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Ask HN: What mistakes did you make when starting as a consultant/freelancer?
622 points by _qjt0 on Dec 7, 2019 | hide | past | favorite | 268 comments
What was the specific mistake, what did you learn from it, and how did you change the way you do business as a result?

For example, I was told by someone who started a project without taking an advance, only for the client to decide not to pay. So he now refuses to take on a project without at least 30% advance.

What lessons did you learn the hard way?

I'm setting up my own consulting practice: kartick.org and would like to learn from other people's mistakes rather than repeating them myself.

Longer write-up here: https://www.gkogan.co/blog/how-i-learned-to-get-consulting-l...

Some things I learned through mistakes:

- Charge more.

- Travel like a professional and bill the client. For my first business trip I used airline points, stayed at an Airbnb on my own dime, and even refused the client's offer to reimburse me. Stupid. (Full story here: https://www.gkogan.co/blog/stupid/)

- If I'm not enjoying the work, request a change or move on. Don't just "tolerate" it and chug along. One of the greatest benefits of consulting is the freedom to chose whom you work with... Take advantage of it.

- Remember who the client is, and don't get too involved with their subordinates.

- If you don't feel "Hell yes!" about taking on a project or prospect, just skip it. It's not going to get more interesting over time.

- Find a great accountant. Fire bad accountants fast (and lawyers, and other service providers).

- Tell the client the hard truth.

- Impostor syndrome is normal. Get over it.

- Stop trying to go above-and-beyond all the time. Do what you were brought in to do, and do it exceptionally well. If other opportunities come up, suggest them as follow-on projects instead of just doing extra stuff for free.

- If you're clashing with an exec at the company, tell the client, instead of just backing away from the project.

- There are hundreds/thousands (depending on specialty) of potential clients out there, you just have to find them. So don't worry if a deal falls through, don't envy other consultants, and don't take on bad projects out of desperation.

> - Stop trying to go above-and-beyond all the time. Do what you were brought in to do, and do it exceptionally well. If other opportunities come up, suggest them as follow-on projects instead of just doing extra stuff for free.

This so much. I used to waste hours doing small things (for free) that the client may never even notice. Just because it bothered me personally. Stick to the contracted list of things .

This isn't to say do a half-assed job, but deliver what was promised

Very recognizable; I always try to remember that they hire me to solve a particular problem. Most of them really don’t care how. Don’t explain, just do the work. If you’re good at your work it will be a good service / product you delivered and your client trusts you with this.

> Travel like a professional and bill the client.

One additional tip here is to purchase cancellable / refundable airline tickets and hotel reservations. You don't want to get stuck with the bill if your client cancels a meeting or whatever. Made this mistake with a long-term client where it wasn't worth trying to get reimbursed for travel expenses for a canceled meeting.

But what about the much higher prices?

Make it part of your policy and very clearly disclose it up front while explaining the why. If they push back, concede by letting them pay for the non-refundable tickets up front then

Exactly this.

Either bill them in advance or have them purchase your ticket in advance.

Any major travel expense shouldn't be on your dime unless you're very acquainted with the customer.

Do you actually forward receipts to the client and have them pay to the cent?

I always find it easier to just have a fixed line item for "travel to client events", and usually I end up coming out ahead by a substantial margin by not booking fancy hotels.

Isn't that fraud? You are supposed to charge exactly how much the travel expenses did cost. If you think you should charge for the travel time proportionally to your work rate, then you should do that but have these separate.

It's possible a client will ask you for the travel expenses receipts and it would not be nice to show him that there is difference between what you charged and what it did actually cost.

You should expense (to the IRS) what the actual expenses are, but you can charge your client whatever you agree on.

e.g., a month ago someone wanted me to travel to their site.

Although I didn't end up going, my fee to do that would have been much more than just the travel (6 hour drive to another state) and hotel costs: I also have to factor in that while I'm travelling, those are hours I can't bill to any other project, so the client would have been billed for the full two work days of travel even though my out of pocket costs would have been much less.

Exactly. Every time I travel for a client they pay for everything, plus the "sandwich & juice" in the airport, taxis/trains to/from home/airport/hotel/meetings AND the hours/days from the moment I exit my home to the moment I reach the hotel. For the return, any minute after 5pm, until I get back home.

I am not willing (in order to be 9am on the client site (in another country) to spend half a Sunday away from home and loved ones for free. I usually charge 1h commute +2h in the airport pre flight + duration of flight + commute to hotel post flight.

> Isn't that fraud?

No, it's a travel fee. When I hire service workers to make house calls, I'm under no impression that the line items for traveling simply covers their expenses. I expect them to make a profit for the privilege of having a professional show up in person.

Could you explain why you think it's fraud (and where you're from might help too).

In the UK there's, for example, a standard "mileage charge" which people tend to claim for driving to a place for work. It's not "the cost of travel" it's an approximate.

When a company charges for sending an operative to a site, they pay the operative £10 ph, and charge the company receiving them £100 -- presumably you think that's fraud too?

How about when Guchi (made up company) charge you $500 for a plain white tshirt made by people who aren't paid a living wage, wouldn't that also be fraud under the same sort of consideration?

I'm not sure it's fraud but it's probably not a good practice.

Standard "mileage charges" in the US are actually set by the IRS. I assume it's similar in other places so that's a well-established practice for car-related expenses. I'm not sure how else you would do it as there's no way to directly capture expenses other than fuel.

I assume that in most cases billing some standard travel day rate/per diem (perhaps based on location) would be fine as well with, possibly, air charged separately for the actual amount.

The key is that you're being explicit that you're not charging the actual amount but rather some standard rate that, in principle, approximates average/typical expenses.

The mileage charges set by the IRS are for 'computing the deductible costs of operating an automobile for business, charitable, medical, or moving expense purposes', i.e. they're used to work out your tax bill.

There are similar mileage rates in the UK, published by HMRC. They have the same purpose.

The mileage rate you agree with your client needn't be related to those rates at all.

Fair enough. It's pretty common to use them for billing purposes as well but if, for example, you mostly drive to client sites and want to use mileage as a proxy for billable travel time it would be perfectly reasonable to add an uplift to mileage rates over the IRS rate.

> Could you explain why you think it's fraud

I was just asking. You are putting "travel expenses" @ $xxx which doesn't seem to include your rate; so it should be how much you spent to "get there". If you want to charge extra (and I think you should since it's time you spent for the client) then maybe put "travel expenses" + "x hours spent traveling".

It depends on the client. With a government client, expenses for lodging and meals are usually capped to the GSA scale. It depends on the contract though.

Depends what the contract says. I've had a client tell me to use expensify and call it a day. I've had to manage travel as part of a fixed price bid. I've just had to bill for travel as a line item on a T&M.

The bottom line is on your end, you should be capturing receipts, you should be logging costs per project, and you should be providing all this data to an accountant for a nice quarterly rollup.

Yeah, it really depends. I've done it all different ways.

- Bill the client for actual expenses

- Paid out of pocket for travel that was baked into the day rate

- Had major travel (air/hotel) paid for directly by a client's travel agent. (Which I actually preferred to avoid when reasonably possible because now you're dealing with your client's travel policies.)

I'm not an accountant but I tend to agree you shouldn't be billing a broken-out travel line item that's not actual expenses or expenses plus explicit overhead [or a standard per diem].

Be careful. If you do that with a public administration client, you might end up charged for embezzlement.

In my experience the difference for hotels isn't too much - $20 - $30 / night, so that shouldn't be a problem.

For flights, you have a couple options. Either make the client buy your tickets, or tell them about your policy of purchasing refundable tickets. Alternatively, you could just eat the change fee (but that has its own set of issues - if you use the ticket personally, you need to pay income tax on the cost of the ticket; if you use it for a different client meeting, billing THAT could be tricky) or you could just write it off as a loss.

Unfortunately hotels are succumbing to the same sorts of fees and restrictions that much of the rest of the travel industry has. As you say, the premium for cancellable rooms usually isn't that much. (Where I work we're supposed to book cancellable as standard practice.) But whereas cancellable used to mean by 6pm the evening of your arrival. Now it often means a day or two in advance. Which is usually fine for changes of plans but doesn't necessarily help when travel goes sideways.

How do I get over the mental barrier of charging more than $100 per hour?

- I'm a junior developer and I mostly freelance for larger companies.

- I feel like $100/hour is the industry standard and if I charge 150-300 I need to do work that requires managerial work.

- 300+ comes from charging a percentage of revenue increase or creating such a narrative, which often requires additional business and strategic consulting.

- On the flip side, I enjoy coding and want to avoid additional managerial and business consulting as much as possible.

Do not think in hours. You are not a worker in a factory. Consider the value you deliver. When you deliver twice the value in the same time you did a year ago charge twice as much.

It does depend. When I was a consultant, we tried to charge based on value (by engagement). OTOH, clients often still thought in terms of hours. If we were on-site for one engagement that was only going to take half a day, they'd often try to hook us up with some other group as well given we were there and had the time. (Typically we'd go along as these were long-time clients.)

And some areas like law are very hourly-based. The one time I did some legal work it was strictly based on time. (At a very good hourly rate including travel time.)

Yeah, true, that may happen. Ideally you get a combined payment by hours with a bonus for performance. That is often a bit complex or tricky though.

You mitigate the risk of getting paid not enough in case the hours spiral out of control while still getting paid a lot when you outperform expectations.

Read Patrick McKenzie's blog. In particular, this: https://training.kalzumeus.com/newsletters/archive/consultin...

I simply started billing weeks and not hours.

So nobody can check how many hours you work a day.

If you bill $2000 a week and only work 4h a day, you get your $100.

> Travel like a professional and bill the client.

Yep. I don't eat at McDonald's or stay at Motel 6 on my own dime. I'm sure not going to on a company's dime.

> fire bad accountants

What is bad? What is good?

I guess I expect my accountant to be a bit of a financial advisor sometimes, which they aren't.

From my experience, an accountant is a financial advisor as far as guiding you through your country regulation goes. Where I come from there are a lot of paths you can follow to become a consultant/freelance, and you want a good accountant to guide you through it because some paths end up being significantly more expensive (especially tax wise) for you.

What makes a good accounts I guess can also depends on your country legislation. From my experience, I'd ask those questions: are they working in my interest? Am I paying any late fees, arrears or interests on top of the taxes I'm supposed to pay? Are they staying on top of changes to the laws/regulations? Do they return my emails timely and with comprehensive answer to my questions?

Those things are off the top of my mind of course, there is more. In my case, although I'm not a very demanding or complicated client, I've been lucky enough to have found an accountant who I completely trust and, after the initial "setup" phase, it has mostly been a set it and forget it kind of situation. I get reminders for when tax payment deadlines are coming up, and neatly filled forms which I just have to pay. They notify me of changes to regulations (which in my country seems to be at least every year) and how that affects me. And whenever I need an estimate of how much in taxes I'm expected to pay in a given year, I send them an email and get an answer within 24 hours.

