How do you work out a competitive price for a bid without selling yourself for too little or pricing yourself out of a job?
When you’re a freelancer, you almost always have to submit a quote. It includes the scope of the project (what you’re going to do as well as what you’re not going to do), as well as a price. People often think that the client is going to select your quote based only on the number. Often, this causes freelancers to price too low. However, it’s not the case. Price is definitely a thing, but clients have budgets and have money to spend. You can charge more, but you have to make people comfortable with spending the money on you. When people receive quotes, they want to be sold. Yes, they want to see examples and yes they want to see a price. But they also want to feel comfortable with the provider they’ve chosen. Rather than just sending an email, send a nice-looking PDF. Avoid jargon – know your audience. The client might not know what a responsive website is, but they will understand that their website is going to look great on their iPhone. Rather than focusing on the money, focus on the presentation and really selling the client on selecting you.
Should you charge by project or per hour?
Wes prefers to charge per project. He spends a lot of time building tools, learning, researching so that he can do a better job faster. If he were to charge by the hour, he would make less for being more efficient, which doesn’t seem fair. He recommends defining projects very clearly and giving a flat rate. If you’re fast, you can get the project done in less time and that’s called being a good business person. In cases where the project scope isn’t well defined, Wes charges by the hour. For example, if someone emails him and says that their site is totally messed up and they need someone to fix it, Wes will quote an hourly rate and provide a maximum amount. Also, when you are hired to join a team (e.g. to work on a project with an existing team) you’ll likely charge by the hour to day.
Have clients ever asked you to give them a better deal? What do you do?
Wes usually doesn’t budge. Unless you really need the money and have extra capacity, it’s usually not a good idea. Often, if you’re firm on your price, the client will say okay and will go with your price. Wes on the "Shit Economy": Shit clients get shit developers and they all work in a terrible economy where no one gets paid enough and the work suffers. If you work hard at your skills, you’ll be delivering great quality and clients that are willing to pay are usually much better clients.
How do you pick up your leads?
When people start freelancing, they go to Craigslist or eLance or 99Designs. Wes calls this a “bid to the bottom”. Usually, the client is looking for the lowest quote. It’s no way to make a living, so Wes recommends staying away from these sites. As a rule of thumb, anytime someone posts a freelance job, it’s not going to be worth it. There are going to be too many bids and too many low bids. Back in the day, Wes got started by going to Tweetups and was able to meet everyone in the tech scene very quickly. But even today, going to tech events or agency events is a great way to get started. Meeting agency folks can be super useful because they don’t usually touch projects less than $10-$20K and often look to pass those smaller projects off to freelancers. Wes also recommends being visible. Stopping by events, volunteering at Ladies Learning Code events, etc. Take opportunities to talk to people and showcase yourself as an expert. Wes recommends blogging. He doesn’t blog super often, but he has a few really good posts about coding on his blog. Also, when new features come out, he’ll experiment with them and blog about it. He put four hours into two blog posts and each of those posts have gotten him $10-20K worth of work, even implementing exactly what he had blogged about. Blog about things that you’d be happy to implement for clients. Finally, reach out to people – everyone – by email and let them know that you’ve started a business. You never know who might need something later down the line. Facebook is also a great tool for telling people you know about what you’re doing now. For example, when Wes posts about teaching HTML & CSS, people see it and tell their friends about it. Wes gets a lot of clients via referrals. Become known as the expert. Every time someone comes up to you and says, “Oh, I didn’t know you make websites!” that’s a huge failure on your part. Make sure everyone knows what you do. Plant that seed .
Should you work for free?
Do it for a reason, and only when it will be awesome advertising for you. Free work is not always beneficial. It is in some ways better to say no to doing free work and just have that time to build up your skills, rather than doing work for free if it’s not going to help you.
How do you organize your workflows so that work doesn’t take over your whole life?
