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The Psychological Trap of Freelancing

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Re: The Psychological Trap of Freelancing

#71

Post by Mirioron »

theli0nheart wrote: post #66

I have to disagree with the premise of the article. Note: I've been freelancing / self-employed since 2010. If anything, knowing that every minute can be transformed into cash has a profound positive psycological affect. You should question how to spend your time. Time is, after all, your most valuable resource. It shouldn't be anathema to be protective of it.

>If anything, knowing that every minute can be transformed into cash has a profound positive psycological affect.

It makes me think of it like a video game. I can choose when and how much I want to spend in fun stuff and how much on "grinding."

Re: The Psychological Trap of Freelancing

#72

Post by jasonkester »

People who attach dollar signs to their time — or “value time like money” — tend to be overwhelmingly less happy than those who don’t, because their nonworking hours suddenly seem less important. “Free” time gets tainted with guilt because there’s a cost associated with it.

Could this be a result of people not attaching a high enough dollar amount to their time?

I tend to see consulting (described as "freelancing" in the article) as exchanging a little bit of work time for a lot of play time. It just plain pays so much compared to a salaried gig that you can buy yourself the better part of a year of downtime with just a few months' work.

So yes, the article is right that I did sometimes think of time in terms of money and vice versa. But usually in terms of "how many seconds would I need to work to afford this cheeseburger", rather than the article's anxiety about how much my vacation is costing me.

Downtime/vacation is the explicit goal of the exercise.

Re: The Psychological Trap of Freelancing

#73

Post by photoguy112 »

stevage wrote: post #57
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…

What's the difference between "the highly paid freelancer" and "the consultant" for you?

When I think of freelancers, I think of 3 tiers: 1: the bottom of the barrel. They will beg for anything you give them and will do it for $5, or even show you a free demo (by building out part of the project, or designing it) They will bid on every project on Upwork. My guess is 80% of Upwork falls into this category. 2: Freelancer who charges a mid-range or "market rate" or even above market rate. They can't fathom that they are worth double what they are charging. 3: The highly paid freelancer - the person who decided to double their rates and "capped out" at some high rate. This person thinks he can't go any higher, he tried, but it wasn't working. Sometimes they do really well.. like a developer charging top rate and putting in 8 hours a day or whatever realistic amount of time developers work. This freelancer can make above market salary and some are perfectly fine with it.

Then there is the consultant. The person who realized that time does not equal money, that businesses pay for value, or more importantly, they want to know how much money this is going to save/make them. The consultant charges for value, at a markup. The top of the ladder make over a mil a year, the ones still learning can make very good sums of money, but its all limited by them. If they don't do the work, the money stops. This is a great place to be, but you quickly learn that you don't want to be stuck here, unless you are the top tier consultant and you love your work and don't mind the day in day out. I have not heard of too many of these, but they usually turn into product businesses well before reaching that.

If there is one thing any aspiring freelancer needs to know is that their mind is their worst enemy. Overcome your mind and you can go a lot further. I was and still am a victim of my own mind and work on overcoming it.

Re: The Psychological Trap of Freelancing

#74

Post by system2 »

herewego wrote: post #32
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…

There is a ton of wisdom in this comment. Others would do well to heed your advice. My experience as a consultant and product business owner has very nearly been exactly as you’ve described.

Same here, the comment summarized all the stages we've been through.

On top of the weekly invoices, I also created "subscription" invoices, which I charge automatically instead of waiting for invoices. It really was killing me last few years. I don't even want to check last year's lost invoices...

Re: The Psychological Trap of Freelancing

#75

Post by photoguy112 »

system2 wrote: post #74
herewego wrote: post #32

Earlier quoted context omitted.

There is a ton of wisdom in this comment. Others would do well to heed your advice. My experience as a consultant and product business owner has very nearly been exactly as you’ve described.

Same here, the comment summarized all the stages we've been through. On top of the weekly invoices, I also created "subscription" invoices, which I charge automatically instead of waiting for invoices. It really was killing me last few years. I don't even want to check last year's lost invoices...

