If I had to share one key to success as a freelancer / independent consultant, it would be to never see yourself as a freelancer. That’s because, in my opinion, one of the most important things a freelancer should be aware of is that, by exchanging their limited time in exchange for money, they are essentially running a business and not engaging in a hobby.
Failure to understand the difference between the two is a fundamental mistake that leads to many others. You should never find yourself stuck in the trap of handling your freelance work in the same, unstructured and unmonitored way that you would handle your hobby or passion project because hobbies do not pay.
Don’t get me wrong…while it is essential to freelance in a trade you absolutely enjoy, failure to carry out your work in a way that is structured and measurable will render you unable to measure your profitability because you cannot account for your time and other resources spent. Running a freelance practice should be seen like running a small, one-person business whose goal is to realise profitability by doing the things that one loves doing and is able to do well.
Freelancing vs Running a Business
The challenge with freelancing is that, by its very definition, the word implies a degree of freedom and flexibility that, because of its non-reference to rigid confinement, appeals to many of us who long to be free from a 9 to 5. What’s ironic though is that, without structures and a structured way of thinking, freelancing can be a fruitless use of your time that leaves you overworked and broke. Making a decent amount of money as a freelancer requires a disciplined, business mindset; a way of thinking that takes a very structured and measured approach to the use of your time and the price you charge for it.
The truth is, if you cannot measure your services in terms of time (hourly, daily and otherwise) and if you cannot place a monetary value on that time, you are running a non-profit venture that will be beneficial to everyone else but yourself. This brings us back to the cardinal point I mentioned earlier – establish from day one that what you are doing is business…the primary motive of which is to realise profitability.
What is the value of your hour?
The big question when starting out as a freelancer is usually how to value your services. The easier way to pose this question is to ask yourself – what is the value of my hour? That is the big question. Anyone who has ever had to price their services will relate to its complexity. At this point, one important rule applies – the price you place on your service items is a reflection of not only the perceived value of the service item itself. To run a sustainable business, you must realise that the price you place on any one service should be a reflection of the combination of expenses that go into making that service a reality.
Start by asking yourself how much you need to make per day to meet your monthly bills and pay your rent or bond instalment? How much do you need for the electricity and data that help you remain productive? All of these are expenses that need to be factored into each service you provide.
If these things are not taken into account, you might not be able to keep the lights on for long. My advice to you is: have a look at the going market rate for your services; double-check that this rate factors in all of your personal expenses, and then think about how much you need to price your services. You don’t have to overprice – that only makes you uncompetitive, but you do have to find a viable balance in your pricing that allows you to realise a decent profit over and above your expenses. Many freelancers who have failed to get this basic business aspect of their practice right have been driven out of freelancing due to the unsustainable nature of it.
Try fielding your prices to potential clients and see how they react. Pricing doesn’t have to be a one-time thing. Continue to fine-tune your rates until they are at an optimal level. Sure, there may be some who do not recognise the value of your service and might be unwilling to pay your asking price, but there will also be others who are willing. And though it may take a while to find the right set of clients with whom you can build long-term relationships, hold on and keep perfecting your product and service delivery. Don’t compromise your value or your pricing (it usually doesn’t go well when you do).
Once you have gotten your product and pricing right, you will be ready for the next phase of your business – selling your services and continuously growing your freelance business into a successful enterprise.