A counter-anecdote: A couple years ago I decided to freelance on the side, but went the other way - I charged triple my day rate, and set a simple rule: no stress allowed. If the client had tight deadlines or a stressful personality, I didn't pursue them.

It's been a massively fun few years, and I've been able to pad my bank account while working when and if I want. It was hard to turn down some great opportunities that would have been stressful, but the biggest enemy isn't free time: it's burnout.

High rates and optimizing for lack of stress don't guarantee lack of burn out, but they go a long way.

That said, I’m not sure how to find such a client. It was luck for me.

I do freelance writing, like resume editing and copy for business websites. I have mostly worked when and as much as I wanted on projects I liked, but at low pay through a service where I can't build a portfolio because I am a ghost writer.

I am trying to figure out how to move away from that. Any thoughts on how to learn how to find clients, set rates, etc? I am struggling with this transition. I think I know a fair amount at this point about creating good writing for certain kinds of things, but I seriously lack business acumen when it comes to some of these specifics. And it's a serious barrier to closing deals.

My rule when I was unhappy with my rates was simple:

1. Double my rates.

2. If the client mentions my rates, but still agrees, then I haven't increased them enough. Go back to step 1.

3. If the client says no because of my rates, I move on (this can be a good sign - if no one is turned away because your prices are too high, you don't have too high of prices). If enough potential clients say no because of my rates (50% lower conversion rate is break even when you've doubled your rates, so # of clients must more than half), then I lower my rates. I quickly climbed from $20/hour to my current rate using this strategy.

There's a nice effect here where higher rates suggest higher quality, which in turn attracts the right types of clients and makes them more willing to pay. I've also found that I want to give them $X/hour quality work, so I'm more focused and the quality increases as a result. Lots of happy feedback loops.

For your specific situation - do you have many repeat customers? One trick that worked well for me is to price my first project with a client at an introductory rate 20% lower than what I actually want to earn (positioned as a "first project discount"). When that project goes well and they come back for more work, the introductory rate doesn't apply, and you've earned yourself a 20%/hour bonus.

I have had repeat customers through the service I work for. It's a completely different ecosystem and doesn't translate to external clients. I like working for the service and I don't plan to leave it, but I want to also develop outside clientele.

Assume that trying to get clients outside that platform is a recent effort that I haven't pursued too hard, in part because I don't know how.

When we first started we charged way too little, and they had us doing simple jobs because our cost was lower than an employee. Charge them enough that it's worth it for them to have their own employee to do the easy stuff, especially if you already have a full time job. There's not that much risk of not finding work since there's a built in backup.

What was your rate, if you don't mind me asking? About how many hours/month were you able to book?

I'm asking because high rates are great if you can get regular work...

Regular work is not hard to get, I used an agency to get me this client, so they add a percentage on top of my rate when they charge the client, but if you have a good network of acquaintances, you can get work that way.

I mean for example, how much would you get in corresponding salary with $100 / hour (600 DKK) after tax?

First, I followed the advice of people lower in the thread and got embedded in two niche communities (private schools + small business owners in my local area). Second, given that in the past I wasn't a talented networker (that's changing, albeit over years, not weeks) I partnered with two other developers who were skilled networkers and observed how they generated leads and closed sales. The combo of [exposure to potential clientele (1) + knowledge of how to talk to and close those clientele] has been effective.

Another note: all my biggest clients have come through relationships - personal friendships and past customers of software I've created. It's a patient game, for sure, but after a couple years of slowly but steadily completing projects and doing the right things, I'm booked out 6-8 months and have a sustainable pace of work.

I think one of the hardest things about starting out freelancing or consulting is figuring out how to properly charge for your time. Almost everyone comes in way too low when they're starting out. I used to freelance and I made the same mistake with my first couple of projects.

The reality is that your hourly wage at your full-time job is not anywhere close to a good approximation for what to charge as a consultant/freelancer. In many cases you'll need to aim for at least 2x this rate, maybe even 3x, which seems absurd if you're new to the game.

There's a couple of reasons:

1) At a full time office gig you're paid a salary in exchange for working a fixed(ish) amount of hours per week. While technically you're supposed to be working the whole time you're "at work", I think most people rarely spend their whole day at the office doing actual work. There's tons of filler time spent on activities that don't qualify as actively fulfilling business objectives. But you are paid for all of this time regardless.

