Raise your rates

We determined earlier this week that you aren’t charging enough for your services. Greg Fuhrman (Freelance CFO) helped us through the nuts and bolts of rate raising.  We also got a butt whooping from Redhead Writing too.

Once you have landed on your new (much higher) rate. You can use these tips to break the news to your clients.

Existing Clients:

  • Will appreciate a little lead time.  Don’t say, “Hi, I doubled my rate, effective 4 minutes ago.”  Start with your longest term and favorite clients.  Call them up and let them know that your rate will be increasing on X date (about 3 months in the future).
  • You can go for broke and do the whole increase all at once on X date BUT
  • Consider stepping up the rate over time.  Your long term clients will appreciate being put on an adjusted rate schedule.  This allows them to project their budgets more accurately which will cause any good project manager to hug you. For instance, you might increase your rate by $10/hour every month for the next 3 months or until you hit your target rate.

New Clients:

  • You have the benefit of historical ignorance here.  New clients probably don’t know how much you were charging last week so you can implement your new rate ASAP with new clients.
  • Consider giving a discount on your normal rate when the project will be very large or long term.  You can afford to cut them a bit of a deal for the sweet security of a long term contract!  A good rule of thumb is to discount your rate by about 10-20% for these situations.
  • There’s no harm in trying to get new clients on a retainer deal.  Retainer=they get a special rate for committing to X number of hours per month.  In return, they get your special “retainer rate.”  Again, the security of a long term contract frees you up to work on your craft instead of being out scrounging up new clients.
  • Remember that clients on aggressive deadlines get to pay you A LOT more for your expertise.  They need the product of your brain in a hurry so they’ll have to pay for it.  Consider doubling your rate when you get these types of calls.
  • If you are writing proposals for clients on the east or west coasts, adjust your price UP by 25-50%.

Let us know how your rate setting/increasing conversations are going!

Your daily butt kicking

You are not a freelancer.  You are a business owner.  So start acting like one.  Enjoy this honest and much needed slap about how you should be conducting yourself.  Written by honorary Cohere member, Redhead Writing*.

*language is not for the faint of heart! ;)

#financefriday: Setting your rate

Normally a superhero dons a cape and mask before saving someone.  Today, Greg Fuhrman arrived at Cohere Coworking Community in relatively inconspicuous attire: a blazer. Greg is a “freelance Chief Financial Officer.”  I’ve given him that title because he works p/t or interim for small and growing companies that need a little CFO love.

Greg helps the group understand rate setting

Greg taught us what a CFO’s role is, why we might want a CFO’s help, how to set and raise rates, adding employees and tips and tricks for securing venture capital!  Yep, all that in just one hour at #frankfriday today.

Today’s financial focus will be on RATES.  How much are you charging and is it enough?

  • Never undersell yourself.
  • Longer projects can be at a lower rate in return for the security of a long term contract.
  • Urgent projects demand a premium rate, sometimes double what you normally charge.  If a company expects you to drop everything for them, it’s going to cost ’em!
  • Measure yourself against your peers.  Your peers are people in the same industry with similar experience.
  • What seems like a lot of money to you may not phase a company with deep pockets.
  • You should not be charging less than $50-60 per hour.  Yep, you read that right.
  • Know what your minimum dollar amount to survive is and work backwards from that number factoring in how many billable hours/month or week you can tolerate as a creative.  (Angel’s note: I’ve noticed that many technically creative people can only produce high quality work for about 5 hours/day. This 5 hours/day is in addition to the more functional parts of freelance like billing, writing proposals and catching up on twitter).
  • When setting your rate, factor in taxes, retirement, insurance and the cost of doing business in your field.  What software or equipment do you have to keep up to date?
  • Get off on the right foot with a new client by telling them your normal rate and then discounting their project.  “My normal rate is $120/hour but I can do $100/hour since this is a large project.”

In summary,  you probably aren’t charging enough.  What could you accomplish if you doubled your rates and worked half as many hours?  Marinate on that and tune in later this week for Greg’s advice on how to raise your rates.

Contact Greg (gregory@fuhrmanconsulting [dot] com) if your business needs an interim CFO, business planning or a long-term strategy.

Duck, Duck, Choose

One of the most difficult challenges you’ll face as an entrepreneur or freelancer is choosing (people, projects, helpers, well wishers, friends and competition).  These decisions go beyond day to day decisions like which coffee shop to land in (if you’re not already coworking).  Many people will offer you their help as you start out and if everything goes right, so much work will eventually flow in that you’ll need to make some tough decisions about where to apply your time and energy.  Here are a few tips to help guide you:

Have a strategic goal that you are trying to accomplish with your business.

