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Ask HN: What mistakes did you make when starting as a consultant/freelancer?

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Re: Ask HN: What mistakes did you make when starting as a consultant/freelancer?

#151

Post by AlchemistCamp »

jklepatch wrote: post #140
daxfohl wrote: post #59

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 compan…

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).

https://www.indiehackers.com/podcast/044-stephanie-hurlburt-...

Re: Ask HN: What mistakes did you make when starting as a consultant/freelancer?

#152

Post by hef19898 »

im_down_w_otp wrote: post #5

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 wha…

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?

Re: Ask HN: What mistakes did you make when starting as a consultant/freelancer?

#154

Post by prox »

sevencolors wrote: post #92
gk1 wrote: post #32

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 w…

> - 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…

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.

Re: Ask HN: What mistakes did you make when starting as a consultant/freelancer?

#155

Post by mdorazio »

m0zg wrote: post #113
mattferderer wrote: post #3

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 c…

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.

Re: Ask HN: What mistakes did you make when starting as a consultant/freelancer?

#156

Post by jklepatch »

AlchemistCamp wrote: post #151
jklepatch wrote: post #140

Earlier quoted context omitted.

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). https://www.indiehackers.com/podcast/044-stephanie-hurlburt-...

Yes and mainframe consulting is also very well paid.

But these are outliers

Re: Ask HN: What mistakes did you make when starting as a consultant/freelancer?

#157

Post by prox »

Roark66 wrote: post #111
FpUser wrote: post #58

Earlier quoted context omitted.

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 prepa…

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.

Re: Ask HN: What mistakes did you make when starting as a consultant/freelancer?

#158

Post by robinduckett »

WildGreenLeave wrote: post #124
im_down_w_otp wrote: post #45

Earlier quoted context omitted.

$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 consul…

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…

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.

Re: Ask HN: What mistakes did you make when starting as a consultant/freelancer?

#159

Post by WildGreenLeave »

mehrdadn wrote: post #63
dfsegoat wrote: post #4

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 t…

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.)

Re: Ask HN: What mistakes did you make when starting as a consultant/freelancer?

#160

Post by mtbcoder »

m0zg wrote: post #113
mattferderer wrote: post #3

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 c…

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.

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.
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