As a consultant, you can only bill for time you spend actively doing client work. But in reality you need to spend almost just as much time on non-client work such as finding new projects, marketing yourself, networking, bookkeeping, etc. No one pays you for that, so the rate you charge needs to be able to compensate for that time.

2) As an employee, your salary does not capture the full cost of employing you. In the US, the amount you pay in social security & medicare is matched by your employer, so when you're a freelancer you get to pay 'self-employment tax' where you essentially have to pay the second half yourself. Don't forget health insurance too. There's also the cost of facilities, equipment, and food. Granted, you can deduct a lot of this stuff as business expenses, but it still adds up.

I think you did it wrong and became jaded. If you're suffering weekends and nights and sacrificing your life, it should be:

a) temporary - temp project, crunch time

or

b) an investment - this client/person will really appreciate it, and be a great networking point / reference / future source of work

and

c) it should be worth your time money-wise. The whole point of freelancing is 'time is money.' At the end of it, you should have nice savings, and during it, the sound of gold coins clinging together rings in your mind's ear.

More on point C. When you're an FTE, you're owned (at least in the U.S. [and the UK!]) by the employer. Weekends, nights, releases, problems, those things will impact you outside the 9 to 5 in any serious job. No overtime pay. There's some stuff about mission and dedication and other platitudes, and in some industries bonuses, but other than that - no overtime paid out for your suffering. If you complain, that makes you a naughty person, etc. and so forth, so you have to suppress complaining about such things.

However, as a freelancer time is money, and you sell that time, you exchange your labor time for cash in the bank. And you tax deduct some of the conveniences, like transportation/taxis and (depending on 2018 tax changes and interpretation) meals too. You might also tax deduct that standing desk you wanted, a new laptop, etc. - things that make you work better.

If you 'lost' nights and weekends then I'm afraid something went wrong. What if your rate was double? What if it didn't take up 40% of your normal job?

I disagree about opportunity cost, which is of course subjective. For me, opportunity cost was slaving away in corporate cubicle farms and getting dragged into meetings (30-50% of my time) rather than jumping around companies and learning cool new tech.

I wonder if the workload was high in part because you gave such an insanely good deal?

It took me a while to get my contracting rate up to where it was high enough to support me, and to feel comfortable asking for what seemed like large numbers. But the quality of work has actually improved the more I ask.

Contracting rate should be more like 150%-200% of your salary rate, since 4-6 billable hours are about the most you can consistently get out of a 10 hour work day. And that doesn't include the weeks spent looking for work between contract jobs.

Could you expand on this at all? Why so few billable hours? I can understand why it's not 10/10 (administrating your own work, keeping records, billing clients) but just 40% of your time? What kind of things are taking up the other 4 - 6 hours that can't be billed?

that will probably take 60-120 minutes of your day.

driving to clients for meetings. may be billable, may not be.

driving to potential clients for meetings, and having those meetings - not billable.

dealing with incoming calls and emails.

actually trying to market yourself - blogging, or some other content work, or applying for conference speaking, or planning presentations for local groups (tech groups, business meetups, etc).

debugging crap that doesn't work.

dealing with taxes/payroll/accounting/recordkeeping/insurance.

needing time away to deal with life emergencies or other events.

6 billable - as in, solid productive - *consistently - as in, weeks or months at a time - is generally very hard to pull off for most people. You can certainly be 'on the clock' for more, but just as in about any mental job, you'll have ebbs and flows, and some of that time won't be terribly productive.

I would also include in my billing a 30 minute lunch over an 8 hour day, which is the minimum mandated by local (Canadian) labour law, and I would bill for any incoming calls and email that is related to the project I'm working on.

I'm definitely aware of how different my time feels when I'm billing, and I've tried to relax a bit. I think billing daily or weekly is always better than hourly.

That said I understand getting to daily or weekly rates can really let your rates take off, and you don't have to worry about what time you're on the clock in the same way.

I get being hesitant to bill for certain kinds of troubleshooting, but I think it comes down a lot to what the scope of the project is. If I'm on something that is multiple weeks of work, and I'm dealing with a problem that I would be encountering and would be expected to solve if I were working full-time, then it's billable.

If you bill daily or weekly, then great. If you bill hourly, then the only way this is okay is if you put "30 minutes lunch" on your bill and show that you're charging for it. There's a reason why it's very very hard to bill for 8 hours of work in a day, and that's because you don't work for 8 hours.