YMMV, I'm sure the things you need to worry about and ask yourself to asses the situation vary from country to country.

My first accountant was dangerous. His suggestion regarding cash flow and financial management was "spend the money as you want and we'll figure things out in the end of the year". I prefer to have a "friend", someone who will care for my £€¥$ and will kick my heart butt if he sees I do stupid things. Another comment used the word "advisor". I know that legally there are limitations on what they can propose to you, but better have someone who cares. Otherwise just get something like QuickBooks for a fraction of the cost and use an accountant in the end of the year just for the filing.

These all ring true in my experience too. One more thing I would add is to specialize if you can. Don’t try to be too general in the services you offer. You can greatly increase your own market demand this way.

Can you expand on this? Also, can somebody else provide a counterpoint?

Here's a good example. Someone I know is an AWS consultant. And, within that, he's fairly focused on billing/costs. He thinks it's helped him to be well-known for a specific set of things rather than be someone called in to consult about "public clouds" generally.

The counterpoint is that it needs to be a big enough market and one that you can service. Another thing to be careful of is that markets move on. I've known consultants who were world experts in some company's products or specific technologies. And then that company or technology ceased to exist and they really weren't sure what to do with themselves.

Not the author but I've experienced this. Basically what ends up happening if you don't specialize is you hit the 80/20 principle. 20% of your clients take 80% of your time. It becomes hard to scale and you end up not doing anything well. Focusing on one thing you can really focus on improvements to how you deliver that one service which reduces stress and helps you scale your service.

Nice. These are also great tips for people in permanent roles.

Setting my rates too low.

Here's what I figured out those many years ago. Clients who are cheap are also really into wasting your time and trying to micromanage the project. Clients who will pay a lot more also give you latitude to do your job (after all they're paying you to be the expert).

Keep jacking up your rates with each new client until you hit a ceiling. Whatever you're charging now, without even knowing what it is, I'm certain it's too low.

When I got started I billed $35/he. When I ended 5-6 years later I billed $300/her. Now in what very limited ad-hoc consulting I do, I bill significantly more than that.

Same here.

I started at a little more than that, and maxed out at less before I retired. I increased rates for new clients, and did my best to encourage more work from ones that paid more, and more promptly.

What was mind-blowing was eventually discovering what one of my first clients had been charging its clients for my work. It was over five times what they had paid me!

I can second this piece of advice. When I first started our small consulting firm we didn't know how to scope explicitly enough and didn't charge enough even if the projects did stay within the scope of work.

Don't be embarrassed of your rates. If they're flirting with but not plainly past what potential clients are willing to pay, you're in/around the right territory. Additionally, explicitly the definition of successful deliverables in your SOWs - make sure that you get enthusiastic client sign-off on these criteria. This can only serve to make everyone better off when work is marked as complete.

Last, "Due on Receipt" with some understanding and grace is a lot better than having to send "Hey just wanted to check in about invoice #1113" emails 10 days after your 30-day receivables haven't come in.

>When I first started our small consulting firm we didn't know how to scope explicitly enough and didn't charge enough even if the projects did stay within the scope of work.

I used to have one client who was otherwise both a good customer and a nice person but he was terrible for constantly trying to incrementally increase scope. It was always an effort during the SOW process to really nail down exactly what the deliverables were.

What does "SOW" stand for in this context?

Statement of Work. Document that (ideally...) answers any question about "is doing this part of the contract, and who is responsible for it"

When you charge low rates people will assign low value to your work and assume that you are entry-level.

Even when they know your work is of good quality they will think that by being unaware of its worth you are probably not very experienced. Last but not least you of course get exploitative clients that way.

The worst thing you can do is offering free work for "friends". Often they will not even say "thank you" or use the actual work you delivered.

Just curious what do you consult on for 350/hr? Is this basic CRUD stuff? Wordpress template etc?

$35/hr was writing post-processors for CNC machines. Went up to $75/hr for interactive media work (Flash/Flex). Went up to $150/hr for business systems integration (Netsuite, Salesforce, etc.) Eventually got that up to $300/hr. The astute observer will notice that the rate was inversely proportional to the actual difficulty of the work. This was mostly 10-15 years ago.

$350/hr+ was distributed database related consulting, and then started going North from there for increasingly niche and specialized consulting services. Though only on very rare occasion these days. The highest rate I've ever been able to negotiate was $1,000/hr. But, it was also for a very short engagement (~10 hours) for some especially weird knowledge I have about replacing critical mainframe infrastructure with commodity systems.

Point being, you might be surprised how much you can charge for the right services to the right customers who have a clear sense of need and appropriately value a solution.

If you don't mind me asking, how did you find those clients? I assume it was all mouth to mouth advertisement? How did you switch between those types of work?

Reason I'm asking is because I recently started freelancing in software/web development (about 6 months ago) and I think I'm doing okay. I love to design and think out all of the odd, interesting or difficult back-end problems and so far all of my clients love my work, and with that I'm slowly increasing my rate, started at 50eu/h ($55/hr) and am currently at 75eu/h ($82). This is all in Europe (The Netherlands) However I feel like I'm a bit stuck, the clients I'm able to find don't want to pay more then $80 and with that the work isn't as challenging as I'd like it to be. At the same time it feels like the clients that do want to pay more aren't looking for me.

A combination of word if mouth and eventually targeted business development activities (not sales, but business development).

To make it easier to charge more you have to go after customers who are less price sensitive, whose problems are costing them a lot of money, and who are accustom to acquiring outside help for things outside what they consider to be their core business & expertise.

In my case this was big enterprises. Nationwide law firms, banking & fin. tech. institutions, international distribution & logistics companies, etc.

It took a long time to build up to that point and to get access to those parts of the market. The way it worked for me was, early-on, I'd be doing smaller jobs for big companies. Sometimes with another vendor as an intermediary. So, I might work with Boeing or Lockheed indirectly, but I was fastidious about establishing direct personal relationships. Once I hit the media & marketing world, it was the same pattern. Work through an existing vendor of say Pepsi or Nike, and then make direct personal relationships that could grow later for their adjacent or orthogonal needs.

Eventually you have enough contacts and enough of a reputation that you don't need to leverage the credibility of intermediaries anymore.

I don't know that such a path would work for everyone for all kinds of work (everything I ever did was kind of esoteric for its time), but that's what worked for me.

This is just under what I charge per day for fully remote full-stack JS development and whilst I do need to charge more in future I am happy with my current client and the work is challenging and engaging. As the OP says, if you don't find the work engaging then move on.

you charge just above $80 per day?

> The astute observer will notice that the rate was inversely proportional to the actual difficulty of the work

This is gold. It happens far too often.

I once charged $20,000 for 3 days worth of work.

Happened like this: one very huge phone company wanted some very specific self contained component written in Java. They shopped around and did not find anyone willing to do it. My friend was working there and told them that he knows that genius consultant (yours truly). So they called me up and during negotiations I told them that I will do it for $20,000. I was prepared to bargain but they told me that I am very reasonable for that functionality. At no point they asked about exact time frame/hourly rate. They just said that the expect it to take no longer than a month.

Came home, fired up my PC and spent 3 very long days coding it. That was all about it. I wish I could nail contracts like this more often ;)

Yeah, such projects happen and it always surprises me - why can't such shops find in-house devs (with regular salaries) for such projects?

Sometimes average corporate developer just does not cut it. Like you've got a bunch who know how to take data from a database and feed it to web form. Ask them to do anything else and they would expect you to send them to a training courses. I've met quite a few shops like that.

Meanwhile. This project required some imagination and multi-disciplinary knowledge. Sure the company have some geniuses but the company is huge multinational and for one department of their branch it was probably way simpler and cheaper to get someone from outside then shop their other brunch. Big companies are very bureaucratic

> Sometimes average corporate developer just does not cut it.

The thing is, it's not just some Kentucky Postal Service inc. but it is quite common in such BigCo's as Microsoft, Google, etc...

In my experience the bigger the company the worse it gets. It's hard to underestimate just how bad most corporate software is.

I've done freelancing and I'm currently developer on a corporation.

I've seen a lot of talent go in and out. Usually it goes out like this:

- PM is seeking resources internally, you could be reached out and be told on what they are trying to do. - The project can be complex or easy. Honestly it doesn't matter within the context of working for a company. As far freelancer, you can go on a nitty-gritty with the client on what it takes to do and justify your rates to them... for a already-hired developer:

- There's absolutely no guarantee they will incentivize you after all the efforts (working as a developer for a company). So it really doesn't matter if the project is super complex or not. Management is pretty stupid most of the time and they can't see the level of effort in things even if you break them out to them. Or they can simply be ignorant about it.

- I've said no. Usually I'm very driven with new challenges but I've learned the hard way that it doesn't matter at all. These days I just say "I don't know, sorry." and "yea I just never worked on that". I've seen people gone the road of talking about training courses so they could stall management a lot if they don't have many options.

Why? Because there's really no end goal. You are already hired within the company. Employers take for granted that that's reason enough for you to do it.

Honestly it could go many ways. Not all companies will be as awful as mine. If you are lucky enough to land with a company that recognizes your efforts and incentivizes you for it good for you. I don't think many people are that lucky.

I'd say, believe me there are quite a lot of geniuses, but I've yet to meet a fool that takes the bait of taking more complex work in without proper incentive. (excluding fresh graduates and those still in their starting years)

"I'd say, believe me there are quite a lot of geniuses"

I did not say they were not. Some products said company did develop do require a genius. But from my experience those tend to compartmentalize in appropriate departments and the rest is just average.

Of course there are always exceptions.

I've had a couple of those projects come along. I remember one in particular for a UK pharmaceuticals company. I went to see them and the first thing they said was "We are so glad you are here, we have been looking for a solution for months without any success. At the moment it's costing us a million pounds a day."

It turned out they couldn't produce their compliance documentation and that was delaying the release of a new drug.

The solution wasn't that complex but it did involve the intersection of several different skills. They had in-house devs but none of them wanted to touch it, to them it looked like a problem, to me it looked like an opportunity.

> They had in-house devs but none of them wanted to touch it, to them it looked like a problem, to me it looked like an opportunity.

It wasn't an opportunity for them. The Risk/Reward was probably insanely bad. If they fixed it, they are just "doing their job" and get a pat on the back. If it was that big of a deal though, if they screwed it up its possible they would get fired.

   > To them it looked like a 
   > problem, to me it looked 
   > like an opportunity.
This is probably the biggest lesson here- finding a reason why to do something versus not doing it is important!

I currently work as a lube tech for a local dealership. (Saving up for the future, and they have better hours and pay than $LocalFastFood.) My coworkers dislike A) vacuuming vehicles and B) doing tire rotations- because both of them take time and effort.

