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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 l

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 rate, so now a project may be 30-50k+, figure out how many weeks it may take me to complete it (rough idea, but this is not important) and then divide into a weekly rate. What ended up happening is me tripling my hourly rate and invoicing weekly. This was game changing for closing leads, now my rate is probably 8/10. You get all the benefits of having to work a lot less but charging a lot more. I will be honest, some days I feel like shit (who doesn't) and I don't work at all. I don't feel bad because on the days that I feel fantastic I get into the zone and knock out a TON of work and usually get ahead. Client sees progress weekly and they are happy. It helps them that they don't have to pay a ton of money in 2-3 payments and can spread it over the course of months. In terms of happiness, freelancing definitely comes in flavors. There is the grunt work, the highly paid freelancer, the consultant and the product-based business until you go full startup or large company. I have seen all tiers. Currently I am a step short of having my own product while I figure out what that will be. You definitely need business acumen and people skills to succeed in the consultant stage. For product business you gotta go a step beyond that and either do really well as a consultant to bootstrap, or just work your ass off to get it going. My advice for anyone in freelancing now, who does not have people skills and gets latched onto hourly work, you may want to reconsider your choices. Freelancing can be highly stressful and demoralizing, unless you take the steps to go into consulting or beyond. It's a ladder, just like your corporate gig, you gotta do the work to move up or suffer where you are stuck.