If your client understands and expects to be billed for lunch, and your client is paying for your time from 9-5, then it's reasonable. (But that would be a rare situation, normally that would be very temporary, or become a full-time salaried position). If your client is paying for your work on an hourly basis, and has not explicitly agreed to pay for your lunch, then billing for it should be off limits.

For most hourly contract work, lunch is on your own time, not billable hours. I'd be pissed if my lawyer were billing me for lunch, it would be downright dishonest.

As far as debugging, I assumed the parent's comment was talking about debugging his own tools, for example a debugging activity that applies to all his clients, or to himself, rather than time spent on project specific triage. If I'm working directly on the project, I bill for it. If I'm working on something that is indirect and/or not solely for the project's benefit, then I don't.

The overhead of recording time and dealing with every call and email ends up being - for me - way too much time/recordkeeping. Scheduled calls/meetings, yes. Someone has a 3 minute call where I can answer a followup question - I just answer it. "But you'll be interrupted all the time with 3 minute calls!" - except, if I'm too busy or don't want to be distracted... I just don't take the call.

Daily/weekly can be, if the clients are OK with that too. I've found some that aren't. along with that, I typically have multiple projects running simultaneously, and I can't - in my mind - ethically charge for a 'day' if I've split my time on 2-3 projects that day.

I don't like charging for time at all, really, but some orgs aren't really set up to handle any other mode of work (and/or, want flexibility in change, so time may be the least unfair approach).

It depends on the job and also on your philosophy and your contracting rate, of course, but I bill only for hours that I’m actually physically in my chair working on the project, and nothing else. Speaking with other contractors, this seems like the norm to me.

Even if you’re not working, a very enlightening and worthwhile exercise is to track your time to the minute at your day job and find out how much you’re actually working. I use toggl to track my time (which I’m not endorsing, use anything that’s tolerable and convenient enough, it’s not like time tracking is fun). Toggl stops tracking after a configurable x number of minutes idle, I use 5. I stop tracking while I’m emailing or reading hacker news. I also don’t track time spent billing; putting together reports on my time & progress and such.

If you’re like me or most people, you might be really surprised to find out that breaks and office chatter and surfing and lunch actually consumes 20%-40% of your work day.

Plus who can work a 10 hour day consistently?

These days, if I’m working five days a week for a client, I will only take on small side projects (something that I could probably do in a few days full time work, but I will spread out over a month or so) for people who understand that is all I can take on and that I will be working at that pace.

I’d advise starting small, overestimating how much time it will take by quite a large margin, and taking breaks between projects, as it’s a horrible feeling when you realise something you’ve committed to is going to take much more time than you expected.

Best is a fixed hourly rate, providing them an estimate, and setting it up so that you won't exceed a maximum (after which you can reevaluate with them whether to continue).

This lets you be flexible on the spec and respond quickly to changes they may want, it lets you get compensated for all those little things that you don't plan for like meetings, and you no longer have to give your time estimate a padding to ensure you meet the deadline.

Although they pay less on average, I think you also make more on average. Consider, for a fixed cost project you need to create rigorous specs that take weeks to develop and then negotiate over how hard different things are. Which of course itself takes lots of time. And god forbid they want to add a new feature or change a spec, necessitating either you just doing it for free or negotiating a whole new add-on project.

Ratios of overhead to actual work? Honestly, probably like 50-50... so by cutting out a good chunk of that first 50% from the process, both sides save time and can do other more useful work. I'd way rather take on two clients and not spend my time negotiating and doing paperwork.

Let me add another important tip too. Bill on regular times. Like at the start of each month and be strict with payment terms. Just do a friendly reminder after that, but...

If the customer doesn't pay within the set term, stop working on the project. If they do not value your time you should not spent time on it.

Strongly disagree. I've been doing fixed cost contracts for a very long time with great success. You just need to know what you're doing.

> They misalign all the incentives, and encourages you to do a worse quality job.

Billing hourly does that. It encourages you to "fit" yourself within the estimate that you had to provide. That's fine if you overshot, but if you were way under, now you're under a ton of pressure to get things done quick and you end up doing a quick hatchet job. All because you want to avoid explaining how you were wrong on the estimate. If you keep missing the target, which can happen even with the best of us, the entire project can turn into a pile of excrement.