I like doing both of those- they take time- which means I get paid (job security!) and also helps the customer want to come back (arguably more important than any time savings from skipping a rotate or not vacuuming underneath floor mats.)

So what did you charge them?!

They are probably swamped with processes, fires and Scrum meetings so the developers have no agent to just concentrate and do something.

Turf. Big orgs aren’t good at sharing developers or other staff, people “belong” to their feudal lord. I had a friend billing $300 to zone luns on a SAN (ie he had nothing to do and spent his days studying) while the team 50 feet away was working 16 hour days on something he could do.

The difference was that they worked for different big shots.

A more charitable way to put it is that people have "day jobs" that are being paid for out of someone's budget. I'll help people in other teams out--I have a pretty flexible job description anyway. But if someone wants a week of my time you can be sure they'll need to get my manager's approval. Which seems pretty reasonable. Most organizations wouldn't work very well if everyone just worked on whatever caught their fancy on a given week.

I know a lot about Erlang & Elixir, but almost none of my daily work now would lead me to learn what I know. Some things are probably 3 days of work if you know it, and 3 months of work if you don't.

It is cool when that happens, but it is extremely important to define the scope of work very well when it does. As if the client had a different expectation for the time frame don't be surprised if they then continue bothering you about details of integration of your feature with the rest of their project for a month.

Yeah, also be careful before you say yes; I had a similar opportunity, insanely good money , but when I interviewed a few devs who’d work for them they had a terrible rep for getting out of scope, moving the goalposts and communicating badly.

I worked at a minicomputer manufacture (okay, Prime Computer). Software enhancements large enough to need a proposal always included a section "Non-goals of this change."

This section laid out the things that might sound like they are related but would not be part of the enhancement. For example, a speed-up of the filesystem might have a non-goal of adding new file types.

Nah. Somehow I've always managed to put enough on paper to not get nailed on things like you've just mentioned.

The rate is partly a function of how deep/rare your subject matter expertise is. Companies will not see $1000/hr as unreasonable if you can deliver sufficient value.

That is really valid advice! I am currently just starting consulting. A friend of mine told me to put my daily rate around 1,500 Euro. Thie first contacts I had so far didn't object. No project came to fruition, so. But then I just started a couple of weeks ago.

Just one question. How do you approach future clients?

Is it better to charge per project or per hour?

I believe that from several times I've read through freelance-related discussion on this site that the recommendation is explicitly not to charge per project. The reason being that it can be very hard to estimate the total time required for the project. Additionally, once a customer has payed they might say "oh, we though you knew that this (previously unmentioned) feature was required when we paid you." Scope creep, tweaks, rewrites, and any change in customer expectation hits your pocket, not theirs, when you charge per project.

When you charge per hour you make sure you are getting payed for all the work you are performing. However, I often see it recommended that you charge per week (best) or per day (next best). I believe the rationale behind the per week (or per day) pricing model is that it weeds out the customers that are just looking for the cheapest labor they can find, leaving only those that are serious about a project and can commit to paying reasonably for the work.

But they use the same argument to justify project based pay. You could just take longer, there's no way to know what the cost will be, etc.

then you split the project in two: first part is just analysis, paid per hour, with one deliverable: the scope and exclusion document. the second part can be fixed price based on your estimate from the first part. all the risk for both parties are minimized, and if it doesn't make them happy, they're the kind of client that wants an ambiguous fixed price project precisely to milk you the most work possible, so no loss in losing them.

Per project is dangerous. Consulting clients will change their minds frequently and you'll want to give them the latitude to do so, which means you simply can't estimate the time needed to complete a project without adding X00% on top to compensate. No one wants to have the "this is out of scope, I'm happy to do it but we need to talk about an amendment..." conversation.

Per hour is not adequate for this type of work; you're delivering a product or service that will increase your client's bottom line, you're not a seat-filler who punches a clock. I charge in the smallest increment of time that I believe I can provide a meaningful impact or deliver a complete solution. When asked for a quote I translate my billing into weeks, as in $X000 per week. Accounting for admin tasks and paperwork, back and forth emails and phone calls, plus showing off the work completed and waiting for approval/notes, a week often seems like not enough time (I can't count the number of times a client asking for a simple font change took literally a week to order and get approval on). There are very rare instances where I know I can accomplish a task in days instead of weeks and if the client asks, I will bill in days instead.

"My rate is $X000 per week and my initial estimate is that this will take XX weeks to complete. I require an up-front retainer of X weeks to get started and I bill every two weeks after. Who should I address the initial invoice to?"

I would typically never reveal this tip, but here it goes: "I bill weekly and my normal rate is $X000. For you I would be happy to reduce that to $X000-20%." The client is told up front that they are getting a discount without having to ask for it and the Discount line item on the invoice(s) very much help in getting that invoice paid faster. The secret is that the rate quoted is always 20% higher than what my ideal number is. I make it rain discounts on everyone.

No one wants to have the rate conversation but I've noticed that clients who don't shy away from that talk or flinch at your rate will not be a problem. Clients who complain that you cost too much will be a problem. Politely suggest you are not a good fit for their project and end the call, you're better off. If you get to the point that your non-flinching clients say yes a little too fast to your rate, increase it. You want a little resistance, but not much. Saying yes too fast means you need to charge more.

And lastly, this is not about what work "costs" or "market rates", this is about what your completed solution is worth to your client and how much it will increase their bottom line. You're playing a different game so stop charging like you're mowing lawns or digging ditches. Charge more.

I’ll second what Greg said in his sibling comment. One of the mental models I’ve learned is that if someone offers you a deal and you’re not special in any way, it’s not a real deal or there’s something more going on. “I charge everyone else X but I like you so you’re getting Y” screams scam/tactic/etc., and as even you pointed out, that’s basically correct (on the tactic piece).

That being said, if you’re working with someone who actually deserves a discount - a client referred by a friend, a startup on a budget, etc., then it’s totally fair. I’d just be wary of tossing around discount claims to everyone.

Strongly agree with this, over hourly or project-based. I do monthly instead of weekly, but idea is the same.

One thing I disagree with is the automatic-discount thing. Firstly, I think it's cheesy. Makes me think of street vendors saying "...But just for YOU, I have a SPECIAL price!" Secondly, I think it cheapens the perceived value. As in, "Why is Joe throwing around 20% discounts? Is he desperate? Is he not confident in his abilities?" Etc.

“My ordinary rate is X000 per week, HOWEVER I’d love to work with you/this project/this stack/this industry so how does a 20% discount sound?”

I think I get what he was saying. I would say the discounted number instead of saying anything about percentages. Round up whatever that number is to nearest hundred. Saying $x748.35 is your weekly rate does sound kind of sad versus $x800. As an example. Still sounds professional.

Or $750, for that matter. (Mind you, if they take $800, good for you!)

> Saying yes too fast means you need to charge more.

In this instance what’s the tactic to increase the price you’re quoting the client? Are they not going to think it’s weird you’ve changed your mind about the price?

What GP means is that you need to in general charge more. You don't charge more to the person who just hired you.

Per day, week (better), month (even better) - and it should NOT be assumed that you work "full-time" (i.e. 8h per day). With this setup - you untie your work from exact hours spent, and retain the flexibility of adding more days/weeks/months to the bill if there is more work than expected.

How do you prefer the client from thinking your going to work 8 hours a day, 40 a week, etc? Or even worse, expect they get you for more time in the day or week? "I'm paying you x got today, here's 12 hours of work..." Or think they are v trading dollars for your labor and if you finish early on a day, go take out the trash and clean the bathroom. Obviously you define what work will be performed. Just wondering and looking for what language people use to address these issues. Thanks.

Don't know the ideal scenario in the tech industry but in the advertising/marketing industry, it's useful to charge by a project.

One may try to calculate (in their mind) how much time they will take to complete the project and then quote a fixed amount based on the no. of hours that came up.

I've made movies and software. I'm extrapolating from movie experience to imagine I know something about marketing and advertising.

I'd feel more comfortable presenting a fixed project quote for a creative project than a software project, because in the case of a creative project I can choose to dedicate a fixed amount of time, and have the result - to be judged subjectively - that I was able to produce in that time.

In the case of software, I would need to keep working until it objectively meets requirements. The quality of software I deliver doesn't degrade smoothly under time pressure, it falls off a cliff.

an essential aspect of fixed hour contracts is that requirements need to be sorted from the most critical to the nice to have and the client needs to be prepared to drop the nice to have if the budget doesn't stretch to them

which is the whole point of the agile manifesto

which is why agile fails under most circumstances, as having fixed time, requirement and budget but under scrum and sprints is anything but agile.

One difference that comes to mind is that while in advertising / marketing you'd need to get what your clients offer, what they'd like to be offering, and how to work with them, in tech you'd also need to understand how it is currently done. The fact is, it's often a mess, with lost, fragmented and conflicting knowledge.

And while both need to deal with unclear goals, figuring out what it is the client and truly needs, in one case you're selling what they have, or what they are, in the other you have to make something they want and will be able to use, support and sell.

That's very often a tremendous amount of uncertainty to work through.

Edit: also what this comment says https://news.ycombinator.com/item?id=21729677

Edit 2: And this one, featured some time ago on HN https://erikbern.com/2019/04/15/why-software-projects-take-l...

My work has mainly been with small businesses on limited budgets, so while an hourly rate might be agreed, I'll also agree to be realistic about limiting costs. Here communication and trust are key, we'll discuss core essentials, nice to have and blue sky dreams, we agree to a fixed limit on costs, I start the project, then, once I'm 20% or so into the budget I'll go back with a clearer picture of the project and the client can decide to spend more, or cut back on non-essentials, at this point the level of trust is high, they know I am keen to deliver good quality work while respecting that the cost needs to reflect the benefits and the mutual understanding of what we our aiming to achieve has been reinforced.

As far as I understand it depends on the kind of projects and how repeatable they are. If you automate large parts of the labor that go into them you could have an advantage by keeping the same price tag.

None of those two. Charge by value you deliver. You can build a 100K car in an hour? Excellent.

Don't punish yourself by charging only $100 for the hour you worked on it.

Know your value - which in capitalism depends on market demand - and charge accordingly.

When you are a distinguished expert you can charge more of course as well.

Make a name for yourself and ensure that everybody knows upfront that you are not a "cheap outsourcing" drone.

> You can build a 100K car in an hour? Excellent.

Why wouldn't ur hourly rate be 100k then (vs $100) ?

- what if you found an even faster way and did it in 30 minutes, do you charge half that?

- what if it takes you a bit longer, 2 hours, is it fair to charge the client 2x?

The point is, the client wants a car, not an hour of car-making.

Also, the moment you provide an hourly rate you get compared to other hourly workers, whether it’s fair or not. “What?! $100k an hour? Even our lawyers cost less!”

> The point is, the client wants a car

Except most clients don't know what they want in such clearcut way before the project begins.

