Nov 28, 10:44 AM: The Freelance Life, Part 3

Now that you know how to get everything started it’s time to start worrying about finances. Starting up your freelance career will require a good amount of money, so it’s probably best that you save up somewhere around $5000 for all of your materials. This includes programs, a new computer if needed, and maybe some fonts or stock art. I personally would purchase a new Apple PowerBook, a high quality digital camera (a Sony Cyber-shot works nicely), and the newest copy of Adobe Creative Suite (you may also want something for print layouts, like Quark). Upon first starting your own career in the freelance field it’s best to start with someone else’s money, and then either split the profits with that person or pay them back later. Once you have everything set up you should be just about ready, but first you need to set some guidelines.

I suggest you start by writing out a mission statement and business plan that covers your goals for 1, 5, and 10 years into the future. Follow the guidelines you set and everything should go fine. One thing you’re going to worry about is pricing for your services. If you charge too much your clients won’t come back, but if you charge too little they’ll take you as a pushover. A good idea is to take a solid number, say $15-$25 per hour. Once your project is finished, multiply whatever price you chose by the number of hours the project consumed, then double it. I myself don’t really like this method because I think it constitutes overpricing. I like to have an in-depth meeting with new clients, where we discuss exactly what they want and their budget. I then present them a solution based around their needs (at this point you should also tell them what you do and don’t know how to do. If they need something like a custom CMS and you can’t do that, tell them you’ll try it anyway and offer the finished product at a reduced price. It’s a good way to learn and let them know that you’re not going to charge them full price for something that may not be worth it).

If you do decide to charge for small websites (when your business is still new charity work is a good idea for promotional purposes), keep it around $100-$300 dollars per website, with one static design. As you grow, and develop a strong client list bump your fees up a little. Keep your small company fees around $300, but no more than $500. For mid-sized and larger companies charge a little more. $1200-$1500 is reasonable for a full website (1 complete design with minor changes per page). Now don’t try to get slick and start sneaking little hidden fees in for data management, small tweaks, etc. Your clients won’t appreciate that. Once you become more experienced and popular you’ll get bigger clients with larger budgets. Some designers, like Mike D., even make six figure annual incomes doing nothing but web design and development. Of course, Mike was working for Disney at the time, but if you put enough effort in, you can make the same.

In the end, go with your instincts, and feel free to bargain with the client. Before you start, however, make sure you have them sign a contract so you don’t get duped half-way through the project.

Besides making money you also have to dish it out too. Advertising and extra materials, among others things, can get pretty expensive, so be prepared. If you’ve registered yourself with a valid business license all your business-related purchases become tax-deductible, so keep that in mind too. If you see your projects begin to grow and you have to purchase fonts, stock photographs, icon sets, etc. you may want to break down your budget into different sections. IE, one section contains your fee for time spent, and then you have a second section for working expenses, and so on and so forth. Explain to your client what this means, and what you’ll need to buy before you begin working. In all likelihood they’ll be okay with this as long as the finished project is want they were looking for.

Now what about actually managing your money? Well, I suggest depositing all profits into a secure bank account as soon as you’re paid. Take a little bit out for your own living expenses, save the majority, and if there’s anything left, go have some fun with it. All work and no play makes jack a dull boy. If you’re looking for a simple way to bill your clients you may want to check out Blinksale, and great web application from the boys at Firewheel Design that allows you to easily manage the financial side of your projects. The great part is you can send out custom formatted invoices using CSS.

One last thing I almost forgot to cover is studio space. When you first start out as a freelancer studio space isn’t necessary, unless you have a lot of money to burn. Because you’re a freelancer most of the time you’ll be working out of the home. I do, however, suggest renting out a PO Box for all of your mailing. Now, if you plan on turning your freelance career into your own company with other employees then you should think about renting out some type of building, maybe a downtown apartment or second-story loft in a corporate office building. For great exposure, I suggest starting your search in a high-traffic area. This will be extremely costly, and you’ll have to buy new materials for other employees as well, so at this point you should have around $30,000 readily available for support. If possible try to catch the interest of some private investors to help pay for things. On the other hand, if you do stick on the freelance path you should expect some clients will want to see your home, so make sure it’s always clean. Don’t invite your old college friends over right before an important meeting. If at all possible, try meeting in a WiFi enabled environment, like a Starbucks coffee shop, or maybe one of the 6000 US McDonalds that have WiFi access, though meeting at Mickey D’s probably won’t leave a good impression.

Money management is very difficult, and no one person does it the same way. I suggest experimenting with different methods until you find something you like, and then stick with it. If you want some further tips I suggest emailing some of your favorite designers and find out what their definition of a reasonable fee is. In the next part of the series I’ll offer a few business tips and a 10-step list that will have you freelancing in no time.

Comment [14]

Comments made

  1. decided to turn the comments back on. For anybody wondering, they were disabled to prevent any further negative comments. in short, I was called a fascist and told my work was crap, among other things.