Being a freelancer is tough because it can take over your whole life. You might work from home, which makes it even harder to separate work and life. As a freelancer, you need to have discipline. You need to get up and start your day at a reasonable time, and also cut yourself off at the end of the day and continue on with your life. Otherwise, it can be too stressful. Wes recommends getting dressed and sitting down at a desk. If you can, have an office with a door on it, where you only go if you’re working. When Wes’s wife first started working from home she started doing laundry during the day and Wes was like, “no!” There is flexibility, of course, but you should use it with caution. Wes has an iPhone and has a thing called “notification mode” that he turns on at 10 pm which stops beeps from coming through.
What about holidays?
Wes and his wife have a general policy that they work on holidays, because clients generally are not working. Then, he displaces that holiday later on and takes another day off, such as the Monday after a holiday. Usually clients are too busy on that first Monday back after a holiday anyway that they won’t be emailing you. As for vacations – if you’re a web developer, things can happen. Sites can crash, stores can go down. Wes just makes sure that he always has his laptop and can deal with things as needed. Other freelancers, such as graphic designers, may not have the same thing (since their work can’t go down).
What are the biggest challenges you face as a freelancer?
The biggest challenge is email. As a freelancer, you’re probably dealing with a few clients as a time, and you may have clients who email a lot. Wes has to spend a good part of his day coding. When Wes wakes up, he puts his phone on his bed so he doesn’t hear the phone or hear any vibrations. He’ll come back to it after a few hours, deal with emails for a bit, and then get back into coding in the afternoon. Wes has also “trained” his clients to not spew email and collect their thoughts before reaching out. He did this by taking the four emails a client sent by 4 pm and copying and pasting them into one email and replying to everything at once. Eventually, clients get it. The other hard part is finding time to run the business. Managing finances, doing the books, going to the bank, etc. On the last Friday of every month, Wes inputs all of his receipts, cuts himself a paycheque, etc.
Do you have an accountant?
Invoicing, billing and logging expenses are things that Wes does himself. He uses FreshBooks for that. Wes also mentioned that Wave Accounting is a great tool for small businesses that have employees. Wes has an accountant for taxes. He has a good relationship with him and calls him up when he has questions. Having an accountant can help with business planning as well.
How do you find an accountant and how much do they cost?
Get referrals. Most of your clients will be through referrals, so you should use referrals to find your service providers. When you run a business, you have to have both a personal and a company tax return done. It was about $700 for Wes last year. Don’t got to H&R block – get personalized service.
Are you operating as a corporation or a sole proprietorship?
When Wes first started, he ran a sole proprietorship. Any dollar earned by you as a sole proprietorship is considered by the government to be like personal income. Now, Wes and his wife Kait are 50/50 shareholders in a corporation. When you’re a corporation, reporting and accounting is more complicated. You also have options as to how you pay yourself. For example, each person can withdraw $30K in dividends at the corporate tax rate. Beyond that $30K, you have to be taxed like an employee (which means a higher tax rate).
What tools do you use to increase your productivity?
Wes is always looking for ways to run his business better and develop more effectively. Here are some of Wes’s favourite tools: FreshBooks – http://freshbooks.com Things (a to-do app) -http://culturedcode.com/things/ Trello – http://trello.com Backing up your data – use DropBox and Wes uses BackBlaze - http://www.backblaze.com/ Alfred – http://www.alfredapp.com/ Skype with a nice headset (Wes uses a Microsoft LX3000) or get a good long-distance plan Anytime you find yourself doing something that doesn’t feel efficient, find a better way. Because the more efficient you are, the more money you make, the more time you have off, the better everything is. A note about Trello and project management – once you’re working on a larger project with multiple people, email can become too much. Wes recommends a project management application at this point.
What about legal?
Wes has never spoken to a lawyer. He suggests getting a contract and using very clear quotes – it should be night and day as to what’s included and what not included.
Do you need startup capital to get started freelancing?
No, nothing really. Register your business for $60, get a laptop and a pair of pants. You are off to the races.
How can you ensure you get paid by your clients?
Make the payment terms very clear up front. Wes says 50% is required up front. At that point, the client is invested. The second 50% is due before launch – so, it will be on a staging server and he wants to be paid before it goes live or before they receive the files. Big companies can be slow. In those cases, pick up the phone and call. Often, email won’t work but a phone call can. Sometimes you have to be a little aggressive to make sure you get paid. You probably will be ripped off a few times and when they happens, you have to look at it as a lesson and move on.