The client usually wants a solution. What exactly it is you decide as the expert.

I tried freelance and realized I hate it more than any other type of programming work.

I can tolerate being an employee where I do what I'm told. After a month I get a feel for the environment so it becomes low stress and then I can keep my head down programming. Or I can tolerate selling software or having a SaaS. If I'm CEO I decide the direction of the product and then just have to handle customer support.

But the BS and stress of dealing with clients, contracts, undefined specs and getting paid... I have no f-ing idea how people tolerate it. So good luck with that. It took me way too long to figure out that I absolutely hate working as a contractor.

You should only have to do that in the beginning and strive to earn more so that you can hire an accountant or a firm to keep the booking and calculate your taxes for you. Invoicing is a matter of minutes and some apps even do it for free. Once you've set up your templates for each type of contract and document, you should be good to go. The only true problem in freelancing is generating new (good) leads. That's it. Admin stuff is a piece of cake with today's technology.

> Admin stuff is a piece of cake with today's technology

Do you mean something like deploying every client with the same stack which is easy to admin? I noticed I started this freelancing thing not giving a second thought about how I would mantain systems running for my clients. I should at least include some kind of monthly fee... (otherwise documentation so they can admin it..)

I’m personally happy I got married to a woman who has a CMA from the US... she does my accounting for me ;)

I never had problems finding a job, but I was really bad at finding good clients.

I especially hate, when I've been brought in for my expertise and I tell them what they should do with the least risk and best outcome and they refuse, because no. I realize there might be some important technical constraint I might not know about, but most of the time they just want to respect something their boss said once, some constraint that wasn't that important at all but makes my work 10x more complicated.

This is why you should charge at least 12x more: 10x for the complexity and 2x extra to compensate your ego.

May be true in the US but in Europe you can't just increase your rates. Too many policies are involved with especially larger customers: they have a specific maximum rate they are willing to pay. In addition some agencies usually required to get into larger corps have a limit, too.

Usually contractors are hired to fix rotten stuff that in some way is a commodity. You can find 10 other contractors with the same skillset, maybe cheaper.

For me the nice part of freelancing was the end date. I knew I would be gone in a month or two so could detach myself from the politics and bullshit and just observe. I used to try and think of it in terms of a trip to the zoo.

I hate watching dying orgs or poor performing teams/management. I can't mentally disconnect. It often feels like visiting a poor 3rd world country with an ongoing civil war. You know that you can and will save some souls but also that it won't change/stop the dying.

I think there is a difference between contractor/freelance and consultant. With the latter the client bring you for a general expertise on a type of problem. They don’t care which tech you use (they usually have requirements on the hosting though) as long as you solve the problem for the agreed cost.

The extra money is supposed to make up for the BS, or at least give you the possibility to pay someone else to take care of it.

Didn't charge enough.

Didn't market. Didn't network.

Didn't constantly hustle for clients.

Didn't outsource scut work.

Didn't down tools when clients were slow to pay.

Didn't develop/maintain a backlog of client work.

Didn't reject fixed price contracts.

Didn't renegotiate when projects changed beyond contracted scope.

Didn't filter free consults against probability they'd turn into a contract.

Didn't have my heart in it (and have since stopped).

What did your hustling for clients consist of? Like I get the pounding the network pavement, everyone recommends that, but beyond that I never really get what it is that people do. Like do you just cold call people or do you entirely go through your network? What specific situations do you place yourself in where you can hustle up work?

Me? mostly reaching out through a decent personal network. Did some event sponsorships, didn't do advertising. Blogged, but not relentlessly. Didn't seek media coverage.

Were I to do it again I’d pick 2–3 topics to master and blog, tweet, guest post, relentlessly. Reuse, rewrite, repost the same essay and commentary dozens of times. Get quoted in press and other media coverage. Follow media coverage looking for potential clients, dig into those clients and master all the public information about those clients.

I didn't do any of that.

Maybe a couple examples would explain what I think people mean. You're getting dinner with a friend, and they mention their new friend just started a company and is looking for some people who do X. You don't really do X, you do Y, but a lot of people who do X also need Y.

On the 0 to 10 scale:

0: "I don't really do X, thanks for thinking of me."

3: "Hey, I don't really do X, but he may need Y. Let him/her know if they need Y they can call me."

5: "Oh, that's neat. Why don't you introduce us, I'd love to meet them. "

8: "Oh, cool, what's their name/email? Can I mention your name and reach out? "

10: "Cool, let's invite them to grab a drink with us after dinner. What neighborhood do they live in so we can go somewhere convenient?"

Important to note that implicit in this example is that you're meeting with friends/acquaintances who are in positions to refer you to this kind of work on a regular basis. That's the other side of networking - if you're not a naturally outgoing person it means putting in the effort to socialize with the right kind of people regularly and make sure they know what kind of work you do / skills you have.

If people don't like doing it,then they need to make sure the entire internet knows about them: bligs,articles, etc. This is one of the ways for introverts to deal with it.

Hire a good tax person immediately. Maybe hire 2.

A significant amount of your income earned is gained through having someone walk you through handling taxes & health insurance. I'm not suggesting cheating on taxes. There are common practices such as knowing how to best incorporate your business for your situation. How to best pay yourself (dividends vs income) & how to handle your personal & company expenses. This can easily make a difference of between 20-30% of your income.

By a good person, I mean someone willing to sit with you for over an hour & understand you family situation, what expenses you have & what expenses you plan to have as a business. Someone who will also sit down with you once or twice a year & re-discuss as well.

What country are you basing this advice on? I think it’s good advice, but if your income can increase by 20-30% as a result of optimising your business structure for tax purposes, that’s a dysfunctional tax system. I’d like to believe that in some countries this advice is not necessary.

I run a small consulting firm in the United States - you can definitely goose dollars-in-pocket based on your type of consulting and other arrangements.

Imagine that I run two firms - one that provides primary top-level advice, guidance, etc. here in the states, and with the other doing some or all of the implementation work in a U.S. territory like Puerto Rico. Much of the profits can end up in PR, and when your continental entity needs cash it can borrow it from your PR-entity at a decent interest rate to further reduce states-based taxable income. You don't really even need to be a citizen of PR for that to begin working. That's one of innumerable ways to reduce your tax burden here. An ambitious accounting and legal team can help you ensure that you keep as much of your total billings as possible.

We don't do this - we're too small and due to ambitious growth we end up eating most or all of our earnings each year anyway. Definitely seen it before.

This advice is good for the UK too. Yes it is dysfunctional

However it is a pretty simple one off step to incorporate, which your accountant should handle easily for you. After that optimise to maximize cashflow, and don't get excited about other tax savings. Some people get bogged down trying to save little pieces of tax by, for instance, buying assets they don't really need. Optimise for best cashflow. Optimise for best cashflow. There I said it three times. I am a finance professional who has held fc roles. I think about tax very rarely. I think about cashflow constantly.

Optimise cashflow for consultants:

Charge more Charge up front If you supply anything make a margin on it, and get paid upfront Bill on time Bill on time. Seriously stop working and write your bill out. A well functioning finance department at the client will pay all authorised invoices around the due date. Authorisation takes time, get in the queue early. Chase your debts immediately, if you have large bills due for payment call your clients accounts payable (know who this is) and ask them if they have the bill and ask them to confirm what date it will be paid on and the amount. Send statements too. I see this every day, where someone is waiting for co to pay them but co has no record of the invoice, it is in spam, in the wrong persons inbox etc. AP departments don't mind being chased, they expect it, it is their job, don't be shy!

Copy your bills directly to accounts payable as well as your direct contact. AP are generally good at chasing internal people for things they know about

Apologies. I should have clarified. United States of America.

I don't believe it's dysfunctional for this particular reason. There are for sure trade-offs between simplification & trying to optimize for the best outcome. A simpler tax code would be nice but then people on all sides of the political aisle would start saying we should really give X a break for Y reasons and that's how it seems to get complicated.

There is literally a 20% tax break for most small businesses this year in the US.

Healthcare can be cut in half if you are below certain requirements but make a $1 more & you pay the whole bill. This one I agree seems silly. Though it's maybe to simplified & should be more complex with a sliding scale.

A popular move for freelancers is to start an S-Corp LLC where you pay yourself a fair wage compared to others in the industry. This money gets taxed hard. Harder personally for you than if you worked for someone else. You can pay yourself dividends though with any extra money your earn as long as it's less than your wage income. This money gets taxed much less.

How you invest your money is also taxed all sorts of different ways.

Note - I'm not a tax professional & the above is just my understanding. Someone who is a professional or has more experience would give better advice hence my original post.

It’s not a crime if they don’t catch you. But ensure that your taxation system does not have rules about transfer pricing to expressly prevent tax avoidance.

The cheaper (with AI and automation) it gets for IRS to chase for transfer pricing violations, the more likely it is to get a fine.

   It's not a crime if they don't catch you.
With that mentality, you're as good as caught, anywho.

In France this is good advice too. If ones doesn't like doing tax things this is generally good advice.

And don't be the cheap client yourself in that regard 120€/hour for a good/excellent freelance accountant, I never want to go back to less experienced/professional/passionate ones.

Some examples: When you open a one person business in France there is a program to give you a 0% tax rate in the first year, but you need to apply and for that you need to know it exists.

Employing yourself can cost you 70% taxes. At the start when you rates might be low you can pay around 25% with the right corporate structure, instead of up to 45%.

edit: typo

This is applicable in most civilised countries.

What are some ways to (a) tell a good tax person from a bad one and (b) look for a tax person in such a way that increases your odds of finding a good one?

As a professional I always have my credentials and certifications framed and hung on my office wall for everyone to see. The same goes for awards and associations meberships.

So when it comes to hiring someone where I don't get a personal reference I always look for this, I also start with professional association member lists and or their referal services.

Most good accountants will provide you with a free consultation at their office or at the very least over the phone, just don't get hung up on fancy clothes and expensive furniture as that can all be just a facade.

The best accountant I ever had wore jeans and plaid shirts, drove a twenty year old car and his desk was always stacked with papers but he knew his stuff and was a huge part of my success, unfortunately he retired but again as a good accountant he referred me to another account before he retired.

Are they willing to sit down, be kind & patient & hear you out?

Do they seem like they care about your best interest?

Are they explaining things or making it sound over complicated?

Are they trying to sell you on services or nickel & dime you.

Remember, you can always fire them & go somewhere else. It's why I also suggested going to two different people. They're fairly cheap for small businesses.

I found my tax person through a referral. Went in and chatted with him about some questions and that was that. 15 years later I still use him, though I don't consult any more.

This points out another good tip: find a network of other software consultants that you can trust and ask questions of. I found mine, years ago, by keeping in touch with past colleagues; some of them had gone independent. Now I'd probably look on a local slack and organize a few lunches.

