Archive:
April, 2011
Every employed person has the hopes that, as time goes on, they’ll be rewarded for their good work, loyalty and commitment with a raise in pay. Freelancers are not guaranteed such raises and must find the right moment to renegotiate the cost for their time. Changing the terms in your contract can feel tricky – you don’t want to threaten your relationships with your client yet adjusting your price to reflect your ability is important.
We’ve collected some of the main considerations about timing that can help you design your approach.
5 sure-fire signs it’s time for a raise
1. If you are always feeling swamped, then you may be putting in more hours of work per week than actually fits your schedule. It’s obvious that you have talent and skills that are pleasing your clients or you wouldn’t be getting so much work. Raising your rates may weed out a couple of clients who don’t want to pay any more than they already are which in turn reduces your workload and helps you get focused with a smaller number of clients.
2. Perhaps your originally discussed rate was lower than you intended and despite your hard work, you’re on just getting by. A recent blog post from IT Freelancers and Contractors suggests setting regular rate reviews and sticking to them. That doesn’t mean you have to raise your rates every year, but make sure to look them over regularly and consider whether it’s time (or not) to ask your clients for a raise.
3. Freelancers sometimes start out trying to undercut the competition but this kind of pricing model is only sustainable for a short while. There comes a time when freelancers have proven their abilities and value, at which point it is time to stop competing on price.
4. Beginning freelancers may need to take a year or two before raising their rates while they cultivate a more varied portfolio. As you build your reputation as a talented freelancer you will have proven your abilities and should consider notifying clients that your experience now translates into a higher value for your service.
5. When the stress level is so much that you start wishing you had a staff job, then it’s probably time to raise your rates. Freelancember lists 10 red flags that indicate a contract has become too stressful (granted some are quite tongue-in-cheek).
A freelancer who advised me years ago would tell me a story about how she chose to raise her rates at a point where she became too busy. Sure, she lost a few clients but, to her surprise, many didn’t even cock an eyebrow when she upped her rate. She capitalized on how businesses expect to pay for work, and work priced too low is worrisome. Looking like a confident professional means charging professional rates, so take a self-assured stance when updating your rate to accurately reflect your ability and talents.
I had the absolute honor of meeting Debbie Millman at Design Ranch several weeks ago, the partner and president of design at brand identity firm, Sterling Brands. She recently gave a brilliant talk at Creative Mornings in NYC (an event FreshBooks proudly sponsors) with lots of real world advice for creative folks. Entitled “10 Things I wish I knew when I graduated from college,” her talk speaks to what it means to be a great designer, key elements to strategic design and getting paid to do what you love (a core value at FreshBooks).
Give it a watch and let us know in the comments what you think!
I didn’t get a chance to really endear myself to Debbie when we met but I did stop bidding on a silent auction item of a friendship bracelet from Jessica Hische (something I really wanted), allowing Debbie to win as a friendly gesture.
We recently caught up with Kelly Parkinson, a.k.a. Copylicious, about how she uses the new PayPal Business Payment feature in her FreshBooks account. Her work involves creating persuasive messaging for clients looking for help with their brand. Here’s more from Kelly about how she’s been able to reduce the ‘cost’ of doing business:
FreshBooks: First off, tell us about Copylicious!
KP: Sales through storytelling is the essence of what I do. Every client is different, but most businesses come away with a bunch of marketing tactics they actually want to do, copy they’re proud of, and this feeling of, ‘wow, I think I know what to say if anyone ever asks me what we do!’ I also work with people to optimize their sales cycle, plugging in all the ‘let me think about it’ gaps. It’s fun!
What were you using for invoicing before FreshBooks, why did you switch?
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If you are careful about client selection, know how to set clear expectations and trust your instincts about when to walk away from a deal, you’ll be smiling 100% of the time, so says FreshBooks user Erik von Stackelberg
When it comes to client selection, you should feel confident about turning down clients and projects that are not a fit for you. Even if you’re desperate for a sale but unsure about the client, you still want to say no. Here’s why:
- You’ll be happier – You started out on your own because you do what you love, right? By selecting clients that fit with your priorities and respect your vision, you can continue doing the work that you find most fulfilling.
- You’ll like your boss – Some freelancers were drawn to working for themselves because they did not want to have a boss. Unfortunately, clients can often become just like a boss. When you ‘interview’ potential clients to work with, you’ll want to decide upfront if they are going to respect your boundaries and the expectations you have for them to offer constructive feedback.
- You’ll generate more sales - When you have great client relationships, you produce better quality work. As a result you have a better chance of having your clients give you the thumbs up to their contacts and benefit from them championing you to their networks.
Even if you’re working with the best clients you can find, it’s still on you to maintain the relationship. This is where setting and managing expectations are almost more important as it’s the best way to maintain your client’s happiness (and your own). Improve your approach by following the three golden rules:
- Always under-promise and over-deliver - The flip-side is probably more important: do not over-promise and under-deliver. If you set the expectations too high, a common mistake when you are desperate for sales, the chances are you’ll fall flat. What will your clients think? Will they recommend you? Will they pay you? Even though you’re an uber capable designer/developer/rockstar, you know where your talent is today. Trust your instincts when to hold back. If you’ve impressed your client by meeting deadlines and fulfilling objectives you’ll probably get to work with that client again.
- Always keep your word - A simple, yet overlooked rule. If you say you’re going to call, then call. If you do not, your client will worry they can’t trust you. As much as possible, avoid giving your clients a reason to question your ability because of small things that went awry.
- Always build a relationship – Don’t be afraid to get to know your client and have a little fun. People like to work with people they like. You’ll work a lot better, do better work and enjoy working with each other. You’ll get more straight forward feedback as the trust and relationship grows stronger.