How do you deal with hosting, domain names, etc.?
Wes requires that the client buys their domain and hosting themselves. This is because if the website ever goes down, if their email goes down, etc. they’re going to call you and it’s going to be horrible. This also means that their website is very portable – they can work with another developer anytime.
What do you do when things break?
If something breaks because of something Wes has done, he’ll fix it for free. If anything else breaks, he’ll charge his hourly rate.
Do you charge for maintaining client websites?
Yes, he usually charges, but sometimes Wes will make small changes or fixes for free.
Do you have health insurance?
Yes, Wes has health insurance. Before Kait quit her job, Wes was on her insurance. When she quit, Wes and Kait both got insurance. It’s $160 per month for the two of them and it’s one of the higher packages. That plus life insurance, same occupation disability insurance and critical illness insurance is about $1200 a year for Wes. Same occupation disability means that you’ll get paid if you can no longer do your same occupation (even if you can do other jobs).
What do you do if a client site gets hacked?
Do you work with any international clients?
Yes! When you work with international clients, you can charge them in their native dollar and then convert it back to Canadian. You get a $46 premium on a $1000 project right now. Note that you don’t have to charge tax to American clients (or clients from other countries). In Canada, you charge a client’s native tax rate (e.g. for clients in Alberta, you charge 5%).
When you’re a great freelancer, you must get lots of job offers. How do you vet them?
You have to decide if you have what it takes to freelance. If you don’t, or if you don’t like it, you might decide to take one of those job offers. But for Wes, he makes a lot of money and has fun freelancing, so it would be hard to lure him away. He blogged about his experience interviewing with Google and got lots of awesome gig leads and also 30 job offers. Just an example of how blogging can lead to major benefits.
Do you work from the client’s office?
Rarely. Some people do, Wes doesn’t like it. Sometimes he’ll go and meet the client, especially if they have a development team. Wes prefers to work from home, alone.
Do you have any partnerships?
Every now and then Wes will work with someone else, such as graphic designers. Be clear about the reporting and payment structure. Who talks to who? Who pays the bill at the end of the day?
What are ways to increase your income potential other than client work?
Wes teaches! He’s also writing a book on Sublime Text, his preferred text editor. He has a sign up on his website for people who want to hear from him when the book launches. He has 2300 people signed up at the moment, and he’s going to sell the book for $40.
What is the social life for a freelancer?
Wes works beside his wife – they’re beside each other 80-90% of the time. But Wes also has IRC open all the time. He uses that as his social interaction on a daily basis. If you need more than that, you can consider a co-working space for a couple hundred bucks a month.
How much should you charge per hour?
A beginner web developer or beginner graphic designer should be charging $50-$60 per hour. Even if this seems like a lot, keep in mind that not all of your time is billable. And you also have costs – internet, rent, hosting, online tools. On a good day, Wes will get 4-8 hours billable.
How do you say no?
Sometimes a project will not be worth your time, or not be appealing, or not be a fit for you. You can either tell them that you don’t have the time right now, or that you’re not interested, or that it’s not up your alley. People appreciate when you’re direct. If you really don’t have the skills, don’t say no, though. You’ll learn fastest when a project is a reach and you have a deadline.
Do you ever pitch potential clients?
When Wes got started, he made a list of 150 potential clients and approached people about doing their sites and got really busy, really quickly. So yes, it’s a good strategy. When approaching clients, don’t let them tell you what they want. Ask them what they need, who their clients are, what the experience should be like, and then put together a story of how you’re going to give them something that is customized for them. Wes doesn’t have a lot of experience cold calling clients anymore, but thinks it’s an opportunity.
Do you ever sell things like analytics?
Yes, think of extras that you can sell your clients. A few years ago, making sites responsive was a great way of doing this. Today, maybe it’s analytics. This is a great way of adding an extra 20-30% to your bill. Thanks from everyone at HackerYou to Wes for running this session, and thanks to everyone who came out! To hear about future workshops like this one, be sure to join our mailing list.