1) Do they sound interested in what your business actually does? 2) Do they work with other people in your industry, or comparable ones. 3) Did they get back to you in good time 4) Do they take documents electronically etc.

Most of all


This is very true, a good accountant is worth every penny. If you follow a good accountants advise you will almost always succeed, the tricky part is following said advice. A good accountant will help you delvop a business plan, theres alot of merit to the saying "Plan the work, then work the plan"

I live in a small remote town, and I'm very unlikely to find an accountant familiar with tech work here. Any advice on finding a good accountant remotely?

I'd say try the biggest city close to you.

You might not want an out of state accountant unless they're familiar with the peculiarities of your state (or even city)

That's a good suggestion. I'm in Alaska, to be specific, and I was thinking of looking down south. I'll try to find someone in-state first.

Nah. Just create an LLC and make an S-corp election if flying solo. That way you can pay yourself a salary, and pay the income tax just from the salary as opposed from revenue, which is much larger. There, I just saved you at least a hundred thousand dollars (if you're in the US and charging market rate). You can totally do it yourself - it's not complicated.

It's not quite that simple. If you're not cheating, you have to pay yourself a market rate salary that you are fully taxed on (you are setting your market rate at a reasonable level, right...?) and you're still going to be taxed on the business distribution in excess of your cost basis, just not federal payroll or self-employment tax. Be careful of state laws and fees as well - California specifically really loves to get their pound of flesh any way they can. Depending how much you make in business income and what your expense situation looks like it may or may not make sense to go through the extra hassle. Talk to a tax professional.

I'm not in CA, my condolences to anybody who is - it's a notoriously business hostile state. I pay myself about $14K/mo pretax (modulo B&O which is paid on revenues) - enough to comfortably sustain a family of 3 in my area. This is obviously lower than market rate for what _I_ do, but not out of the line for software engineering in general. I also don't do any distributions. I expect that at some point I'll only be working _very_ part-time on whatever it is my clients want me to do, and spend the rest of the time on my own stuff, and this is where most of the tax savings will come from: you pay less tax overall if the salary you pay yourself yearly is less.

An S-Corp will increase your risk of audit. Don't go it alone, make sure you and your accountant are dotting all i's and crossing all t's.

My biggest mistake working as a freelance consultant and truth be told still one of my biggest weaknesses is under estimating the the amount of work a job will require. I now tell myself any time I plan a project, whether for myself or someone else to double my estimate of the work required.

Many times it wouldn't even be my underestimating but rather the clients changing their plans halfway through and I would end up losing out rather than risking having them give me a bad review.

It is always better to estimate high then charge less than the other way around.

If you don't get a job because your too expensive don't be too upset, don't sell yourself short. IMHO it's better to not get the job than to work your fingers to the bone, miss out on other jobs and get burnt out only to go broke in the end.

This is a great point. I've slowly started to believe in the planning fallacy [1] and that humans just aren't that good at estimating the time that it takes to do a given task.

The freakonomics podcast had a good episode on the topic this year [2]. There's an amusing quote by Daniel Kahneman in the episode that brings me some comfort: "If you realistically present to people what can be achieved in solving a problem, they will find that completely uninteresting. You can’t get anywhere without some degree of over-promising."

[1]: https://en.m.wikipedia.org/wiki/Planning_fallacy

[2]: http://freakonomics.com/podcast/project-management-rebroadca...

I thought "I'm a great programmer so I'll be a great programmer-consultant". In fact they are two separate sets of skills, and if you don't have the soft skills around consultancy like networking for clients, dealing with payments, and smoothing things over when they occasionally go wrong, you'll need to acquire those skills.

Also get a good accountant. There are lots of terrible accountants. Literally I had one who forgot to file my tax return - you had one job! - and I ended up paying a huge fine for his incompetence then trying to sue him to get it back.

Everyone’s talked about charging more but let me add a vote specifically for dealing with credit risk - it’s real.

I worked with a lovely but cash-strapped startup who really needed my help, and I made absolutely certain to collect payment up front as a condition to working with them. I billed on the 1st of the month for the upcoming month and it took away all stress around (their) cash flow.

It ended up being a really fun engagement that lasted 6 months, and when they told me they were really tight on cash and had to stop the engagement in 2 weeks, it was zero stress on my part (because they’d already paid for those two weeks).

Chasing a client for money is one of the worst aspects of consulting and I’ve just decided not to let it happen again. I’ve been on both sides — the consultant trying to get paid, and (unfortunately) the client who didn’t have enough cash, and it’s agony for everyone involved.

Just a few hours ago I saw this post on Product Hunt: "Freelancember is a collection of 31 gifts for freelancers, one for each day. Templates, checklists, guides how to get better clients, raise your rates, etc." Might be helpful! https://www.producthunt.com/posts/freelancember

Some other folks mentioned taxes -- I highly suggest reading the book Profit First and implementing the system. I'm not a freelancer myself, but I'm solo & self-employed, and it's such a relief to have a pre-destined pile of cash to be sent off to the appropriate authorities each quarter.

Freelancember has listed most of the mistakes indeed, along with the solutions on how to solve or avoid them.

Example: https://freelancember.com/excuses-for-not-raising-your-rates... - how to deal with raising the rates and not ending up stuck at the bottom level.

Staying too deep in tech.

As a consultant your number one thing is making money. Find high paying clients, establish good relationships, do good work but don't get too far in the weeds of tech stuff. From everything I've read and experienced, deep technical work doesn't pay well or market well. Dumb stuff like setting up Magento is where the big money comes. People who are mainly technical seem to do better at companies. There are of course exceptions.

My business did not succeed. I still enjoyed the three years I spent on it. I got to work with lots of different things that I would never have had much chance to do otherwise, and get paid for it. I ended up going back into industry though once my primary client had to pull back my hours, and so far am happy enough with that decision too.

I am sure Magento pays well but I don’t think it has to do with being more simple.

Ex: wordpress developer vs react / frontend dev, who makes more? React / frontend.

This being said, for really high paying consulting gigs, i think that its definetely not in tech but in sales / marketing/ strategy.

Stephanie Hurlburt talked on the IH podcast about doing 7-figure contracting deals for C++ graphics work (math, C++, GPU optimization and various technical work).


Like I said, there are exceptions. To do this you have to be a well known expert in a highly valuable skill. I'm sure Troy Hunt does fairly well in security consulting on Azure for instance. Being an expert in something challenging but that doesn't make the client money (say Haskell, or whatever the distributed DB flavor of the month is) doesn't pay beans. Nor does knowing 50 languages or web frameworks: the client only cares that you know one. Determine up front what you want to specialize in, if you go this path.

> Nor does knowing 50 languages or web frameworks: the client only cares that you know one

I 100% agree with this. Specialization is worth it. Nobody cares if you're fairly close to workplace competence in ten things, but people will beat a path to you door (or inbox) if you're world class at one.

I'd also add that when you add to your skill stack, make sure it's complimentary skills you can use with your existing strength, not alternative skills that accomplish the same thing.


Yes and mainframe consulting is also very well paid.

But these are outliers

Not when I started, but after I'd been contracting for five years I ended up in a contract where the client ran out of money so couldn't pay me. I figured that because I was hired through a recruitment agency I was safe, but apparently not.

For those who aren't aware 'contracting' in Europe refers to what is effectively a short term employee who charges X/day. Clients usually pay net 30 - 60 and often you work through a recruitment agency. The agency is supposed to vet the employer and provide a good source of candidates, but for the fees they charge clients (10-30%) IMO they don't provide anything near that value.

This led to mistake after mistake on my part and now the client owes me £40k. I ended up working with a soliticor, and we have now agreed on terms for then to repay me, but I ended up with a pretty bad deal (it's effectively an interest free loan to them).

I've learnt quite a lot of lessons though:

- Under no circumstances work for free, if a client asks you to, it simply means they do not value your time. There's plenty of businesses who are willing to pay you so it's not worth the hassle. The only exception I'd say is if you are getting founder level equity (10s of %) in a startup you believe in.

- I had a bad feeling about this contract from my first week when I got in the office, guess I should have listened to my gut feeling :-)

- If a client is putting a lot of stress or pressure on you, fire them. There's plenty of good clients out there.

- Do not ever work for free https://youtu.be/jVkLVRt6c1U

> Clients usually pay net 30 - 60

What do you mean by this?

You'll also see terms like "2/10 net 30", which means if the client pays in 10 days, they get a 2% discount. Otherwise payment in full is expected by day 30. Your accountant would have a "Sales Discount" account to record it as an expense if they get you the check early.

Most large companies (b2b only?) request 30 to 60 days to pay an invoice. You don’t send an invoice and get your money right away.

Over a decade, I went from doing grunt work freelancing — data entry, HTML conversion, etc — to charging about $500 an hour as a true consultant.

Freelancers do what they're told. Consultants advise the client on what they should do.

When you start out, it's natural to think you're Doing A Thing (whatever skill you have & want to charge for) rather than Running A Business. I started out thinking "I'm here to make web pages and get paid for it!" and that made it very easy for people to take advantage of me. I would do exactly what the client asked for and then they would complain about it.

By the end of my consulting career, VPs would come to me with their ideas and I'd feel free to say "I'd love to work with you, but that idea won't fly. Here's what you SHOULD do." And they would go with it!

I realized that I could have positioned myself as the expert much earlier on in my career, and saved myself a lot of stress of trying to do every little thing the client asked, no matter how foolish.

The business mindset also means service agreements with initial deposits, work schedule with intermediate payments, kill fees and more.

I now run a product biz — the star being a time tracking SaaS for freelancers http://nokotime.com

Turning my catch-as-catch-can freelance business into a real consultancy is what made me able to charge more, work fewer hours, and have less stressful projects (bc I was the actual boss rather than a tool to be used by the client) and build the SaaS on the side.

Someone else mentioned Freelancember. Guess who made it? Me! Based on all my mistakes and years coaching others to level up like I did. http://freelancember.com

I highly recommend the book The Secrets of Consulting, which is like "the inner game" rather than explicit stuff like contracts, taxes, etc which are covered elsewhere.

Don't charge per project - charge for your time. The only exception I'd make on this rule is sweat equity and that's because I'm well aware of the gamble I am making with my time. Still charge a token amount of actual $$ for sweat equity unless you are a co-founder.

Do not overengineer anything.

Charge for your time - 3.6x what you are currently charging ¯\_(ツ)_/¯ no idea what that is. Don't work for clients that blink at that price at all.

Take the high road in every possible situation and never burn a bridge - your life blood will be repeat business and referrals. Your community and network are tighter than you realize.

At least 20% of your time will be networking, sales, and meetings - buffer your estimates an extra 30% with that in mind plus whatever other buffers you already told yourself you'd do.

Be over enthusiastic, be your own hype person and the hype person of the project you are working on, still under promise and over deliver though.

