save the client money in comparison to hiring a larger company!
7. Benefits When faced with a decision of where to work, many individuals take benefits like medical insurance into account. This, of course, is very important. Companies have the upper hand over individual freelancers in terms of affordable benefits because they get group rates. That doesn’t mean that you, as a freelancer, don’t need medical insurance! It only stands to reason that if you are going to be paying more for the benefits yourself, that you should be charging the client more to cover your expenses.
8. Signaling There are a lot of psychological games in play when money is involved. And with that said, charging too little can actually be dangerous to your business. Money is a signal of value. When you pay more for a Lamborghini, you expect that it’ll be better quality than a cheaper Kia. Charging too little can alert a potential client of a couple things: lack of expertise or lack of confidence and uncertainty. One More Thing… Have you ever tried negotiating with someone only to have your first offer accepted? That leaves you walking away thinking “I should have offered less!” It’s much easier to negotiate your rates down, then to negotiate them up once the client agrees. And as a freelance worker, you are always in the position to negotiate!”