With fixed price, there's no timer on the side of your table. You take the time to do it right. If you're off by a day or two, the client will take that delay a lot easier than a bill that's twice what they expected AND took twice as long.

Do you lose out since you worked time that you didn't get paid for? Sure. You also win when you get the work done faster than what you estimated. It will even out, but the client will be happier since the experience is less volatile for them.

Which is the point. Clients much prefer a fixed price, since it lets them budget accordingly.

Think of it this way, if you were hiring a plumber, would you want the guy to show up and say his rate is 300 an hour or would you prefer him to show up and say this is going to cost you 150. Which is less stressful? What are you more likely to say "yes" to?

> And it encourages them to take up your time with meetings and support and new "quick" features to add.

No. I set the meetings at the beginning of the project. We meet on a regular basis. There are no surprise meetings. All communication outside of those meetings is via slack/email.

Also a "quick" feature in my book is something that takes me 15 minutes. I do those at no additional cost since it would take me longer to bill for those. I get less than a dozen per project, which works out to a few hours of work which is already expected and added to the budget. Anything over 15 minutes will get a fixed price cost and additional time added to deadline. I've never had a client push back on this way of doing things.

> Best is a fixed hourly rate, providing them an estimate, and setting it up so that you won't exceed a maximum (after which you can reevaluate with them whether to continue).

Clients hate this, since they have no idea what it'll cost. Even if your way of doing things will cost them less. They hate uncertainty. They already have enough of that.

The maximum you're setting is my fixed price, which I simply get paid every time and the client is happy because they know what's coming their way.

On top of that, you're stressing on your end when you start to approach that maximum and start cutting back on the quality of work. I just focus on getting the job done.

> This lets you be flexible on the spec and respond quickly to changes they may want

I can do the same with fixed price. You still need to provide an hourly estimate for any changes. It's really the same thing as approving a fixed price change.

> it lets you get compensated for all those little things that you don't plan for like meetings

Again, meetings suck, they should be kept to a minimum and should be 100% controlled by you. They should be a highly predictable part of the equation or you're wasting time.

> and you no longer have to give your time estimate a padding to ensure you meet the deadline.

Yes, you do. A deadline is a deadline, regardless of how you charge the client. Estimate what it'll take you and then multiply by 2. If your estimate is still off after that, you need to work on your estimation skills.

I've never had a client get pissed at me for finishing early. Hell, you can just finish the work early and then do something else for a week, then deliver on time. But don't be LATE. People HATE that.

Always pad your time. By as much as possible!

> Although they pay less on average, I think you also make more on average.

No =) I tried both ways, for years at a time. You make more when you're not a commodity and when you're hourly, you'll be seen as a commodity.

> Consider, for a fixed cost project you need to create rigorous specs that take weeks to develop

You need a clear SOW (statement of work) regardless of how you bill. If you're not doing that, you're in for a world of hurt.

> then negotiate over how hard different things are.

No? Just price all the options and let the client choose.

> And god forbid they want to add a new feature or change a spec

When they ask for changes, I just price them out over email. It's literally one sentence. This will cost X and will take X extra days. That's it. You need to do that if you're working hourly as well?

> necessitating either you just doing it for free

Never work for free.

> negotiating a whole new add-on project.

Love additional work.

> I'd way rather take on two clients and not spend my time negotiating and doing paperwork.

I'd rather take on three =)

Look, I think you're conflating some bad business practices with how you bill. How you bill does NOT force you to engage in those business practices. It's just how you bill.

I prefer to bill in a way that makes my clients less stressed out which makes me less stressed out in turn. I also have an easier time divorcing PRICE from TIME. This is REALLY important if you want to make more money.

I've done lots of work where I've been paid $1000 per hour when I break it down by time. Can you say the same?

The vast majority of the kind of work I do is one-off prototypes that are very customized, and the rest is research and development where how to get to the answers is not at all clear.

For one-off prototypes, I think the most sensible thing is hours plus materials. You have a limited picture of how hard it will be, it turns things into molasses if the goals changing based on new information requires renegotiation, etc.

But after you've done it once, I think it makes sense to use a fixed price for replication, with variations in price based on small changes from a base design.

That makes sense to me. It has flexibility early on, like a stage A of the process, paid hourly. Then there's a stage B for replicating it once the product is stable, for which a fixed price is a better deal.

