How to Freelance for a Living

Posted on May 22nd 2011 11:37am Sunday, by Blaine

Freelancing has many perks such as choosing your vacation days, working the hours you want, and you getting paid what you want. It also has its downsides such as money flow, lack of social interaction, and finding motivation to work from home. This article is going to talk about how to work as a freelance developer for a living.

Getting Started

Experience + Skill + Location = Worth

How much are you worth? This varies depending on your experience, skill, and location. Ask some locals of your skill level what they charge for their services and start there. You can also undercut their prices and offer to do work for them. This way they can make a profit and you have a source of income. In my field I have seen freelancers charge $15-$300 an hour. Do not ask clients how much you should charge. Not only does this show your inexperience, but makes them feel like you are not worth what they are paying you.

Where do you find clients? Contacting development and design firms or other freelancers is a great place to start because many of them need “part-time” freelancers. The majority of my business is from word of mouth. By keeping clients satisfied they tell others about me. About 5% is from business cards that I give out to people who are interested. I have about 100 of 250 cards from two years of business. Finally, 5% of my business is from this website. I do not compete directly with the thousands of other web development websites. Instead I refer clients who want to see my portfolio and resume. I compete for local clients because people prefer someone they can meet. The blog and other content on my site are to help other programmers and introduce them into the world of web development.

What about invoices and taxes? FreshBooks handles tracking time on projects, business expenses, and invoicing clients. I use timerSync with FreshBooks to make time tracking even easier. I have both a business checking and savings accounts. I use the checking account to pay for business related expenses and use the savings account for taxes. Once a month I review the checking account history and categorize my expenses in Freshbooks. My categories include: lease, utility, travel, service, invoice, supplies, fees, depreciating assets, and software. These are grouped to make my taxes easier to file at the end of the year. Here are a few things I write off as expenses: Miles driven and meals when meeting with clients, a percentage of my home utilities and rent that I use for my office, hosting, domains, cell phone, and office furniture. If you buy it for use in your business you can usually write it off. Check with a tax adviser if you have questions.

A fellow freelancer, Dan Decort, recommends getting a Certified Public Accountant. He says “They are worth every penny and do wonderful job at saving me money on taxes”.

Put 25% away for taxes, make sure the ratio is appropriate for your tax bracket

A CPA will manage all of your money and handle your taxes. I don’t have a CPA out of personal choice, it is possible however that in the future I might get one. I am responsible enough to put 25% of all my income into business savings and not touch it until after taxes are paid. I use TurboTax to do my personal and business taxes. I setup a LLC and have a prepared W9 in case a client requests it. The W9 is the appropriate form for contractor work. It basically states that you are paying the taxes on the money that the client gives you.

What projects do you like to work on? At first you may not get much of a choice of what you work on but as business gets moving you will get more of a choice. You should always strive to take projects that will challenge you but not overwhelm you. It is important that your client thinks you are the smartest programmer in the world.

Keeping things moving

What about financial stability? Find a steady client or two (development firm or another freelancer) who can pay your cost of living. If your cost of living is $1,500 a month and your rate is $50 an hour, your client should consistently buy 40 hours per month. Where is the extra $500 going? Taxes. Do not forget about taxes. You may have to give them a discount on your rate to get them to spend the amount you need. Any other clients you can get are extra money. Try to save 6 months of your minimum living expenses in a savings account to use if you lose clients.

How do I keep my sanity? Working from home is challenging. It is nothing like working in an office with people, phones, and lunches. Instead you have silence, radio, and YouTube. It can and will drive you crazy unless you enjoy silence or radio. However if you have this urge to be around people one solution is to voice chat other freelancers. The conversation is usually small talk because we are working, but it is knowing that they are there helps me a great deal.

What do I do in my downtime? If you need more work start looking for new clients. Try craigslist, other job offer websites, and freelancing websites. If you are expecting clients with work in the near future try learning something new that you would not feel comfortable doing for a client. You can also write a blog to help others with problems you may have had or something you feel very knowledgeable on and can teach it with your own twist. Everyone learns differently, so your perspective may help.

Earn a raise by maintaining a lot of work. Then raise prices to lower work.

What happens when I have too much work? Clients start emailing you about the same job. You are sleep deprived (I’ve been up for 27 hours as of now). You are on the programmers diet, meaning, if nothing is within reach you forget to notice you have not not eaten in the past 12 hours. If you find yourself working for more than 40 hours a week on a constant basis and you have enough clients, raise your prices. I raised my prices by $15 and lost no clients. Try not to do this often, you just gave yourself a well deserved raise. At this point you can either find a freelancer to take on the extra work and make some money off of them. Or you can decline work of clients that have another freelancer to go to. To grow you must find, teach, and trust other freelancers to work with you.

Final Tips

Keep a good relationship with your clients. If you need to end a relationship, keep it as civil as possible for future business and referrals. Quote high and beat your quotes, it will make your client feel like they are getting a deal. If you have a client that is trying to price gouge your work do not put up with this. Explain that your rate is the standard for the quality of work they are receiving. If they feel they can get a better deal some were else tell them to go for it. I find it best to have hourly fees with detailed quotes so the project does not lose you money. If you have to have a flat price on a project, bid high and detail the work that will be done for the price.

If you have questions feel free to hit up the comments below or contact me.

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