> Charge for your time - 3.6x what you are currently charging

Don't you think 3.14 would be more scientific?

Many (still do some) -

- Not booking myself in advance. - Taking rush jobs. - Not limit myself to a set no. of hours - Absolutely no systems in place other than a Calendly meeting link that I set up very recently. - Not able to estimate the time I need to complete a task. - Not producing enough content so that I could get pre-sold, inbound leads.

e.g. I'm a direct response email copywriter and I've been told by many gurus & coaches to write emails on a daily basis and publish on the web. Yet, I've been slacking off.

Result? I've to reach out to prospects and try to sell them on myself. Not an easy thing to do.

Got too attached to my project.

Your project isn't yours, it's your client's. I turned down better paying work because I had become so invested in the code. I was afraid to ask for a raise for the same reason. Finally my client stopped needing more features and that was that.

Your code is just a means to an end. Don't get attached to it or to a client. You are running a business. Keep good relationships, but be ready and able to cut ties.

Embarrassing but honest:

Pay your taxes on time (quarterly), assuming you are US based and on a 1099. Put that money away as soon as possible with ea. payment - just like an employer were withholding it.

I managed my finances poorly, and it gets increasingly difficult to catch up. All good now but was the most expensive lesson I learned.

Edit: seeing other replies here, I would meet with a tax/financial person from the start.

Yeah I ended up owing 95k in taxes last year oops. Luckily I can do a payment plan now. If I had gotten unlucky and started earning less I'd be bankrupt.

What I did in the past is to use the highest marginal tax rate for both corp tax and personal tax and leave that aside as our Dutch friend said it is actually a nice bonus at the end so you feel 2x better

How do you know how much money to put away until you're at then end of the tax period and know the total tax amount? Do you just estimate based on what you expect to earn?

I'm from The Netherlands where taxes are probably a bit different, but for every invoice I send I take of the amount of VAT (21%) and put that to the side. After that I split the amount I have left in 2, so 50% goes to a savings account to pay income tax, and the other 50% is what I can spend/have left.

The 21% will always be less, because you also have to pay for other things that include tax. So that (should) never be higher. In the end you've put more aside then you have to pay so that's a nice bonus.

With regards to the income tax, in The Netherlands you pay +/- 37.1% till 68.507eu, after that you pay 49,50% for everything that is above the 68k. So if I put away 50% for every euro I earned I'm sure that at the end of the year I've got a nice bonus and don't have to pay more then I put aside. (For other dutch people, I'm using the new tax brackets that start in 2020.)

> Do you just estimate based on what you expect to earn?

I echo the advice to get a good accountant, but "estimating" is what I've been doing for the past 5 years. I had an unexpectedly good year a few years ago and wound up underpaying on my quarterly taxes. The IRS and the State of NY both charged me a small fine and I just sucked it up and paid it. It's quite a racket they've got going on considering income tax was supposed to be a temporary measure to get us through WWI.

Interesting, do you have a link to more reading on this? The Wikipedia page on the 16th amendment doesn't seem to mention WWI as the reason.


But I would also find a good accountant in advance.

Never work for free.

I had a guy contact me and con me into developing a feature for him and then disappear.

The other way to put this is, get paid upfront. Estimate your price, triple it, then demand 1/3 upfront before you start to code. That way if the client flakes out on the rest you're at least covered. (Heh... I wrote this from just the headline, before reading the blurb. Your friend who "refuses to take on a project without at least 30% advance" is spot on.)

Which brings me to the next gem: Charge more. The A-#1 mistake most people in every business make is to charge too little. (Flip it over: don't compete on price. Not as a freelancer/consultant.)

What else? Don't work for liars or incompetents.

Also, just because a client has money and is willing to give it to you doesn't mean that you should take it.

Sometimes the right thing to do is sit Gil down and tell him: your project is the Winchester Mystery House and I have better things to do with my time.

(Ah, Gil... what a client. He would come in to discuss the project, and we'd say, "Well, there's A, B, or C?" and he would say, "What about D? And E? Could it also F and G?" and the PM would smile and say, "Sure Gil! We can do all that!". It was the only project I ever worked on that had 100% code coverage. No, really, 100%. Every line. Every single line. Because Gil wanted it. :-)

So yeah, charge more, and brook no bullshit. It helps if you're good at what you do, or at least dedicated.

The common rule around here is to charge more. This is also promoted a lot by patio11 on HN and on Twitter.

I would counter this with the fact that sometimes it could backfire. Just like in a job negotiation, a contract negotiation might end up with no contract at all.

So while it's nice to hear about this, applying it in practice generally works for new customers while the original/current customers are paying your bills at the normal rate. Trying this with your current customers might lead to no customers.

There are a lot of glass ceilings out there and mental blocks on both sides of the negotiating table. Even a deal that works for everybody might not happen because people are not entirely rational when talking about money.

"Charge more" is rhetoric[0]. If you look closely at those posts where patio11 advocates charging more, his reasoning for doing so is that most highly skilled developers undercharge for their services. His advice simply doesn't apply outside of that context.

[0]: If you don't know the difference between Rhetoric and Dialectic, I urge you to read Rhetoric by Aristotle. It will help explain some of the problems you may or may not have when talking with non-technical people.

> his reasoning for doing so is that most highly skilled developers undercharge for their services. His advice simply doesn't apply outside of that context.

Being highly skilled is a personal auto-evaluation. One might (perhaps wrongly) believe this and still not manage to raise rates.

> I urge you to read Rhetoric by Aristotle. It will help explain some of the problems you may or may not have when talking with non-technical people.

This is an interesting piece of advice. You think this would be a common trait among technical people?

I never did read Rhetoric, perhaps I'll find time over the holidays.

> I would counter this with the fact that sometimes it could backfire.

Well yeah, especially when you consider that the people writing those things have no way to know if you should charge more or not. It's actually pretty silly to respond to someone on HN and pretend you know that they should charge more. This is one of those situations where free advice is worth what you pay for it.

Have a rate card that encourages clients to pay on shorter net terms, and to pay on time.

Structure it as a discount instead of a penalty, but have the fully discounted rate be the figure you wanted in the first place.

Helps in initial negotiations if they want long net terms. You can just say, "sure...here's the rate for NET 45".

And, helps with slow payers.

So, in month 2, if they have paid on time for month 1, present an invoice with the discount applied. If they are late, then don't apply it.

Don't be afraid to say no if a client looks shitty.

Don't say no to a good client. Quote them an atrociously high price instead. What's the worst that can happen? They pay it.

1. Not making it clear to the client up front that I'm charging for the week whether they have enrolled me in their IT systems or not!

2. Not making it clear to the client up front that if they wanted me to do the work the following week I've also have to charge them extra for having to reshuffle my schedule.

With big companies this stuff is very hard to fix after the fact, it has to be part of the initial negotiation.

Here're mistakes I didn't make:

- Insisted on payment once contract is done and ignore "could you also do that and then i'll pay you for everything together.

- Did not race to the bottom with developers from poor countries.

- Did not take startup stock/shares/options to sacrifise salary.

- Realized that 5% of customers are responsible for 95% of revenues and prioritize attention to their requirements accordingly.

Not billing often enough. Send a bill every 2 weeks. If they miss one, stop working. No negotiations.

Agreed! And send the initial bill after the first week to familiarize the client with your invoicing process. (They typically appreciate this.)

I think this is very bad advice. I had great clients who overlooked a payment. Just let them know and everything was fine.

It also depends on what country you live in. Where I live it is 60 days by rule unless it is in a contract signed by both parties.

My wife is an accountant, and here's a protip on how to make sure that a client never "overlooks" a payment: put a penalty clause in your contract that says the client is to pay 1.5% of the balance every month after the payment is due, and the client is responsible for any recovery fees. Your invoice will always be paid on time. If the client does not agree to this, walk away. It's a laughable amount of money, but their accounting department will front-load any "penalty" contracts nevertheless.

All this "overlooking" is bullshit anyway. Nobody would "overlook" you not doing any work for a couple of weeks. So why should it be any different when it comes to payment?

Penalty clauses are not always enforceable. Early payment discounts are...

I mentioned it in my post, but the number one reason a reasonably sized company doesn't pay is that your invoice is not on their ledger. Call their accounts payable dept up after a few days, check they have the invoice, ask them when it will be paid. Don't be shy, this is what they expect!

Doesn't matter - they work anyway. Nobody in accounts payable is going to get into the details of whether things are enforceable or not. They'll just pay your invoice instead.

This is not a universal truth. Discount incentives work much better.

The clients who pay late will pay their invoices without the late fees anyway, in my experience. Now you’re tracking down payment for your work and the fees.

>> This is not a universal truth.

Nothing is.

>> Discount incentives work much better.

This is not a universal truth. See what I did there?

It depends, lots of larger professional ap just don't work that way. They don't choose when things are paid. They are trained to look for discounts though

It's a great advice. If my job,as a consultant,is to consult them,their job is to make sure payments do happen and they happen on time. In my current job, I do have a decent visibility on when,who and why gets paid. And guess who gets paid first? A massive tech company, that threatens to suspend our system if we don't pay,which would mean the company going into ground.

The problem with consulting as a developer is that you can't charge as much as it costs to fix shit properly. Endless fucking story. Developers are mostly crap which treat their work as any other working man.

You are there on the floor with these men, lowest in the hierachy, selling your time which you can't scale.

You can't set a price on your time, it's something you will never get back, but if you absolutly must sell it, sell it expensively and to people you values your time.

Fuck doing work with lousy people and companies. It's not worth it.

Time doesn't scale

> You are there on the floor with these men, lowest in the hierachy, selling your time which you can't scale.

What's the alternative? Being an employee is the same thing, but with better benefits and worse pay.

Charge more. If you can't find clients, the answer is to get a job and build your experience/network, not to lower your rates.

Related question (especially to those saying you should've charged more): how do you start consulting in software engineering? Like where do you advertise and expose your talent to potential clients who would pay at a rate that you think is worth it?

In my case, I start by telling my friends and people I was working with that I'm now available for consulting gigs. Eventually, one person (who know my works) recommended me to their friends. I did some projects for them, and they like my works so they recommend me to their friends, and so on.

My wife also like to talk about what I do to her clients (she was a consultant working on a big consulting company, different field), leading to more projects.

The usual advice is to expose yourself to as many people in the business as you can via friends, studies, conferences, talks, hackathons, etc. And let as many people as you can know that you're open and able to create/improve that thing that will make them lots more money than they'd pay you.

Network at Conferences and meetups. Stay in touch with old colleagues. Listen to everyone’s problem and suggest a solution if you see they are really stuck on something. Reach back to those people and ask about their problems. If it’s ongoing, build a concise document that describes the problem and a potential roadmap to solving. Give it to client (see what I did there?) and tell them to shop around and use that roadmap as a guide. Build sales documents and go back to client asking to implement your roadmap by working on said solution, involve other key personal in that meeting. ... Profit!

