A huge issue in the field of freelancing and consulting is that people just aren't bringing in enough money to sustain their businesses in the long term. This is bad because it means they are putting the longevity of their business at risk, as well as underselling their worth. Happily, there are some tactics you can use to combat this situation.
The first tactic that you should consider is smart money management both before and during the time you are freelancing or consulting. This is so essential because if you find yourself in a situation where no business is coming in, and you have no funds to fall back on, it can be incredibly tempting to keep lowering your prices until you get a bite from a customer.
Of course, lowering your prices devalues all of your work, creates a whole lot of stress, and it can make it's even harder to ask for a decent fee if you do get any repeat work. To that end, it's vital that you have some saving to fall back on when you first begin this type of business.
I recommend 3 - 6 months as a starting point and that you work towards a year of operating expenses. That’s a year of salary for you (and anyone you pay) plus a year of all business expenses. Yes, that’s a lot of cash sitting in the bank but you’re going to be so happy you have it when you hit a rough patch.
Next, if you genuinely want to get paid what your time and effort is worth you need to be able to demonstrate to potential clients that they are getting the best person for the job.
One way to do this is to invest in yourself and further your education in the field of business. You don't even need to take time away from your company to do this, as you can get your online MBA while you work. The latter being something that makes qualifications like this much more accessible to freelancers and consultants that cannot afford to take two years off purely for study.
Additionally, you may choose to use an online portfolio, and testimonials to demonstrate to potential customs the value that you can add to their business by providing your services. I love video testimonials because they increase trust with prospects since they can see you interact with your customer. They get to know your voice and your face and are more likely to purchase from you.
Lastly, when it comes to getting paid what you are genuinely worth for freelancing and constancy work you must remember to get your sums right.
Getting your calculations right as a freelancer is crucial.
What this means is that you set your prices in line with what your overheads cost you, added to how much your time is worth by the hour. Also remember that as a consultant or freelancer you need to factor in vacation and sick days too, as well as your tax. Otherwise you could end up charging too low a fee and be out of pocket.
Additionally, make sure you don’t fall into the trap of thinking that you’re going to bill an 8-hour day every day. It’s not going to happen unless you’re going to work 12 - 14 hours a day. You should be basing your hourly rate off a 4 - 5 hour day of billable work.
Yes it’s going to take 8 hours to get that much billable time in.
With a bit of planning you can make your money stretch further as you use a budget. If you put a bit of effort in, you can establish yourself as an authority which will help prospects see more value in your work. Finally, if you do a bit of math you can work out what you should be charging with the time you truly have available.
Photo by: gladius