I think there is an art to marrying the idea of billing hourly and fixed-price projects.

For me, projects are estimated and estimated are approved by the client. I will do my best to ensure work is completed within that time frame. However, if more work than estimated is required to complete a project, it is my responsibility to notify the client as soon as possible. I will provide an estimate for the time I believe necessary to complete the job, and the client will approve this new estimate. Me all agree to this up-front; it's in the Statement of Work. Always have a Statement of Work!

Unfortunately it can go the other way too : you work for $10/hr.

Your estimation skills have to be top notch. If they're not, work hourly for an agency so that they bear the risk. Use that time to hone your estimation skills. Even then, multiply your estimate by 2 and that's what you charge.

If the project is risky, lots of new stuff you've never done before, then multiply your estimate by 3 or 4.

The idea is that you cover your ass so that the "$10/hr" never happens. And of course, never take on projects with vague scope. Make sure everything is clearly defined. That's a skill too and should be honed as well.

The key though is that the "$10/hr" project will be so painful for you though, you will be sure to never repeat that mistake.

Similarly, I don't ask friends in other professions to work for me -- I ask for their advice on who to hire. If they suggest someone to do the work, good, I know they'll recommend people they respect. And if they say "Oh, it'll take ten minutes -- let me show you" then I take them out to dinner. Either way our friendship continues.

I started last year in May (see https://www.codementor.io/radubrehar) and already doing pretty well. Work just when you want to! Plus, it feels great to mentor people and help them solve real problems everyday.

Had a "friend" call me the other day and say: "My old tech-guy retired and won't help me anymore. I hired a new company and they're charging me $150/hr for troubleshooting, which they're slow at and my secretary ended up fixing the last problem. So I don't want to use them. I really need a new Quickbooks server and computers. Can you do this for me - I'll pay you!"

I tell him I'm not the right person, but he's having none of it. "Come-on, I'm in a spot. I'll pay you!"

I hang up and I'm stewing. But, I can't really put my finger on why I'm so pissed off.

So, I'm sorting through this idea and keep having these "WAIT" moments - short for "What Am I Thinking" (probably should be WTFAIT, but..)

My sorting goes like this: - I could do this - I could help him out. I know Windows, I've heard of Quickbooks. I've set up my own network. - WAIT-I work on a MBP and only touch windows intermittently. - I don't know QuickBooks. Maybe I can look up what I need on the internet (go off and search...find a few issues like the version he has doesn't work on Windows 10) - WAIT-I don't deal with this stuff day-to-day - I'm going to run into unforeseen issues. But, I can mitigate that by researching it ahead of time. But it's risky - I could miss something. - It's not fair for him to have to pay me for all those hours researching stuff I don't know. - WAIT-I'm going to do this on my own time? - But he's in a spot. And I could make a few bucks on the side when he needs additional stuff going forward. - WAIT-I could end up having to fix any issues that come up for a long time. Like months, years. - It's hard to find good tech support, right?

...and on...

- WAIT-There's plenty of tech support out there. He's gotta know hundreds. Why is he calling me?

Finally...I realize that my "friend" is like many small businesses - cheap. He's hoping I'll treat it like a hobby, charge him a low hourly rate, and eat all the hours I spend getting up to speed. Sorta like doing charity work - but not for a charity.

- Then I called him back and said: "I'm not the right person to do this. It's not that I'm being modest. It's that even though I know there are some pitfalls, I don't know what all the pitfalls are. Which could mean spending a ton of time, making mistakes and who knows what else. So, if you want to do this on your own, I'm willing to help. But it would be just as a friend and I couldn't possibly charge you for it."

I haven't heard back form him...

Seems to me you learned at least one new thing.

The solution, for a time, appeared to be charging enough money so that clients used me as a last resort; but even then I eventually found myself awash of money and having no time still, and quit trying to do two jobs.

You don’t get any more time, it’s precious. It’s also easy to lose track of time that isn’t billable (like client acquisition). Sell your spare time at a premium, or not at all.

it does have the downsides you talk about, I did choose something which I was interested in exploring more. But it did begin to feel "painful" and was happy to finish it.

Now I just do my own side projects.

Your one experience doesn't guarantee the next person's.

noun a word or phrase that is not formal or literary, typically one used in ordinary or familiar conversation.