“You’re next best client is your last best client”
Picking the right client and managing expectation means you’ll both be happy. And if that happens, you’ll easily be able to work with them again, securing you sales and knowing you’ll produce a great end result for them. And if you get a number of these types of clients, you may never have to find (or fire) another client again!
It's hard when projects go all pear-shaped
It’s a common situation with no easy resolution: your original quote for a project was woefully low compared with the amount of work that ended up being involved. What went wrong? Perhaps the client’s needs changed or the second draft bombed or maybe you ran into some tech glitches that caused delays. Regardless the reason, you now have a heap of revisions on your plate and need to change the terms to ensure you get paid for your extra time.
In certain cases it might make the most sense to simply take the financial hit and finish the job for the original price. But sometimes – like when the project threatens to eat up too much time you’ve already set aside for other clients – freelancers face difficult conversations with the customer: a negotiation for more money. We asked a handful of pro negotiators (freelancers, writers, web designers and consultants) for their perspective on how to get through that tough talk :
1. Establish clear parameters
Try to establish parameters around revisions and redevelopments from the get-go. Put plenty of effort into developing the contract and the scope of work at the beginning of the project and you’ll find yourself in a better position to request more money should it come to that. Ask yourself: how many major rewrites are you willing to offer the client for the price quoted? How many times would you be able to redevelop the customer’s website given the pay involved? Your goal is to come to an agreement with the customer for a certain amount of work for a certain price. And if you and the customer agree to the terms of the project – and if the scope of work does change – the original contract will help reinforce your request.
2. Know when to speak up
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The Spring Echidna!
FreshBooks will be closed for Good Friday on April 22nd, 2011. We will be back on Monday, April 25th!
Being a first generation immigrant to Canada, I wasn’t exposed to the Easter holiday until I was about ten years old. Thinking back, I remember I wasn’t so impressed by the choice of animal that represented Easter – a bunny? Really?
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Add some color to your checks!
Being a freelancer in an employer-driven world is difficult. There’s a dated stereotype out there that “freelance” is just a clever euphemism for “unemployment,” given that there are really no hard and fast rules for the art of freelancing.
Whether you’re transitioning from part-time to full-time freelancer, or from not freelancing at all to doing a little on the side, here are some tips to get yourself started:
- Automate as much as possible. In fact, there are many cost effective services out there to help you spend more time doing what you’re good at. So, set up the infrastructure to ensure you’re spending as much time as you can working on billable projects or selling new ones.
- Set standards for your time. Ask yourself periodically, “What is my time really worth?” Although this standard needs to be tempered with what the current market pricing is for the service you provide, having a standard that you stick to could save you from getting caught in the vicious cycle of the “bro-deal” — or, as Urban Dictionary defines it, “A preferential price on buying something based on friendship with the seller.”
- Never, ever, ever, ever, ever do a minute’s worth of real work without a contract in place. It doesn’t need to be a Dostoevsky novel; there’s plenty of good one-pagers out there that will suffice, for sure. Just make sure you find one that works (that means clearly outlined steps, terms of payment, etc.); hand-shake deals are for “freelancers” that are really transitioning from one full-time job to another.
- Become a remora, not a parasite. (Quick lesson from the dictionary: “Remora” are fish that attach themselves to sharks, and clean them.)
- Identify other freelancers or companies that provide services that don’t compete, but are very complimentary, to what you do–and partner up with them. Ideally, these partners should be sharks (and you, the remora), in that they should be bigger, stronger and older than you. Send these partners business at every opportunity. Building a good network of professionals is a great way to help build your clientele.
- Unless you fancy doing a bunch of work for free, always require a deposit. It’s an odds thing. The longer you’re in business for yourself, the more you will encounter those bad eggs that have you do a bunch of work and then back out. It may even be a reasonable sounding excuse like, “Someone just stole my identity and cleaned out our business accounts!” (More likely, the dog or family ocelot will have eaten their checkbook.) Regardless, do yourself a favor, and collect a reasonable deposit before spending any time working on a project. It’s an industry standard practice for a reason.
- Mentorship. Find it. As FreshBooks CEO, Mike, always says “I collect mentors”.
- Fish where the fish are. If your service is consulting on enterprise software installations and configurations, try not to spend too much time “networking” in small start-up business mixers… ‘Cause it turns out that really cool 19 year old kid wearing skinny jeans that just launched <insert lame .ly domain name here> probably isn’t going to pay you for Oracle or SAP consulting services when he thinks they are bands (if you happen to be in IT…of course, substitute with examples from your particular industry.)
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If you’re interested in tearing up your paper checks, explore PayPal Business Payments for businesses in the United States.
PayPal Business Payments is a PayPal pilot program for businesses only in the United States.
One of the biggest pain points of getting paid for your invoices is waiting for a paper check in the mail. Online payments with a credit card have proven to be a way to get paid faster, but for large invoices, the discount rate can be a hefty cost. Now, you have another option, PayPal Business Payments, which costs $0.50 per transaction (this is PayPal’s pilot pricing and may change down the road).
PayPal Business Payments enables you to collect online payments for a FLAT FEE, instead of a percentage. This is a much more cost-effective option for any invoice (to a maximum of $10,000). For example, on a $5000 invoice, it would cost $150 in transaction fees with a credit card. Now, that’s just $0.50! FreshBooks has been waiting for it since our inception in 2003. Finally, we’re closer to saying goodbye to the paper check.
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Mike McDerment was in the hot seat on BusinessCast episode 195 over the weekend. Mike covered a number of great topics for entrepreneurs including running a business online and finding fragmented markets. However, there is quotation that stands out for all people trying to work for themselves and get paid for doing what they love:
Don’t give up.
If you have ten minutes, this BusinessCast is worth the listen.
Financial Post has a written version as well.
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