Freelancers: New Year, New Rate? by Lisa Strickland

It’s that time again; the time when you break out a shiny new calendar, look back at the year that is winding down, and ask yourself the freelancer’s perennial question, “Should I raise my rates this year?”

The Freelancer’s Conundrum

When you are trying to establish your freelance business and attract new clients, you may fall into the trap of charging less than what your services are actually worth in an attempt to get a toehold in your niche. While that is understandable, it can be a recipe for freelance disaster. Seth Godin observes:

“Someone else is always willing to go a penny lower than you are, and to compete, your choices get ever more limited. The problem with the race to the bottom is that you might win. Even worse, you might come in second.”

Undervaluing your work affects your bottom line badly and creates a huge source of stress. Freelancers Union points out:

“Most people do better work when they feel that they’re properly compensated. In fact, research says feeling underpaid is the leading cause of work stress! You may actually do better work because you raised your rates.”

Fortunately, if you originally undervalued your worth to clients, that does not mean that you have to keep doing so. Rates are, after all, not set in stone.

Your inner naysayer might be whispering, “If I raise my rates, I will lose clients.” This is by far the most common misconception about increasing rates that freelancers hold. The reality is that your clients do not exist in a bubble. By and large, they understand that in the natural course of events, rates go up for services rendered over time. If they do not understand this, perhaps it is a good thing to lose their patronage.

 

Why the New Year is Perfect for New Rates

Like many things in life, changing your rates successfully requires good timing. The New Year is a perfect time to raise your rates. Why?

  • The New Year is a natural time to rethink all your business goals and objectives, including remuneration.
  • Clients are more likely to accept changes in rates at the beginning of the year, as it is also the beginning of the fiscal year for many of them.
  • Every year that passes, you increase your experience and skill level as a freelancer, which should be reflected in your pricing model.
  • Clients with whom you have built a relationship for more than a calendar year are likely to continue using your services even if you raise your rates modestly.

 

How to Set Your Freelance Rates Appropriately

Once you decide to raise your rates, you can rely on several factors to help you to price your services appropriately. The first thing to remember is that pricing is fluid. For freelancers, the going rate for a project is determined by multiple factors such as skill level required, experience, value to the client, geographic location, and more.

Do not neglect to also factor in the rate of inflation in your area. Freelancers who forget about inflation find their profit margins dwindling year over year. At some point, working for the same rates over time leads to significant financial loss.

The Guardian reports: “The Association of Independent Professionals and the Self-Employed (IPSE) recommends taking your equivalent earnings as an employee and adding a third, which accounts for the added costs that arise as a freelancer.”

The Freelancers Union gives the following guidelines to help you set your rates:

  • Even if you do not plan to charge an hourly rate per se, determine how much time it actually takes you to complete a project on average. For your own purposes, set an hourly rate that you will use as a baseline when giving clients a project rate. In general, you can determine a ballpark hourly rate by adding annual profit, annual expenses, and annual salary, then dividing by billable hours.
  • Account for any supplies and other expenses, including overhead, that will be incurred in the completion of the project.
  • Build in a specific target profit range for each project.

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How to Be Your Own Boss, by Roberta Codemo

Who wouldn’t want to be working in their pajamas, setting their own hours, and being their own boss? It sounds like the perfect world.

The reality, however, is very different. Before you walk into your current boss’s office and hand in your resignation, ask yourself if you have what it takes to start your own business and be your own boss.

Discipline

Making the transition from a regular job with a steady paycheck to being your own boss takes more than the requisite leap of faith.

Do you have the discipline to handle the demands of running a business startup on your own? In the beginning, you’ll be putting in a lot of 12- to 14-hour workdays to get your business off the ground.

It takes hard work, dedication, and commitment to start a business and make it successful. If you’re not sure, you can experiment with the idea by taking on some consulting or freelance work as a side gig before fully committing to becoming your own boss.

Support

You’ll want to be sure you have a strong support system in place. During the first few months, especially, you’re going to be making a lot of important decisions.

If you don’t have a support network in place, look for a business mentor to help you so you won’t have to go it alone. Identify a business mentor who has been down the same road you’re on and who can offer you advice and guidance when the going gets rough.

A Business Plan

The popular saying, “Failing to plan is planning to fail,” is often attributed to Benjamin Franklin, who knew a thing or two about entrepreneurship.

While some might argue against drafting a formal business plan, having one in place serves as a guide for your business and helps you articulate your vision and where you see your business going in the next five or more years.

A good business plan lays out your objectives, strategies, and long-term goals, as well as ways to achieve them, and helps hold you accountable.

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Getting Paid, by Rachel Fulginiti

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This week I received a delightful and unexpected gift. I got paid for a job I thought I’d gotten burned on. Let me backtrack. My business is divided into two parts. There’s the agented side of things: I audition for jobs with my agent (s) either at home, in their office or at casting places and when I book a job they send me to the studio. These are the “Cadillac Jobs”. Kushy and smooth. I am just a voice for hire. I go into an awesome studio, record for a half hour and then get a check sent to me a while later. No engineering, no invoicing, no call for pickups, (unless there’s another paycheck attached!); it’s pretty sweet.

