
How This Freelancer Hacked His Hourly Rate - endtwist
http://www.fastcolabs.com/3021904/open-company/how-this-freelancer-hacked-his-hourly-rate
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jasonkester
Ah, the seldom used 3rd definition of "Hacked": "To abruptly remove large
portions of".

This freelancer seems to have contrived a way to work the equivilant of two
billable weeks (spread out over a presumably longer amount of calendar time)
at a tiny fraction of his market rate.

Hopefully the marketing effect of articles like this one will result in a
significant uptick in his workload. If not, he's not only put in a bunch of
work at a terrible bill rate. But he's signaled to the world that the correct
price for his work going forward is $76/hour.

Not the best place to be. Here's hoping another hundred-odd people buy time
from him so at least the final number looks respectable.

~~~
GrinningFool
The point of this isn't to pay his bills, I suspect - it's marketing, and
apparently effective: he's made over 100 new business contacts at this point.

~~~
vcherubini
Exactly the point. Chances are, these people have long term projects for him
and now he has become a trusted consultant. I absolutely love everything about
this.

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noptic
How This Freelancer Hacked His Hourly Rate _with one weird trick_

~~~
thesimon
Top Freelancers hate him.

~~~
laxatives
Next up, how this young entrepreneur hacked his breakfast.

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zipfle
I really like this idea. I'm planning on starting to freelance in a few
months, and one of the things that really worried me was setting rates. I know
how much runway I have to make it a success, and I'm confident I can get work
pricing myself below market rates (anyone can sell $5 for $4 forever). But
I've heard a lot of people say you shouldn't try to be the lowest-priced
option, because then you end up with clients who don't respect your time. I
was worried that I might have to choose between market rates and be
outcompeted by people with better portfolios, and low rates and clients I
didn't like. This seems like a great third way. Start out below market, and
raise my hourly rate by $1 for every 100 hours. I'll have plenty of time for
portfolio building, even if I have to hustle for people who aren't my ideal
clients (which actually sounds like a necessary experience anyway). Then when
my rate goes up, if those customers don't think my time is that valuable, we
can just part ways.

~~~
a-priori
Instead of aiming for a 'market rate', aim for a target utilization rate (# of
billable hours / # of working hours) of something like 70%. The remaining time
should be spent pursuing new work. If your utilization rate is higher than
that, raise your rates.

 _Edit:_ If it's less than your target, you'll automatically be spending more
time finding new work. Use the extra time to figure out how to make yourself
more valuable to your customers to bring in more work. As a last resort, lower
your rates (maybe the market has changed?).

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leknarf
The key insight here is that it's complelety acceptable for freelancers to
charge different rates for different clients. Many new freelancers, even if
they accept that premise in theory, are uncomfortable asking one client to pay
300/hr if another is paying 100/hr.

That's only possible if you can infer a client's ability to pay and match your
quote to their expectations. You can earn much more if you're able to adjust
your rates on the fly, which is one of the reasons most freelancers do not
list a rate on their public website.

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kfk
I am thinking of stealing this idea to offer finance advise (mainly advise on:
cash flow planning/forecasting, financial planning, how to read statements,
setting up controls and reports). I like it because I would start cheap with
little experience in consulting (while I do work in controlling in a multi co)
and get more expensive the more experience I gain. Also, 1 to 3 hours buckets
might actually work very well for this type of freelancing.

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eliot_sykes
This is the freelancer's site mentioned in the article
[https://onehour.me/](https://onehour.me/)

The hourly rate is $91 at time of writing.

~~~
ProblemFactory
It's certainly a fun experiment, and could be a great way to introduce
yourself to 91 potential long-term clients.

However, it's still too early to call it "hourly rate hacking" as the original
blog post does.

There's no evidence that the method will work after the rate increases above
the standard market rates. A few hourly slots per day, plus travel is very
inefficient use of his time. He seems to be a competent developer with good
business & design skills, and could probably book projects at $100-200/hour
for full weeks at a time, instead of a few hours now and then for an average
of $45.

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canistr
I think this would be a great pricing model if applied to tutoring for
students. If you find a tutor useful, you'll go back to them. Conversely if
you find they weren't helpful, you leave early. So it's up to the tutor to
entice you to come back by providing value up-front.

However, the primary difference is that you do this logarithmic scaling per
student rather than as a set price for everybody.

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k__
Won't a linear increase function prevent anyone from hiring him in the future?

~~~
flavor8
Right, but by the time he makes $3000/hr he can retire.