Lather, rinse, repeat. Sometimes the above takes 6-9 months. Sometimes you get a handshake on the spot. Sometimes they never call back. Just like dating, keep your options open to stay fluid and keep talking to potential clients on the regular.

All the freelancers I know (though only three, including myself) started off taking a job from a company they had worked with previously. Start off doing some moonlighting on a side project, then if it goes well enough to do full time, go for it. I think in all cases it was questionable whether our employment contracts allowed it but nobody's employer seemed to care. Typically you can charge 4x what you were making in salary, and it'll still be less than the company was paying for you earlier.

1) Not charging enough. This is harder than it sounds. First time I significantly increased my price was when I didn't want any extra work, so I asked for double my rate. After closing that deal I started aiming higher.

2) Not creating content sooner. There hasn't been one thing that influenced my career as much as my blog - If there would be one thing I would do different it would be this: I would have started blogging earlier.

Trying to find work through gig sites.

I've spoken to multiple freelancers to learn that the best way to actually find good clients that pay well is through word of mouth. There is inherent trust in the relationship when someone comes in as a referrals vs when they don't.

And that trust really changes the game in terms of how much more comfortable they are in terms of how they engage with you. They'll trust you with the project because they trust the referring source.

The alternative is spending a significant amount of time showing your skillsets to clients that don't know about you. Which means you may have to warm them over a few projects before they actually fully trust you. While starting off job sites maybe the only way to build a portfolio but we believe that everybody inherently has a professional network of good relationships they can tap onto, like old colleagues or friends from college that work in a similar industry.

[1] Here's a post I wrote about the ways different ways experienced freelancers find clients and most of them said that their best work came through word of mouth https://freelancefish.com/things-we-learnt-about-finding-cli...

[2] If you want to bootstrap your referral network, a friend and I are working on a tool that helps freelancers find work through word of mouth by reminding you to stay in touch with people and helping them in meaningful ways. It also encourages you to clearly articulate what you do and how the same people can help you in return. We just launched the beta a couple of weeks back and are slowly adding people onto the platform https://clienttree.io

Interesting. Will like to give this a whirl. Just curious - a) if there is an option to import my existing network/contacts from LinkedIn or some CRM that I maintain.

b) are you also building tools to help me showcase my consulting portfolio? (Like Dribble is for designers, but something more generic to encompass all types of freelancers/consultants). I would like to have a portfolio page on the platform - that I can easily create with some (no-code?) tools - and then something my referral network can easily point to - to their next level connections - as Proof of Work.

We haven't worked on a) yet but its on the roadmap. We want to import it from gmail as of now but linkedIn is on the list too.

We have a very basic services page that gets set up. More than portfolio we focus on how you can help your potential client. So really trying to showcase a very specific problem that you're dream client can relate to.

1) I thought that getting clients would be relatively easy, but getting new ones is more about trust than anything else. I moved back to my home town after spending two years away and noticed that my professional network there was quite poor so it took awhile to find a gig (~2 months and it's not in my home town).

2) When looking for opportunities (any kind really), the 80/20 rule applies. Try to focus on the 20% that produce 80% of the results. In our case we started by cold contacting, with quite poor results. Instead, we've been pretty successful using local freelancing networks/sites ran by larger consultancies to outsource the work they don't have the resources to do. Granted that's just subcontracting but it's a decent way to start out. I'd imagine the way the 80/20 rule applies when building direct client relationships is to focus on large-ish corporatios with decent financials that are already using contractors.

I've been freelancing for ~20 years.

One of the biggest mistakes was not charging enough early on, which lead to taking on work from questionable clients.

I think it was easy for me to fall into that trap because I started really young (pretty much right out of high school). I had no mentors or anyone to talk to, and this was in the late 90s so there weren't thousands of blog posts and Youtube videos on this topic.

Your rates make a big difference and it's not just related to your income, it's also heavily tied into the type of clients you'll be working with. On average after many hundreds of gigs at varying price rates I find the more you charge, the more easy going your clients are. They tend to trust you to do your job instead of trying to micro-manage everything with unrealistic expectations. Of course this comes with more responsibility, but that's a trade off I'll make every time.

Not making the client pay specifically and separate for travel. It should cost them more to have you come over to their office. That way incentives are aligned. That way they'll book all weeks meetings in one day, instead of having you come over to their office every day.

And ensuring travel hours, despite being paid, are not working hours. Working on a train or plane is fine, if you feel like it. But it should be your choice, a courtesy. Not something they can expect. "I'll get that report 9:30 tomorrow. Tomorrow? But you still have two hours of travelling. Yes. Which is why I cannot finish it tonight."

I think there are three mistakes I'd make:

1. I wasted a lot of time as a freelance web designer trying to get clients and convince them to go with me. I think someone would tell me they wanted a website. Without taking any payment at all, I'd setup a demo website. It wouldn't be a whole lot, but I'd setup at least half the pages with lorem ipsum, only to have them tell me they'd get back to me... or take forever for us to get the website done.

2. I always undervalued my work thinking that they would go to another client. To this day, I still am a culprit of making this mistake. It's not that I should overcharge a client, but for a lot of the bullshit they put you through, back and forth, meetings... etc. I was giving away a lot of free time.

3. A lot of times I'd have clients going into their website and making their own mistakes.. nothing that was my doing.. nothing that even required me, but oftentimes, I'd rush to fix everything for them. Soon as I stopped rushing.. I realized a lot of the time, clients figure it out themselves, especially the usual minor mistakes they'd make.

Here is my way of doing it, after 20+ years of experience in the field. Be sure to watch the video in the "article".


Those were the errors I made for a project I was a consultant/freelancer:

- Not charging the right price per hour, because "I was starting, this was an opportunity". - Not putting boundaries on client limits, as in, "no you can't call me whenever you want" (especially if you live in a different timezone) I personally understand they need to have an answer, but they can do perfectly fine by e-mail and you'll have to set to them a deadline for replies, for example "I will call/or reply you as soon as I get the e-mail" on the contract. - I didn't bill them for every cost they make me do like travel meetings and other general costs, so at the end my profits were even low. - I didn't had a contract, that was completely solid, so, get a lawyer who can draft you a solid contract with all your needs. - I was so overswamp of work that I couldn't manage all the expenses, or other time that I didn't bill to them, so also, get an accountant if you are charging them with something that might be funky.

I generally disagree with the “charge more” recommendation in the beginning. The reality is that until you have a sustainable client base, taking lower rates is often a necessity. In time, though, you should raise your rates to be market center.

One more mistake I would add was that I didn’t specialize at first. I marketed myself as a general full-stack software developer and that was the wrong move. Now I specialize in a particular area that I focus on and excel at and that is something companies are willing to pay for. The value proposition is clear; they’re paying for a specialization that they won’t ever have (or need long-term) in-house.

Edit: I own and run a very profitable consulting company, among other things.

As a junior software engineer I wonder, how do you get started with contract work, and how do you keep getting clients? Is it all networking?

1) Setting my rates too low

2) Not saying 'no'

3) Not making contracts and accepting changes mid project

Not full time freelancer, but I made many and still make some those includes

-Not charging enough.

-Spending less time to find client

-Not specifying Time required to complete task

-I have micro-experience of many platform and business specific task, but despite knowing its is rare to find such developer I always forget to charge enough.

-Taking fixed price for project with ambiguous scope like firing on own leg.

-Not to know when to refuse to do something

and many more.

My top-three biggest mistakes were, in order of severity:

1. Taking on and continuing to work with asshole clients. 2. Setting my rates too low (I didn't account for taxes, paying both halves of FICA, and healthcare as much as I should have). 3. Not finding a good balance between finding clients and actually doing the work.

Constantly update expectations based on how the work is actually going and based on evolving requirements. If you are T&M or Fixed Fee, you need to always give people your best expectation of progress and where you think (even with a lot of uncertainty) you'll be when the budget runs out. If you do this constantly and early clients feel empowered to make choices (including adding more budget). If you just work until the money is gone either you eat the overage or the client is blindsided and pissed off.

The short version of this: Never, ever, go over budget - always ask for more money or a cut in scope and always do so as early as humanly possible.

If you and/or the client aren't clear on scope or if the budget is enough, don't sleep at night, confront and squash the uncertainty and resultant misalignments or you will get bitten!

Everyone here covered 99% of the things I would say so I'm going to add a few important ones that people missed.

- Estimation. Devs are notoriously bad at it... so don't think of it as an estimation of the amount of time something will take, think of it as a negotiation with the goal of getting them to agree to the most amount of time something could take. If your estimation doesn't seem ridiculous to you then you did a bad job of negotiating.

- Asshole tax. If you get a client that you think is going to be an asshole tax them for that privilege. +20% at least (make sure you're charging more to begin with as previously mentioned). Now this may seem wrong but if they turn out to be not an asshole (which happens a lot), but to make this right with the universe just do more work and don't bill for it. The idea here is that you still end up being mentally happy to do the work even if working with them is painful.

- Use options to negotiate better. There is a bunch of advice saying "don't charge by project"... hogwash. If you can make more money by leveraging a customer's desire to know ahead of time what something will cost you can make money on that. You can clearly define ahead of time exactly what the project entails, charge a 2X or 3X what it would cost in hourly, and then charge for scope changes (which we all know there will be a ton of). Similarly, when you present a proposal, give at least 3 options: "cheap-ass", "normal", and "deluxe"... you will be surprised how many people will spend extra money because they can (you can do this even if the project is billed hourly). Furthermore... people that head into "cheap-ass" land give you valuable information on how to deal with them - most of the time this means you do the same thing but need to itemize your work more heavily (more on this).

- Itemization. Better Negotiation and billing higher amounts are improved by itemization. they say the person that comes to the negotiation table with the most bullet points to negotiate over will win the negotiation. Billing is just a different negotiation.

- Getting content is a nightmare for web clients. Charge for that... but as mentioned elsewhere make the charge in the form of a discount elsewhere. If the content is delivered by XX-XX-XXXX the project is discounted $XXX. THIS INCLUDES BASE ECOMMERCE PRODUCTS.

- Don't try to hire people to do part of your work until you are REALLY efficient at it.

- Exercising is part of your job if you are 100% on your own. Seriously.

- If a tool will save you time buy it immediately. Avoid free tools - you will pay for them later and it will cost you more.

> Estimation. Devs are notoriously bad at it

I wouldn't say devs are bad at it. It's more that software development is very hard to estimate. Unless you're doing exactly the same type of work with an identical setup every time - like billing people to install a Wordpress site, it's often impossible to estimate the exact amount of days or hours something will take, especially if you're being paid to fix a bug or a problem to which you don't yet know the solution.

Too cheap and not sending early enough invoices, because it felt hard to do while we were still working together. Now I'm more expensive and send invoices right away. If there are troubles with payment I have a better lever and can also stop working with a client.