The standard, “I create websites” just won’t do.  There are at least 5 different web developers at Cohere right now and they all have very distinct niches.  Saying, “I create visually appealing, high traffic websites for science fiction authors”  will serve you much better in the long run than scrambling to take every bit of work that comes your way.  Having vagueness around what specific skill you bring to your industry will confuse your potential customers and actually decreases your net worth in the mind of the consumer.  Being good at 1 thing instead of mediocre at many bumps you up “expert wise” and allows you to charge more–BONUS.

Give “helpers” their first task as quickly as possible.

Many people just like offering help but have no intention of doing anything for you that will actually help your business.  For every 12 offers of help I got in starting Cohere, only 1 or 2 actually came through at crunch time.  Give those who offer to help a very small task.  If they complete it well and ask for more, keep them on tap.  If they flake on you at the first sign of even a little work, politely ignore or deflect their future offers of help.  For the small percentage of valuable helpers, always be thinking of how you can return the favor when they need help.

Shed what you hate.

Befriend other people in your industry.  This will allow you to contract out the portions of projects that make you want to tear your hair out.  Chances are, your dislike for a particular part of a project is someone else’s perfect cup of tea.  Work together using your individual strengths to hammer out projects more quickly.  You’ll procrastinate less and sleep better knowing that someone else is on it (and loving it).

This also goes for outsourcing.  As soon as you can afford it, outsource any business task that gives you heartburn.  For me it was accounting.  I lost about 35 pounds in mental baggage as soon as I ponied up to get a book keeper.  You can also outsource any activity that you can pay someone a lower hourly wage than you pay yourself.  If your time is worth $100 dollars an hour and you save one hour by outsourcing accounting at $35/hour, you just made $65 in billable hours (extra time you are available to do what you get paid to do).

The reality is–starting out as a freelancer or starting your own business will be HARD.  They do this on purpose to weed out the weak and un-passionate.  How do you stay on track with your business?

I’m Rubber and You’re Glue

Developing resiliency as a freelancer and entrepreneur has been a fun topic of discussion for the coworkers at Cohere this week.

What is resiliency? The ability to overcome obstacles, to keep going no matter what, to have thick skin, to accept your circumstances and keep trying, to keep innovating, the wherewithal to keep on keep on-ing.

At #frankfriday today we talked about what things/feelings manifest themselves as potential areas to build up resilience.

Cohere members have developed ways to deal with rejection.  Writers, especially, have to deal with rejection a lot.  Maybe your work didn’t strike a chord with the editor or maybe you got the dreaded “it’s just okay” feedback but learning how to bounce back from this feedback will be essential for your ongoing mental health as a freelancer.  Plus, you probably have crappy health insurance, so let’s be proactive with your emotional fitness here.

Tips from the Cohere Coworkers on how to become more resilient:

  • Be confident in who you are and the work that you create.  Your work will NOT appeal to everyone.  In fact, your work might only appeal to 20 people in the whole world.  Spend your energy finding those 20 people, not trying to please the masses.
  • Feel the fear and do it anyway.  Submit your work even if you think you might get rejected.  You probably will get rejected but practice makes perfect!
  • Learn to distinguish between helpful and hurtful criticism.  Not everyone has your best interests in mind.  Finding the people who do will be critical to your continued development as an artist.
  • Your once rejected work will probably circle back around and become new and sought after at a later date.  Consider this to be your sign that you were way ahead of your time and the rest of the world is finally catching up.
  • Cry.  Sometimes you just need to feel the pain to be able to do anything about it.  As one coworker shared, “if you keep a bow strung all the time, it will lose its tension (and effectiveness).”  Unstring your bow from time to time and regenerate.  You’ll come back springier and more awesome after.

How have you developed resiliency in your freelance business?

Get accountable

Why re-write the wheel when it’s already been done?  I got wind of this post via Twitter and it basically outlines how to create accountability and boost productivity within a small group of freelancers.  Need some accountability yourself?  Check out Cohere…we do this ALL DAY LONG.

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We’re all self-employed, we all battle periods of distraction and aimlessness, and we live our days sandwiched between the rush of deadlines and our own long-term life goals.  We’re busy, but we each needed a voluntary reason to stay focused.

Read the full blog post from Justin Kownacki here

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