herewego 8y ago
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.
- system2 8y ago
  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...
  - photoguy112 8y ago
    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?
    - ajlburke 8y ago
      Freshbooks and Wave both offer repeatable invoices - I'm sure other invoicing/bookkeeping services do as well. I "Flintstoned" my small SAAS with automated monthly Freshbooks invoices until I had the time and money to get Stripe properly integrated. It meant we could get paying customers from day one with one less programming/integration headache to worry about.
      - photoguy112 8y ago
        Thank you! This whole time I didn't realize Freshbooks allows you to create recurring invoices that let people save their cc details. Doh!
    - bonestamp2 8y ago
      Not OP, but I use waveapps.com for subscription billing. It was among the lowest cost option I could find, it works well, and it produces nice invoices that you can white label. Once the customer has entered their CC, you can also process incidental charges as necessary above and beyond their subscription. Most clients don't want to deal with billing either, so this just runs the card on whatever frequency you want and allows you to run the card whenever else you need to. If someone has a better suggestion, please let me know.
rdokelly 8y ago
Would you mind speaking a little on your path from salary to freelance? I want to make the jump but it seems scary and I don't really have anyone to talk to about it? How are you finding work?
- photoguy112 8y ago
  My start in freelancing was forced. I was laid off as part of a merger for lack of face time (fully remote, while others showed up in office so naturally they were chosen over me). It was really tough. I lived in an expensive area all of a sudden without an income. I guess the reason I did not go applying for jobs was just the sour taste that the layoff left. I felt angry, not at the company, but at myself for letting others dictate my life. I started on Upwork. It was a bitch. Upwork is known for low quality, but I didn't have any choice. I just tried doing as best as I could for everyone I dealt with and that seemed to manifest into a 100% rating, which led to even more contacts. At one point some of the clients weren't so terrible. I think the first year I did 40k, much much lower than the salary I had, but it was enough to pay the bills. I also moved to a much more affordable area so it helped. Having 100% rating on upwork lead to agency work. Agencies are great, if you do good work they often have a steady workload for you. You know what comes and when and can schedule more time to work on other projects, thus upping your income. If you are a developer working with an agency, this can be very rewarding if your charge your worth. I am a designer and our industry naturally caps what people think I am worth. It sucks. At one point I was doing well enough that new clients I was taking on were willing to pay per project. It was super hard and scary, but I said bye to agency work except for 1 agency where I befriended the CEO. Per project work was really nice, but I learned quickly that if you can't sell your value (which I couldn't at the time as a "designer" and just lacked experience in this area), it can be difficult to close larger quote projects. People are just scared of large numbers. Tell someone they should pay you 50k and they run away (I am sure that other's experience may differ and people don't mind paying them that sum). I tried a bunch of things, price anchoring, huge fancy proposals.. yada yada. What happened is that I was getting burned out on huge fancy proposals and not getting anything out of them and that was the breaking point. I figured, I am done with proposals, from now on I get people on the phone, talk to them, and if they don't agree at the end of the call then I won't put any more effort. THIS WORKED. Now the process is simple: Schedule a call, we talk, I ask you about your BUSINESS problem and offer you a business solution. No talk of design. No talk of development. What is it that is costing you money or not making you money? Let's change that. As far as new work it's 100% referrals at the moment. However, I know that this can't last forever and at some point I will burn out (I already feel this after 3 years). My goal is a product or a product-service (have someone else do the work I offer at a reduced scope for a cheaper price). I have read about several people here on HN doing this and making a killing (by my definition). This is what I look forward to next, but it has not been easy. As a side note: if anyone is running a product service or a SaaS and started in a similar fashion, I'd love to hear from you!
alzoid 8y ago
Had did you transition from the hourly work to weekly? Why do you think your clients are more accepting of 10K for 3 weeks vs a 20K quote? When it comes to products do you have any thoughts on competing with big players? I have a few now, I am hoping being local will get me in the door and make the client more comfortable with me than a website offering it as SaaS. My advice for consultants / freelancers. Setting yourself up as a general company with a name goes a long way. Not as John Doe consulting. Some larger companies don't like throwing money at a self employed consultant. If you show up as Compu-Global-Hyper-Mega-Net they treat you differently. Also people skills is spot on. Even if you do have people skills, it can help a ton to have a sales guy working for you as well.
- photoguy112 8y ago
  Transitioned simply by trying something different, until per project quotes succeeded. It was hard so I gave up and decided to try something else, seemed to have worked. My projects usually last a month or two, sometimes longer. Smaller businesses with smaller teams seem a lot more accepting of weekly invoices. It becomes a line item for them, just an expense among many (this is my guess). In terms of products, I am not qualified enough, but if I had to guess, it's best not to compete with the mega SaaS. Position differently and find a unique niche that won't necessarily make you super rich. As for naming, that's an interesting point. I don't know if it's true as I've seen consultants go by their name and make a lot of money. Some people simply build a brand out of their name and become well known for the work they do. Sadly, I don't have a brandable name so I went with a business name. I think there is some truth to your point when it comes to being seen as a company to do business with than "hiring a consultant".
stevage 8y ago
What's the difference between "the highly paid freelancer" and "the consultant" for you?
- alistairSH 8y ago
  Not sure about the OP, but to me... The freelancer is building product on their own, or mostly so. Somebody hires them to do the majority of the project. "Hi, I need a website that does X, here's $20k to build it." The consultant is embedded in an existing team and either building some niche portion of the product OR providing some sort of training. "Hi, I need a website that does X, we're only qualified to build subset Y, here's $20k to build the remained OR train us to build the remainder."
- photoguy112 8y ago
  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.
mancerayder 8y ago
Freelancing can be highly stressful and demoralizing, unless you take the steps to go into consulting or beyond. It's a ladder, just like your corporate gig, you gotta do the work to move up or suffer where you are stuck. I have one sticking point I'd love to hear what the HN crowd does to deal with it. I'm freelancing and I find gigs that are long-term via recruiters / LinkedIn. And never directly with companies. While the pay is high, the feeling is I'm just another employee, except temp. How do you market your skills directly with firms, and where do you go, if you're not the 'social media broadcaster' type who's on Twitter / etc. all day? I DO have people skills, I DON'T spend any time doing presentations at tech conferences or blasting myself on Twitter / social media. Do you partner with a marketing type? Or become that type?
- zilian 8y ago
  Outsource this to a profiler/marketer to build yourself an identity Don't work under your name but create a brand even if it's just you ;)
  - mancerayder 8y ago
    I think the problem is that, in the U.S., recruiters have captured that market. Since they captured it, they also capture 20-40% + of the rate because of this "added value." And I say that with the maximum possible cynicism. How do individuals compete against recruiters? Why would this marketing person take a few grand from me, when they can be a recruiter and take 20-40% + of my rate for doing nothing but the intro?
  - Blaiz0r 8y ago
    This sounds like a really interesting idea, have you done this yourself or seen any good examples of it?
    - zilian 8y ago
      Yes, I know companies but do that very well, but they are in France and work only in French. Distinctive features to look for : small companies (2-3 is best for their focus on you, 10 max) but it's just my opinion. Once they grow, they tend to lose their initial verve. It doesn't seem to scale well.
porker 8y ago
> 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. When I added 30-50% to the prices, I didn't win the jobs. I could write a spec 80 pages long (which no client would pay for) and still there were variances which cost me. On my current $50k+ project I've got the client to bear the risk because he's the worst client for cost overruns I've had, and it's on a time and materials system. However because he has no more money than the top range of estimates, and because he wants everything and more, I feel trapped and as stressed as if it was fixed price (which it's turning out to be). It feels like I am missing something obvious that other developers/consultants have got. I want to price on value so I'm not stressed about every minute's productivity. My clients want fixed price so the risk is stacked on me; they won't/can't do sprints (often because their board of directors won't approve it, even if they say they see the benefits); and the projects are unique systems each time, so the estimation is not accurate. I freelance/consult because it pays well, but this way of working sucks.
- gk1 8y ago
  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.
  - photoguy112 8y ago
    The reason I did weekly vs monthly pricing is simply because it breaks down to a "smaller" amount, visually ;) But yeah.. in essence you are just asking for a monthly retainer. Also, with weekly you don't need to worry about collecting as much in case of nonpayment, at most you'll lose a week's worth of pay.
- jameslk 8y ago
gk1 8y ago
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.
FigBug 8y ago
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.
vicbun 8y ago
I found transitioning to full project billing extremely satisfying. The main downside is not clear project requirements, scope creep and you said / I said issues. One way I found very helpful in mitigating it is getting a prototype of the UI, with some comments about what's unseen. Getting an "idea to prototype" thing done is not expensive in context of any 25k+ projects and gains are huge on both sides.

