I've tried fixed bid. However, whenever I do a fixed big project it takes longer than I expected and it ends up costing me. Obviously that means I'm under-estimating and/or not charging enough. Or perhaps it means the way I come up with the fixed cost is wrong.
Generally, I break the project down into a list of tasks. Estimate liberally for each task, then multiply the final number of hours times 2 then multiply by my hourly rate.
To your second point, as a small 1-2 person company, how could I afford a sales person? Are there sales people out there who would purely work on commission?
Try daily rate. Say you charge $800 per day. Minimum charge is one day. If you do work in 2 hours it doesn't matter because you'll charge full day as it's inefficient use of your time to split it into minuscule hourly chunks.
And don't do small projects which take couple of days or weeks to finish. Try to get commitment from clients for at least 3-6 months of work. So get a written contract which defines your pay to be 22 * daily rate * number of months, billed weekly let's say.
You'll have much less stress and waste less time looking for new clients.
Basically I'm suggesting you become a contractor with a daily rate, work on projects which last around 6 months on average per project. You can then slowly transition from this to more niche or specialised consulting. And you'll have a decent Rolodex of clients and references after contracting for couple of years.
I feel like I'm getting worse because some of my project surpass my worse-case. All things being equal, the project I'm thinking of involved working with new technologies.
So perhaps the lesson there is to apply an appropriate coefficient according to how well I know the technology.
Find a niche is the hardest part, indeed. Some people call it “Positioning”. Well, I don’t think it’s useful for you what I’m currently experimenting with, I bet it’s far more interesting how I found it.
I will share some thought that helped me a lot, your mileage may vary:
1) Think about something you can do really well, and that you can do in 1 day. Look at your past proposals, find that single task where you think you can make a difference or remember that problem you solved so elegantly. The “1-day” thing is completely arbitrary but keep in mind that the shorter it is, the better chances you'll have to test and sell it.
2) The task should be something that a fair number of people need (even if they don’t know it yet). Listen to your clients, try to remember what they asked more often in your past projects. Listening and frequency are key here.
3) The task doesn't need to be anything extra innovative or super revolutionary, actually, it should be something very simple. Think small!
For me, the biggest challenge was to fight my own ego. I think I’m very good in some areas of my expertise. In 10+ years of freelancing, I ran this race to the bigger project, the bigger client, the bigger challenge, the bigger reward. At some point, I had problems explaining why my solution was so much better and the best one for the client, who only wished someone solved his silly problem and didn’t give a damn about it, best price aside. Remember, burn out come mostly out of frustration. I felt I was tricked into playing the wrong game. Then, I found that bigger isn’t always better, many times it is just… bigger. Again, this is just me with my own story and my own experience, your situation may be different.
4) Once you find it try it out. Fast. Share it with your clients and colleagues. Make a 1-day mvp or landing page and throw some Adwords on it, leave the details for later. Don’t overthink it, don’t overdesign, don’t over-engineering, don’t over-anything, just test your idea. My rule of thumb is that if something works, it will work since day one. At least you will receive some genuine positive interest almost immediately.
Other notes:
- You will still do freelance work on ordinary projects. Your idea will act as a bait, some clients will be very happy and will ask you to solve more of their problems. Hopefully, this time it’s in your hands to choose the right project and the right client and not the other way around.
- Again, you will also find ways to upsell more complex solutions with the right clients.
Well, I think I'll stop here, sorry, if I had more time I would have written a shorter comment. Just hope some of this will help.
Generally, I break the project down into a list of tasks. Estimate liberally for each task, then multiply the final number of hours times 2 then multiply by my hourly rate.
To your second point, as a small 1-2 person company, how could I afford a sales person? Are there sales people out there who would purely work on commission?