How to Freelance and Not Be Poor

My money advice for freelancers

Somehow this is the second week in a row where I’m using this newsletter to give advice, even though I’m not known for my good decision-making and my life is a mess half the time. You get what you pay for and this newsletter is free.

One of my go-to writing tips is, if you can’t think of anything to write about, take a question you get asked a lot and write down the answer. It’s a win-win: you get something to write about, and the next time someone asks you that question you can just send them whatever you wrote instead of talking to them.

Anyway, I was a freelancer on and off for a couple years and during that time I made a lot of money while not working very hard so I guess I was pretty good at it. At least, I got good at it eventually. The first year I made a ton of mistakes and was broke the whole time. Freelancers are constantly screwing up, especially around money, probably because we’re constantly stressed about not having any and it’s hard to make good decisions when you’re in that spot. 

So here’s my hard-earned money advice for freelancers. Hopefully this advice will enable you to skip right past all my mistakes and get straight to the part where you’re good at it. I was a designer and web developer mostly, but I think this advice can apply to people doing many different kinds of work.

If your pricing doesn’t feel like an outrageous ripoff, you’re charging too little.

My top ten pieces of advice for freelancers are just me saying “charge more” ten times. I’m not saying you should actually rip off your customers, but freelancers chronically under-value their work, so what feels like a ripoff to you is probably just a fair price. Also, when you’re good at something, it seems easy to you, so you tend to underestimate how much it’s worth to someone else.

In my early freelance days, I chronically under-charged. I think I subconsciously feared my work wasn’t good enough, and thought my customers would have lower expectations of lower-priced work. I also secretly feared that if I quoted a price that was too high, the client would just walk away.

But it turns out that almost never actually happens. What actually happens if you quote a price that’s too high is the client will think, “Shoot, this is a little out of my price range. Let me see if I can get a better deal.”

They will always try to negotiate before walking away, so you’re never at risk of losing a deal just by quoting a high initial price. Then you can say something like, “Well, those are my standard rates, but I think your project is really cool and it’s something I’d be excited to work on, so I’d be willing to discount by (some amount).” Ideally you actually believe this, but it works even if you don’t. If their project is something that no one in their right mind would legitimately think was cool and exciting to work on, like a brochure for health insurance, say something about how you can tell they’ll be really easy to work with instead. This has the added benefit of subconsciously cueing the client to act in a more easygoing way.

It also turns out that clients do not have lower expectations of lower-priced work. In fact, if you’re expensive, people will just assume you must be good. This is especially true for something like design whose quality can’t be objectively assessed. If someone is hiring you to do design work, that probably means they don’t have a very good design sense: if they did, they’d just do the design work themselves. The more you charge, the better they’ll think you are, and the happier they’ll be with the final product.

A great trick is to ask the client about their budget on your intro call. A lot of the time, they’ll tell you exactly how much they have to spend. Then you can come in with a bid that’s just under their budget.

On a related note, never charge by the hour. Hourly pricing is bad for everyone: the client isn’t certain about the total cost upfront, and you’re penalized for working faster. Plus, lots of freelancers lie about their hours anyway.

You don’t want to be a laborer who’s paid by the hour: you want to be a craftsman or an artist who’s paid for the value they deliver. I was once paid several thousand dollars to name a company and I came up with the name in about ten minutes. But that doesn’t count the lifetime of experience that made me the kind of person who can think of good names for companies. Someone once asked Jackson Pollock how long it’d taken him to paint one of his paintings, and he said, “my whole life.”

Make them compete to win your business instead of the other way around.

To the extent you can do this without being an asshole, you want to act like you’re in incredibly high demand and are selective about who you work with. Acting from a place of confidence helps level the playing field in any negotiation. Strategies I’ve used for this include:

  • Casually mentioning how I’m lucky enough to have built my business to the place where I don’t have to just take whatever comes my way and can focus on jobs where I’m into what the client is doing and/or feel especially equipped to serve them well.

  • Asking prospective clients about their work patterns and past experiences with freelancers as if I’m interviewing them.

  • Driving prospective clients to get to a decision faster by emphasizing that I have other potential projects that would fill up my schedule, but that I’d much rather work with them because I think what they’re doing is really cool/have some past experiences that are especially relevant/really like them as a person. I wouldn’t recommend outright lying, so you need at least one other potential project to pull this off, but I think it’s okay to be fairly generous with your definition of “potential.”

By the way, if you can pull it off, this is also a good strategy when interviewing for full-time jobs. The best employees have tons of options and make employers recruit them.

Ask everyone you know for leads, and incentivize them with generous referral fees.

The easiest way to build a freelance business is through personal referrals, since 99% of the high-paying work comes through referrals (websites like Fiverr and 99designs are a race to the bottom). When I started freelancing, and every six months or so thereafter, I emailed basically everyone I knew explaining what I was doing and asking them for referrals.

You’ll want to do this as a mail merge with 1–2 custom sentences for each email so that it feels personal. This will take forever—I spent basically an entire day writing custom lines for 500 people—but it’s worth it, since people are way less likely to respond to a mass email. Your goal is to make it really easy for people to pass along your info to someone who might be in need, so include a blurb about yourself at the bottom that the recipient can just forward to someone else.

You should also pay referral fees when people send you work. You might think your friends would send you work anyway, and maybe they would, but trust me, they’ll send you more when there’s money involved. And make the referral fees generous. $100 is a nice little bonus, but $1,000 will make people stop what they’re doing and take 30 minutes to think if there’s anyone they could refer you to right now. You can afford to pay these outrageous referral fees because you just tripled your prices per my previous advice.

Here’s one of the emails I sent if you want to use what I did as a jumping-off point. Don’t copy me exactly because my “unique brand of humor” will probably make you seem like an asshole.

Anyway, freelancing still kind of sucks even if you do all this stuff, but at least it doesn't suck quite as much. Forward this email to all the freelancers you know and let’s see if we can make their miserable lives marginally better.

Yours in hoping none of my former freelance clients read this (though honestly it might just make them even more impressed with me),

Max