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The Psychological Trap of Freelancing

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Re: The Psychological Trap of Freelancing

#111

Post by rburhum »

When I was freelancing a bit over a decade ago I was making more than most people my age I knew at the time. My natural reaction was to try scale that, so I hired folks to do the work for and with me... that is when I learned first hand how difficult it is to scale a services-based business.

However, folks much smarter than me taught me another thing. True wealth is created when you reach a point where you are making money while you are sleeping - which is exactly the opposite of what I was stressing about ("I only make money when I am charging for my time"). Ironic.

Re: The Psychological Trap of Freelancing

#112

Post by mistrial9 »

rburhum wrote: post #111

When I was freelancing a bit over a decade ago I was making more than most people my age I knew at the time. My natural reaction was to try scale that, so I hired folks to do the work for and with me... that is when I learned first hand how difficult it is to scale a services-based business. However, folks much smarter than me taught me another thing. True wealth is created when you reach a point where you are making…

"True wealth" has many meanings in life, not only finance. When you substitute all of life for finance, its a trap.

Re: The Psychological Trap of Freelancing

#113

Post by gk1 »

porker wrote: post #107
photoguy112 wrote: post #28

I went from hourly, to per project, to weekly billings. When I charged hourly I ended up working A LOT more than 9-5. Per project work was good but I ended up losing a lot of prospects in the quote. Since many of my projects ran into the 20-40k range, my closing rate was 1/10 (already pre-screened, what I deemed as high quality prospects). This made me feel like crap. Instead of per project, I decided to increase the…

> I went from hourly, to per project, to weekly billings I have tried all three, read all the HN favourites on why value pricing is the way; tried charging for roadmapping; and yet I come back to the most stressful of day-rate (hourly by any other name), unable to break this in 15 years of technical consulting. Why? Because with per project billing I was losing 30-50% as client expectations were different to mine. Wh…

Have you tried doing a monthly retainer rate?

You come up with the SOW and say: "This will take X months provided there are no surprises or delays, at a rate of $Y per month."

> My clients want fixed price so the risk is stacked on me...

The risk should be spread evenly. If you're bearing all the risk then it's not a good relationship.

Re: The Psychological Trap of Freelancing

#114

Post by gk1 »

photoguy112 wrote: post #28

I went from hourly, to per project, to weekly billings. When I charged hourly I ended up working A LOT more than 9-5. Per project work was good but I ended up losing a lot of prospects in the quote. Since many of my projects ran into the 20-40k range, my closing rate was 1/10 (already pre-screened, what I deemed as high quality prospects). This made me feel like crap. Instead of per project, I decided to increase the…

This is the way to do it.

The article conflates "freelancing" with "charging hourly." The problems it outlines mostly go away when you do value-based pricing, paid weekly, monthly, or even quarterly.

Re: The Psychological Trap of Freelancing

#115

Post by pointillistic »

I am a "freelancer". I have discovered that billing by the hour is the worst idea. It creates the inherent conflict. Clients start resenting how much time it took you, etc. Instead always bill per job, unless impossible to estimate. Determine value acceptable to you and the client. Agree on lump sum and let chip fall where they may. Sometimes client wins, sometimes you win, in the end it all events out. More importantly you build a base for the next job where everyone agrees to acceptable fixed fee parameters and you can correct the fee estimate. Hourly billing is really wrong in my opinion.

Re: The Psychological Trap of Freelancing

#116

Post by nickdandakis »

HenryBemis wrote: post #104
ams6110 wrote: post #80

Earlier quoted context omitted.

Do you include your self-employment tax, health insurance, and saving for retirement in those three hours as well? Or is that just making up what was in your take-home pay?

If one lives a modest life (no Ferraris/Great-Gatsby-parties), on a sensible financial management, one can have north of £/€/$1m on the side, in one decade(speaking for UK/EU/USA)(for contracts on IT/IT Sec/GRC/PM.

I think the vast majority of people would find it incredibly difficult to save ~7.5k per month for 10 years (assuming an annually compound savings interest of 2.2%), to hit 1M.

That type of savings goes beyond "no Ferraris/Great-Gatsby-parties".

Re: The Psychological Trap of Freelancing

#117

Post by Spooky23 »

pointillistic wrote: post #115

I am a "freelancer". I have discovered that billing by the hour is the worst idea. It creates the inherent conflict. Clients start resenting how much time it took you, etc. Instead always bill per job, unless impossible to estimate. Determine value acceptable to you and the client. Agree on lump sum and let chip fall where they may. Sometimes client wins, sometimes you win, in the end it all events out. More importan…

Fixed fee is great as long as the scope is limited.

Whenever I've hired companies to do stuff on a fixed fee basis, they typically lose due to unforseen circumstances.

Re: The Psychological Trap of Freelancing

#118

Post by toss1 »

Indeed, as the article describes, it's not so much the stress of freelancing as the particular stress of billing by the hour.

While I/my shop nominally have billable hour rates, some time ago it evolved into projects that are estimated as the rate of billable hours plus materials, but billed on a per-project basis. The project is due for the agreed amount, whether I spend the planned number of hours, twice that, or half that.

This is decidedly less stressful for both me and the client.

I still have the stress of meeting the schedule deadlines, but I no longer feel that stress described in the article of 'wasting' minutes I'm not productive. If I take a break, it may feel that the schedule is slipping, but it doesn't feel like losing an irreplaceable opportunity cost to earn $x in that 0.2 hours.

Re: The Psychological Trap of Freelancing

#119

Post by a-saleh »

balabaster wrote: post #98
josefresco wrote: post #41

"I went outside to get coffee and ran into three different neighbors who wanted to chit-chat. I wanted to scream, ‘For every word that comes out of your mouth, I’m losing money!" This is a statement from someone who either hasn't been freelancing that long, or who hasn't realized that "brain down time" is just as important as raw coding hours. I've worked "for myself" for almost 20 years and for the first 5 I too pan…

The biggest problem for me was my (ex)spouse always pushing for billable hours. Every time I decided I wanted time off there was a constant nagging reminder and guilt of not only what it would cost to go and do what I want - for example cost of flights, accommodation, entertainment and food, but also the cost of the loss of income for that time off meaning that every time I was away from my keyboard it was costing me…

If I were in that position, and wouldn't want to break off the relationship, I would probably try to change billable-hours to billable days (or even weeks?) I would then try to keep strict 8-hour a day work-schedule (ok, maybe even just 6 to be honest :-)

Like, I am programming in professional fashion for around 10 years, and there are hours, where I make more progress than previous days. I don't want to be fighting for billable hours.

Re: The Psychological Trap of Freelancing

#120

Post by FigBug »

photoguy112 wrote: post #28

I went from hourly, to per project, to weekly billings. When I charged hourly I ended up working A LOT more than 9-5. Per project work was good but I ended up losing a lot of prospects in the quote. Since many of my projects ran into the 20-40k range, my closing rate was 1/10 (already pre-screened, what I deemed as high quality prospects). This made me feel like crap. Instead of per project, I decided to increase the…

I much prefer hourly to day or weekly rates. When I charge a daily rate I feel I need to work a full 8 hours.

I currently use a timer app and bill my exact working hours. It's great because when the weather is nice and I want to go sailing or cycling, I just stop the timer and go.

I have a set monthly salary I want to make. If I'm on track to hit it, no pressure to work. If I'm behind, then I'll put in hours.

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