When you're starting out, it can be easy to think that you'll just undercut your competition - if not for the experience gained.

No, here's the truth: When you undervalue your work, you'll attract the types of clients you don't want to work with. Scammers, misers and bargain hunters, etc.

You're also signaling that you're inexperienced - even though you may have a legit reason for charging less. I know consultants that work from home, and live in extremely cheap areas, or simply don't have many expenses, compared to consultants living in high COL areas.

So yeah, charge more. It's a good filter that you don't need to actively work on.

Lots of advice to raise your prices, which I agree with, but just be careful if quoting for a dream project or something in an industry you want to move into.

I recently quoted for such a project, with a higher price than usual but not unreasonable at all. Heard nothing back from the client for weeks now when discussions were previously going well. I feel like they have taken offence at my quote or something.

I am a bit of specialist in the particular area so pretty sure they won't find someone else to do it for less, which was part of the reason for my slightly higher quote.

Any advice on how to follow up in a situation like that?

Something as short as "Have you given up on this?" might work

Just ask if they have made a decission already and eventually what is a planed start date. You may politely explain that your availability slots are filling up for upcoming weeks/months.

It is normal for projects to be deprioritized. In that case usually all focus is shifted onto something else - that includes decisions and communication effort too.

From a business perspective - regardless of the content of consulting/freelancing:

People respond to incentives and everything that matters to you and to the client is up for discussion.

I do a mix of project work, training, and team/design coaching. I have a graduated rate schedule. If we're doing a long-term project, I'll typically price work out at the week level and bill at what comes out to be a lower effective hourly rate. This is fine, because these things are planned in advance and I can schedule around them. For customers that want to be able to get an hour or two of time nearly on-demand, I bill a much higher effective hourly rate and bill at 15 minute intervals.

I value my time, and I value being able to plan for things. I incentivize clients to do this by charging them more for things that are relatively inconvenient.

I like being paid on net30 terms - this is how I plan my cash flow. If a client has a blanket rule for net60 or something else, I'll discuss with them my preference, and will typically offer early payment discounts, something like a 2.5/30 net60. Again, incentivizing my preference. I'd rather have a predictable cash flow.

Regarding the second item - it's always worth discussing something. I've never had a customer issue with schedule or scope when we've talked through what's happening. Your work matters to your customer. Keep them apprised of what's happening.

I will typically have active work with 3-5 clients at a time. I have a mix of remote clients and those that prefer on-site presence. For much of the last month and a half, I worked out of one client's office, but had daily standing commitment from 12-5 for another remote client. The on-site client was fine with this, because we discussed the schedule. They prioritized the on-site presence and immediate availability.

I typically won't work full time for a single client. I consider full-time to be 40hr/wk for more than two consecutive weeks. This doesn't mean I have no long term clients, just that we work out schedules that work for both of us. This is because I value my schedule flexibility and don't want to be beholden to a single client. My clients get this.

Here's some solid advice for consulting: https://www.youtube.com/watch?v=2YF0_N7DuwA&t=1254s

This is going to sound basic: not charging enough. It's worth an entire blog post. Between imposter syndrome and economics, you probably won't value your experience enough.

Took a project as a whole price. As a result, the client asked for a lot of changes and paid only initial price, of course. What was supposed to be a short 2 days project blew into a full month. Learned my lesson, never worked on a fixed-price project again, only hourly. Now I welcome clients with gazillion of change requests and new features since I get paid by the hour. Also allows me to be at hand maintenance guy after project is done. This way pays the bills quite nicely.

I outsource a lot of game dev related work. Usually I give the requirements, ask for an estimate from the contractor then I increase it 25% and ask if they’d do it at that fixed price. Does that seem fair? So far it seems to have worked out over a few tasks but curious what objections you or others reading might have to this?

If your task is small, then it's OK, since you know very well what are the requirements. But on related to what kind of work I do, that's a no go. You see I don't do small tasks, I do full blown solutions. And on those an estimate can be as off as 100%. And usually, because clients wants this and that, it goes on like 300% in the end. Why? Because as time passes and new versions of solutions get on their hands, while they use it, they want some things to behave differently while some other things that didn't exists came to be implemented (change requests and new features).

You see, I do your kind of work, meaning small tasks, after the solution is finished and it enters maintenance phase. Client comes back and, for example, on top of exporting to PDF, now he wants the same reports to be exported to Excel as well. Small task, to which I can give a very precise estimate in hours and after clients agrees to it, I go implement it. Usually that kind of task is around 100% accurate from estimation point of view.

> I outsource a lot of game dev related work.

Do you mind if I ask what kind of game dev related work?

My experience in the industry involved only hiring companies to do completed bits of work. This included programming, art, sound and level designs all in one. Basically, whole playable levels and/or mini-games from scratch. Not ideal jobs for a single programmer.

Working on a first person shooter in Unreal Engine 4 so tasks include stuff like weapon inventory systems, bullet penetration, AI bots, server hosting, modding tools, in-game VOIP. I also do a lot of programming (~75%) but outsource modular tasks where ever I can to try to buy some time.

I bet that kind of work is more interesting than CRUD work. Thanks for the info!

Starting work before I had a written purchase order in hand (or at least a verbal purchase order number with the promise of getting me the written purchase order soon). if you’re working before you get the purchase order there’s no need for them to actually make this a priority. It always eventually turns into a problem. Also having a purchase order shows that everyone in the company is on the same page (between engineering and the finance department).

Like most of here pointed out, I didn't charge high enough. When I started I was afraid if I charge too much, they will leave.

But still, I haven't learned from my mistakes. I charge way too less compared to what people posted here. I don't increase the price continuously. PLUS I don't market myself much. I heard word of mouth marketing is best for freelancers but I am yet to get a gig from word of mouth marketing.

When a customer makes a new request or tries to modify a requirement, don't be afraid to say no if you don't think it's reasonable

Reading many replies here I now understand why prices go from $2 to $200. The work often gets easier but the intermediaries increase.

Lot of good comments here. The /r/freelance subreddit is also a good place to ask questions & discuss issues.

What's the appeal of being an independent consultant?

Why would you do this versus any other business or job?

Genuinely curious what the appeal is.

For me:

- I get to work on something new every few months. New company, new people, new challenges, etc. This keeps things interesting.

- I get to do what I think is best for the client, rather than taking orders from someone.

- Pays much better than salaried positions (for me, at least).

- I get to define my own job. If next year I decide to switch from marketing consulting to, say, operations consulting or sales consulting or illustration work or some narrow marketing thing like site conversion optimization, I just update my website headline it's done.

- Experience the joy of running a business. Project cash flow, close deals, scope out projects, deliver results, collect feedback, track invoices... Love it.

- Ultimate flexibility. Last year I took a month off to travel, and this year I took a month off for paternity leave. All it took is advance notice to my clients, and a return date so they know when we can pick back up.

Can you share what you consult on?

I'm an engineer-turned-marketing-consultant for enterprise software startups. I help them attract and convert more enterprise customers in a repeatable way.


How long is your average engagement, if you don't mind asking.

Also I suspect this requires a lot of travel (and time away from home), correct?

Starts with two months, usually, and on average goes for over a year. As the startup grows there are always new challenges that pop up.

Actually I barely travel even though most my clients are in the Bay Area and I’m on the east coast. Everything is done remotely with email, slack, and zoom. I go there once a quarter but even that is just for some face-to-face time and not out of necessity.

I got into consulting mostly for the freedom and schedule flexibility. I work when I want to, and if I wake up feeling tired or unmotivated I can take a morning off instead of having to grind through it. And I can spend significantly less time working overall.

I've also found that consulting gives me a healthy amount of emotional separation from my work. I'm hired for a specific task, and I can take pride in doing that well. The long-term success of the client isn't my problem and I don't have to stress about it.

I didn’t set out with freelancing as my goal, it was more that I decided to travel. I left my employer to travel for six months. On my travels I visited Japan and decided I’d love to go back there. When I came back to the UK I started studying Japanese and applying for a Japanese working holiday visa. I also needed to get some savings together. I could of went back to my employer but it seemed like a lot of effort as I was at my parents place in Northern Ireland and my employer was in England. Moving over is a hassle and I knew I would be leaving after a few months so I decided to try freelancing.

I am a Python web developer and couldn’t find any work in Northern Ireland. My clients ended up all being in London and I would work remotely. When I actually moved to Japan my client at the time was happy to continue working with me. Which was pretty cool. I have fond memories of that time. Working in a ryokan, sitting on a tatami mat coding Python. So cool.

I ended up working for a company in Japan which was cool. Before my visa ran out my old colleague contacted me out of the blue and asked if I wanted to freelance with him at the same company he was working for. I had my interview over Skype while in Japan so when I came back to the UK I was straight into work. It ended up being more convenient to freelance than to look for a job and I’ve just continued to freelance ever since.

For me it's first and foremost freedom to do what I want. I work on what I want, take time off when I want, set my schedule how I want.

Also variety. Lots of different projects for businesses in different industries. It's definitely not boring.

Do not work extended periods without getting paid. Especially if it's something approaching 40 hours a week.

Bring the client in to ask them what to do when something unforseen happens in a project. Even if you know what should be done, having them make the decision with you means they can't come back 6 months down the line and complain about the project not being delivered on time.

If you are in the US, make sure you are up to speed on any county/local regulations and tax laws about running a business. Even as a freelancer and depending on your area, you may need to obtain a business license, pay gross receipts or any other such legal obligations.

The thing that most forget: it is impossible to estimate. So don't do it. Charge by period and keep communication to the client what you did in that time. Give them confidence that you provide them company value for the time they pay you.

As freelancer or as a consultant? As a freelancer i once didn't stop working for a client who didn't pay for a month. Because we cooperated for a year and good contact with him. I never got these money back.

Get a retainer and start work when check clears. Invoice client against the retainer. When the retainer low, ask for more money. When the retainer is spent, stop work until additional funds are deposited.

Also, there is this advice from Mike Monteiro (explicit language):


Not sufficiently understanding my own brain. If I'd known then what I know now about ADHD, things would have gone very differently.

(OK, I don't really think of this as a mistake, but still...)

There is an excellent book that I would suggest called “The Secrets of Consulting” by Gerald Weinberg.

I also use a tool called FreshBooks that has been killer as far as invoicing and tracking time.

Happy ex customer of Freshbooks (ex because I am no longer consulting). I will say if you are disciplined and want to save every penny, you can get by with Excel and word for invoicing, but once you get your first client or two, Freshbooks is real nice to have. Easier, invoices look better, you get reporting.

And the Weinberg book is top notch. Anyone who wants to solve problems in business should read it.

For B2C, get 100% upfront. For B2B, 50%. I am willing to walk away from all business when my payment terms are not met. Life is so much less problematic.

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