But to make it as a VO in this day and age, you pretty much also have to have a home-based business, as well. On this side of things, I am not only the “talent”, but also the engineer, as well as the accountant and office manager. Most times, I am also the director and sometimes the producer. Jobs come to me through referrals from past clients, online sites, or by people finding my website.  Someone contacts me about a project, I provide a quote and tell them my policies, they send me a finalized script and I record it, either with them on the line or on my own depending on their preference. Then they may come back to me with one round of pickups. After that the job is usually (hopefully) just another good memory. Next. I fondly refer to these jobs (privately!) as “turn and burn”. No disrespect, they’re great. I get paid, complete the job quickly and it’s wrapped up nice and tidy with no unnecessary time and energy lingering. Everyone’s happy.

To this end, I always ask for payment up front, especially the first time I work with a client. I didn’t always do that, but I learned the hard way. Many times, clients seem to magically disappear after they get what they need, and understandably so; they are typically on tight deadlines and still have post production ahead of them. A few times I was stiffed completely. More often, I would eventually get paid, but it might take months and months…and that meant months and months of me following up with them, sending gentle reminders, more terse reminders…you get the idea. The whole process was a hassle, uncomfortable for me, a time suck and just plain not fun. So, I decided to adopt a policy that was in place at a corporate job I had years ago.

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10 Simple Ways to Surprise Your Clients, by Paul Strikwerda

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“Clients don’t like surprises,” said one of my business mentors.

“In an unpredictable world, they need to know that they can depend on you. If you can live up to their expectations, you’re building a long-term relationship.”

Wise words from a wise man, and yet I only partially agree with him.

In order to live up to your client’s expectations, you first need to know what they are.

Many clients forget to tell you, and many freelancers don’t bother to ask. They just assume they know, and get burned in the end.

Thanks to the marvels of the internet, there’s often little or no direct contact between a client and a freelancer. You know how it goes. We respond to vague job postings with a vague budget, and simply hope for the best.

If we happen to land the job, we get straight to work so we can meet the deadline. But what to do when we’re not sure what to do?

Some freelancers will turn to their colleagues, and ask them for an uninformed opinion:

“Please help. Should I pronounce this strange name in this way or that way?”

“Do I read all the footnotes or shall I leave them out?”

“What kind of tone or accent would be best for this book?”

Sorry people, but you’re barking up the wrong tree! It doesn’t matter what your Facebook friends think you should do. Your client doesn’t care what you think either.

Go to the source and ask!

The only way to consistently satisfy your customers, is to meet and exceed their expectations. You’ve got to offer exceptional value that justifies your rate. That’s how you build your business.

Now to the first part of my mentor’s advice. The part about surprises.

I happen to think that clients are human, and humans like surprises. That is, as long as they are pleasant.

The first way to surprise your client has everything to do with what we just talked about:

1. Communicate

Unless it’s cut-and-dried, don’t just accept the job and get to work. Get in touch, and stay connected. Show some interest in the project you’re hired to do. Ask questions. Get details. Give updates. You’re not some speech-imitating computer program. You’re a real person, so show your client you care.

You’d be surprised how much goodwill you create when you communicate. Time spent getting to know your client’s preferences will save you time in the end.

So, let me ask you this. If you could work with someone who is open, flexible, and communicative, or with someone who isn’t, who would you choose?

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How To Secure Return Business, by Paul Strikwerda

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It must be hard to be Balloons the Clown.

For years, Balloons has been a fixture in my Borough.

He drives around in a silly red VW Beetle with a slogan prominently printed on the back:

“Honk if you like clowns.”

I’ll be honest: in all the years that our paths have crossed, I’ve never heard a single honk. That must be pretty depressing, if you’re a professional clown. But as one of my old teachers used to say:

“The meaning of our communication is the response we get.”

Here’s my question: Why would someone like Balloons even ask us to make some noise? My guess is that it has to do with the theme of last week’s blog postreassurance. Perhaps this family entertainer is hoping for honks to confirm his presumed popularity.

Even though you probably don’t make a living walking around in huge shoes wearing a red nose, you and I, and Balloons, have something in common: we like to be reassured.

Our need for reassurance has to do with a deep human desire: the wish to be accepted. It’s this universal, comforting feeling that we matter, that we are safe, and that everything is going to be alright. It’s what lovers love, preachers preach, and what politicians promise. The person able to reassure us the most, gains our trust and gets our vote.

Clients are no different. They want to know that they are in good hands, and that their money is well spent. It is your job to convince them of that fact. As I suggested last week:

Selling is about reassuring. Before the sale, during the sale, and after the sale.

THE DO’S AND DON’TS

As the client is making up his mind, here are a few things that will make him feel confident that you’re the right person for the job. This is what you have to do:

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Freelancing Isn’t Free, by Paul Strikwerda

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Isolation.

It’s a common feeling among freelancers.

Voice-overs (like me) especially, may feel separated from the rest of the world because they often work in small, dark spaces, talking to… themselves.

It’s easy to feel lost and lonely without a professional support system, and without colleagues to have water cooler conversations with.

But if you ever feel small and insignificant as a voice-over, you’re making a mistake.

You haven’t looked at the big picture yet.

The fact is: you are one of many independent professionals.

THE NEW NORMAL

These days, freelancers account for one-third of the U.S. workforce. That’s nearly 54 million Americans, and this number is expected to grow to 50 percent by 2020.

Evolving technology and changing business needs have made it easier to take part in what some call the “Gig-Based Economy.” This economy is driven by people who don’t rely on a single employer to make a living. Many of them do not freelance out of economic necessity, but out of choice.

We all know the advantages of freelancing: freedom, flexibility, variety, and the joy of being our own boss. But there are serious downsides to running your own business. Let’s name a few.

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