~~~
kfk
Which means USD 4.5M

(sorry, I OCD on numbers)

~~~
tjbiddle
Hey - I'm not a huge math guy, but I remember there is a formula for this and
was curious. Can you refresh my memory on what it is? Thanks!

~~~
kjay
You are looking for the sum of all numbers in a linear function. The sum is
equivalent to the area under the curve which you normally use calculus and
integrate for. However, in the case of a linear function, it's just a
triangle. So, you can take a short cut if you just "know" f(x)=x^2 / 2.

~~~
logicallee
What does _" know"_ mean? suspect? :)

~~~
Double_Cast
imo, "can visualize". In my experience, those strong in math easily visualize
math problems geometrically. This is opposed to, for example, having to grind
through the quadratic formula.

Try to mentally (or on paper) graph the freelancer's pay. The x-axis
represents "hours" and the y-axis represents "pay per hour". The function we
get is the linear function "f(x) = x". I.e. for the first hour, he's paid $1;
for the 300th hour, he's paid $300. A very straightforward graph. If we cut
off our x-axis at $300, the graph looks like a right triangle.

If you want to find the total amount of money he's accumulated, all you have
to do is find the area under the triangle (which is a special case of
integration). For a triangle, geometry class taught us "Area =
(1/2)(base)(height)". Calculus courses prefer that we integrate, which has
broader application. Integration of "f(x) = x" gives us "f'(x) = (1/2)(x^2)".
Our "integral" is equivalent to the "geometry-class equation" because for our
particular triangle, _the base is the same as the height_. For comparison:

Area = (1/2)(base)(height)

f'(x) = (1/2)(x^2)

DoubleMalt is saying kjay's visualized "shortcut" (intuitively faster
approximation) is slightly off. This is because the triangle in our _actual_
problem looks like a staircase, and not a smooth slope. But kjay's shortcut
has a margin of error of only about "-0.033%" which is a good enough
approximation by most people's standards.

Also, DoubleMalt's equation should look like

x * (x + 1) / 2

instead of

x * (x - 1) / 2

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drewblaisdell
I had an idea to do something _frustratingly similar_ to this. Not the $wage++
aspect, but to offer discounted rates for 1-2 hours in order to build up
interesting business contacts. "Micro-consulting".

Well done. 10% of these business contacts will likely want to hire this guy
back at some three-figure number, and he will be able to choose the ones he
wants to work with in the future.

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njonsson
It strikes me that an hourly rate that increases over the life of a project
might be a way for a freelancer to skew his billable hours toward new
development and away from maintenance. It also reflects the fact that the
freelancer’s knowledge of a particular client becomes more valuable over time.
On the other hand, an increasing hourly rate is a tougher sell to potential
clients.

~~~
NKCSS
He should just couple it to his backlog.

Set a Reserve ($A), and for every reserved hour, ad $B.

So, with a reserve of $50, and 40 backlogged hours (at $1 each), the rate gets
$90. Once you have less work on the roster, the price drops. When more gets
booked in advance, the price rises.

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aantix
Letting others tell you your price is the weakest negotiation position to be
in. No wonder it's been holding steady at 76.

Does this guy show up to a job interview and when they ask for salary does he
respond "you tell me?"

Your worth is a constant projection. Learn how to convince people of it, and
he'll increase his rate three fold.

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mcguire
" _started selling his time for $1 per hour, increasing the price by another
dollar each time an hour was sold._ "

So I'm very confused by the methodology. That description (which seems to be
taken from onehour.me) seems to indicate that the price is unbounded and
monotonic.

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rwhitman
Thats a great PR move, I'm jealous.

I had unofficially been doing "startup therapy" for years, but I always
treated it as a loss-leader for new business. Probably should have been
charging for those meetings, oh well.

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ricardobeat
(and made $120 in total)

This clever PR stunt might cost him a month of free work, or bring him a load
of clients. I'd be curious to read a follow-up a couple months from now.

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lifeisstillgood
but will it work for anything other than startups?

I do like the idea though - there is a lot of value in getting an audience to
a critical mass

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akinder
Does everything have to be "hacked" these days? Pardon me while I go "hack" my
bathroom break.

~~~
davidw
I just read it as "smurf" and think of whoever is writing it as Brainy Smurf.

Yeah, I have small kids.

~~~
sheetjs
Remember the cloud to butt chrome extension? Sounds like we need a new one for
hack