    I’ve decided to enable comments, but please try to refrain from posting anything negative

    Nov 28, 05:25 PM
  2. An extremely useful article. I’m making some progress, but the full-time job is crazy at the moment – so that’s hampering my freelance ambitions.

    I apologise to end on this, but I find it very sad that people feel the need to be unconstructive in their comments. This kind of senseless commenting isn’t welcome on any site, let alone one that provides articles of genuine interest to the intended audience of this site.

    Nov 28, 06:00 PM
  3. I didn’t see the negative comments, but I did see the comments that stated 100-300 was underpriced, and i think it is something that needs to be said. you cannot live off of $100-300 or $15-25/hr unless, as in your case, you have someone who pays for your rent, utilities, etc. Other than that i am enjoying this series of articles and i hope there are more to come.


    Nov 28, 06:11 PM
  4. “I apologise to end on this, but I find it very sad that people feel the need to be unconstructive in their comments. This kind of senseless commenting isn’t welcome on any site, let alone one that provides articles of genuine interest to the intended audience of this site.”

    It is sad to hear you say this as the comments before where in no way negative but a discussion. It is unfortunate that people can not openly discuss things without being censored or being labeled as negative.

    And I think telling people to charge lower than current market values is unethical.

    Nov 28, 06:29 PM
  5. I agree with George.

    Nov 28, 06:31 PM
  6. Shane, thanks for the comment, I agree with you completely. When the one user called me a fascist for deleting some of the earlier comments I told him everyone has to be an authoritarian on their own site.

    Kelli, the article mentions you should double that price at the end of the project. This was a method I picked up in another book I read on the subject. I don’t know why you shouldn’t just start at $50. I myself don’t charge by the hour, because you can often run into little bugs, etc that take hours to fix. also, the $100-300 is for very small websites, usually only one to five pages with a single, static desing. No content management system, etc, just X/HTML and minimal graphics

    Nov 28, 06:32 PM
  7. Goerge, you spelt your name wrong. It should be George, not Goerge. Apparently you missed some of the comments, they were pretty nasty, and so are some of the emails I’ve received. Also, I’m not telling people to significantly undercharge, but it is a good idea to charge less than your main competition. If you undercut them there’s a better chance you’ll beat them out in the long run. Correct me if I’m wrong, but isn’t the philosophy over at 37signals to do less than the competition?

    one last thing, why do you feel the need use a fake email address for comments. The way I see it that would be censoring yourself, because not many people really care what an anonymous person says

    Nov 28, 06:39 PM
  8. The 37signals philosophy has absolutely nothing to do with charging less than your competition. It has to do with application development and feature lists. Try re-reading their statements.

    And I do tend to agree that as a professional, you can justify a higher hourly rate and website fee. Don’t undermine yourself, this type of thinking hurts the entire industry as it creates an expectation of cost that is unrealistic.

    Nov 28, 07:51 PM
  9. If you compete with lower prices then you are doing yourself a great disservice, you need to research what others in your field charge. Secondly, you should compete on things such as quality, uniqueness and professionalism, not price…

    Nov 28, 08:13 PM
  10. $15 – $25 per hour and $100 – $300 per web site is very very very under-priced. $300 for a small brochure site would cover the cost of an initial site plan and a basic proposal, and that’s about it!

    Fewer jobs at a higher price – that’s the key. That way you can a) make a living(!), b) put everything that is required into the project (big all small) so that it succeeds and gets results for the client, and c) justify extra time on creativity so that you can get some job satisfaction from the project.

    I agree that you should price to compete, but your examples are way way under the going rate.

    Nov 28, 09:24 PM
  11. thanks for the comments everyone. I’ve decided to do a little more research on this subject, and rewrite the article at a later date. I’m used to working with small, local companies, with low budgets. Around here some people think $300 is too high of a price, while others go as high as $3000 per project

    I try to cater to all budgets, and create a design that fits around their needs. As for the whole $25 per hour, it says to double that at the end of the project.

    Nick, the statement on doing everything less than the competition is actually from an interview I read a while back. I’ll try to dig it up, maybe I misinterpreted the whole meaning of their ‘do less’ vision.

    like I said, I’ll revisit this at a later date, hopefully you’ll all check it out. On a side note, I enjoyed your website, kevadamson

    Nov 28, 11:35 PM
  12. Each designer should charge according to his/her skills. There’s a market for everyone out there – from $100 designs to the 6 figures websites.

    Starting out at around $15-$25/hour seems fair. Just make sure you keep spending time to improve yourself so you can charge more and more. You might want to check out AIGA’s Salary Survey for a comparison.

    Nov 29, 01:03 AM
  13. This is great advice…if you’re a 10 year old web designer living with your parents. However if you want to learn something about this topic, I suggest you do some reading at www.alistaprt.com

    Nov 29, 01:49 AM
  14. Nice post Kevin, I agree, when starting out you should charge cheap so that way those customers tell others about how cheap you charge then little by little you krank it up…. by the way great job on the site

    Nov 30, 12:08 PM

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