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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?

#21

Post by cm2012 »

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…

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.

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

#22

Post by Pandabob »

sigmaprimus wrote: post #2

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 u…

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...

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

#23

Post by mattferderer »

wwweston wrote: post #8
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…

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?

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.

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

#25

Post by Nextgrid »

super-serial wrote: post #20

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…

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.

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

#26

Post by mkbkn »

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.

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

#27

Post by iandinwoodie »

chirau wrote: post #9
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…

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.

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

#28

Post by mkbkn »

chirau wrote: post #9
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…

Is it better to charge per project or per hour?

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.

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

#29

Post by nier »

chirau wrote: post #9
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…

Is it better to charge per project or per hour?

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.

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

#30

Post by mirimir »

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…

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!

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