As a freelancer, there’s a constant pressure to increase your rates, find better clients, and generally do better. It’s a blessing, pushing us forward, and a curse, causing attacks of impostor syndrome and doubt when we compare our activities to those who are few steps ahead.
Lately I’ve been writing about why we should increase our rates. I’ve realized that a high rate is just a means to an end, but the process has made me reflect on my business and the growing pains I’ve been through while learning to run it successfully.
Initially, I started without a plan. Before I became a freelance consultant, I floated between many jobs; none held my interest for longer than 2 years. Either the pay was too low, or the job made me compromise some part of my personality; not in ethical ways per se, but there would be tasks I didn’t enjoy or policies that I didn’t agree with.
I left my last job because of one simple fact:
The best part is, you don’t need permission to access these opportunities, you just have to figure out where they are.
I quit my job because I knew that it was possible to charge more than $100/hour.
To justify quitting, I needed to replace my $40k salary; at $100/hour, that’s only 400 hours of work. At the time, I was very naïve.
Though my initial goal was to bill $100/hr, I didn’t know how to make that happen. Instead, I belly flopped into the freelance pool without any water wings and needed to hustle like crazy to keep myself afloat. There were a few months where rent was due in a week and I had only $80 in my bank account. I would frantically email clients that owed me money and make sure that I could scrape together enough to pay my rent.
Every time I encountered a roadblock, I had an opportunity to improve my working conditions. I would put systems in place to avoid the same problem in the future. Over time, I adopted policies like payment terms, friendly reminder emails, and contracts to solve these problems. However, a little bit more up front preparation, would have allowed me to avoid these stressful situations altogether.
I’ll admit, leaving my job without a plan was impulsive, but once I’ve made up my mind about something, I don’t like to give up. Instead, I set my resolve and trudged on towards my goal, stepping up my rate incrementally, first from $28 to $40, then to $80 and to $120.
When I reached $120/hour, I could stop my constant hustling for new work. The new rate created the breathing room I needed to take a few steps back from my business and evaluate what was truly going on. I realized that I needed a new goal. My business was sustainable. I’d achieved my original goal and was operating without purpose.
I realized why I’d quit my job in the first place – I wanted the freedom to work on interesting problems, with amazing people, from anywhere in the world while making enough money to focus on my own interests part time.
Having a successful freelancing business is about building a business that works for you. It’s not about comparing your income or client portfolio to the people around you. You and I both know that there will always be someone who makes more money than you, has more prestigious clients than you, takes more vacation than you, or just seems better than you.
For me, the take home lesson is this: building a business gives you the opportunity to create your dream job.
Raising your rates is just a means to an end. You need to raise them to create time in your week for you to focus on your passions: side projects, spending more time with your family, making more money (working more billable hours), or travelling the world.
Your business should be what you want it to be. What does that look like for you?