What did you use to make a subscription invoice? Stripe? Or another platform integrated with Stripe?

I am curious how you transitioned into a product. How did you validate your product?

Re: The Psychological Trap of Freelancing

#76

Post by motohagiography »

This slightly ignores how hourly rates are advantageous to they buyer, and when you sell by outcome, you compete against all hourly people, who necessarily have similar ballpark skills and less negotiation ability.

Clients will often salami slice work to pay %10-20 on your quote. It is all about leverage (batna). Development work is different than say, security consulting or other design and analysis work, as it's all in the findings.

I recommend building a "Matthew Effect," where you have consistent demand independent of price or rate so that you can determine the value of a project objectively. It matters less that your rate is down than being vulnerable to a gap in demand. That gap returns you to wage slavery.

Re: The Psychological Trap of Freelancing

#77

Post by mark_l_watson »

UweSchmidt wrote: post #17

On the other hand, equating time (especially work time) with money helps with making sense of what money is actually worth. These days every product category is full of well presented temptations in any price range. The correct way to evaluate a 1000$ phone, a mechanical keyboard with custom keycaps, fantastic coffee machines and barbecues and car parts and designer handbags is to put them in relation to "how many ho…

+1 this is what I also came here to say. I have mostly worked as a remote consultant in the last 25 years. My wife and I talk about large expenses costing how much of my time. This leads us to spending a lot of money on travel because we love to see new places and not so much money eating out and we own a modest but nice house.

Another thing about time vs. money: I found that it feels really empowering to turn down jobs that are not a good fit: consciously giving up money when I wouldn't learn from or enjoy a project and allocate the time to spend with friends and family or learning new things.

Re: The Psychological Trap of Freelancing

#78

Post by taude »

UweSchmidt wrote: post #17

On the other hand, equating time (especially work time) with money helps with making sense of what money is actually worth. These days every product category is full of well presented temptations in any price range. The correct way to evaluate a 1000$ phone, a mechanical keyboard with custom keycaps, fantastic coffee machines and barbecues and car parts and designer handbags is to put them in relation to "how many ho…

I've done this for 20 years. In fact, when I was out of college, I was a SDE at a top technology company. My personal motto was that I should never own a car that costs more than two months of my salary. All my other young counterparts were doing dumb things, like buying really fancy cars when our first tranche of stock options vested

Even today, I think about the cost of money in my time, since I value doing thinks over owning things. I typically justify buying nice laptops with a three year amortiziation, but cell phones, I buy cheaper ones because I've broken so many....

(And that mechanical keyboard, surely a $100 for something that will last several years while performing your job 10 hours/day is a worthy investment, if you're into that.)

Re: The Psychological Trap of Freelancing

#79

Post by photoguy112 »

motohagiography wrote: post #76

This slightly ignores how hourly rates are advantageous to they buyer, and when you sell by outcome, you compete against all hourly people, who necessarily have similar ballpark skills and less negotiation ability. Clients will often salami slice work to pay %10-20 on your quote. It is all about leverage (batna). Development work is different than say, security consulting or other design and analysis work, as it's al…

For most freelancers "consistent demand" is the hard part. I found it easier to price a service once you can estimate the type of value it will provide. For development work this is probably hard to do, but with experience and enough poking around you can learn the type of value your work provides. It helps if you can get down to the core details such as how much the product is currently earning, and how much your work will contribute. At that point it becomes much easier to sell yourself because when presented with a $ cost and a $$ profit, it becomes really clear that it practically doesn't matter what you charge because the returns are on-going whereas your work is one time. If I made a business $2 mil additional revenue, all of a sudden a 5% investment doesn't seem as hard to swallow. Coincidentally, charging a high rate leaves less of a gap, especially once you figure out your typical gaps and when they happen and budget appropriately.

Re: The Psychological Trap of Freelancing

#80

Post by ams6110 »

stevage wrote: post #54
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…

50%? Even less in my case. 3 hours a day is plenty to get paid as much as I was before on a salary. Honestly I find the time-related issue as a freelancer is having too much of it, and putting it to good use rather than just lounging around.

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?
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