herewego 8y ago

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.

system2 8y ago
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...
- photoguy112 8y ago
  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?
  - ajlburke 8y ago
    Freshbooks and Wave both offer repeatable invoices - I'm sure other invoicing/bookkeeping services do as well. I "Flintstoned" my small SAAS with automated monthly Freshbooks invoices until I had the time and money to get Stripe properly integrated. It meant we could get paying customers from day one with one less programming/integration headache to worry about.
    - photoguy112 8y ago
      Thank you! This whole time I didn't realize Freshbooks allows you to create recurring invoices that let people save their cc details. Doh!
  - bonestamp2 8y ago
    Not OP, but I use waveapps.com for subscription billing. It was among the lowest cost option I could find, it works well, and it produces nice invoices that you can white label. Once the customer has entered their CC, you can also process incidental charges as necessary above and beyond their subscription. Most clients don't want to deal with billing either, so this just runs the card on whatever frequency you want and allows you to run the card whenever else you need to. If someone has a better suggestion, please let me know.

rdokelly 8y ago

Would you mind speaking a little on your path from salary to freelance? I want to make the jump but it seems scary and I don't really have anyone to talk to about it? How are you finding work?

photoguy112 8y ago
My start in freelancing was forced. I was laid off as part of a merger for lack of face time (fully remote, while others showed up in office so naturally they were chosen over me). It was really tough. I lived in an expensive area all of a sudden without an income. I guess the reason I did not go applying for jobs was just the sour taste that the layoff left. I felt angry, not at the company, but at myself for letting others dictate my life. I started on Upwork. It was a bitch. Upwork is known for low quality, but I didn't have any choice. I just tried doing as best as I could for everyone I dealt with and that seemed to manifest into a 100% rating, which led to even more contacts. At one point some of the clients weren't so terrible. I think the first year I did 40k, much much lower than the salary I had, but it was enough to pay the bills. I also moved to a much more affordable area so it helped. Having 100% rating on upwork lead to agency work. Agencies are great, if you do good work they often have a steady workload for you. You know what comes and when and can schedule more time to work on other projects, thus upping your income. If you are a developer working with an agency, this can be very rewarding if your charge your worth. I am a designer and our industry naturally caps what people think I am worth. It sucks. At one point I was doing well enough that new clients I was taking on were willing to pay per project. It was super hard and scary, but I said bye to agency work except for 1 agency where I befriended the CEO. Per project work was really nice, but I learned quickly that if you can't sell your value (which I couldn't at the time as a "designer" and just lacked experience in this area), it can be difficult to close larger quote projects. People are just scared of large numbers. Tell someone they should pay you 50k and they run away (I am sure that other's experience may differ and people don't mind paying them that sum). I tried a bunch of things, price anchoring, huge fancy proposals.. yada yada. What happened is that I was getting burned out on huge fancy proposals and not getting anything out of them and that was the breaking point. I figured, I am done with proposals, from now on I get people on the phone, talk to them, and if they don't agree at the end of the call then I won't put any more effort. THIS WORKED. Now the process is simple: Schedule a call, we talk, I ask you about your BUSINESS problem and offer you a business solution. No talk of design. No talk of development. What is it that is costing you money or not making you money? Let's change that. As far as new work it's 100% referrals at the moment. However, I know that this can't last forever and at some point I will burn out (I already feel this after 3 years). My goal is a product or a product-service (have someone else do the work I offer at a reduced scope for a cheaper price). I have read about several people here on HN doing this and making a killing (by my definition). This is what I look forward to next, but it has not been easy. As a side note: if anyone is running a product service or a SaaS and started in a similar fashion, I'd love to hear from you!

alzoid 8y ago

Had did you transition from the hourly work to weekly? Why do you think your clients are more accepting of 10K for 3 weeks vs a 20K quote? When it comes to products do you have any thoughts on competing with big players? I have a few now, I am hoping being local will get me in the door and make the client more comfortable with me than a website offering it as SaaS. My advice for consultants / freelancers. Setting yourself up as a general company with a name goes a long way. Not as John Doe consulting. Some larger companies don't like throwing money at a self employed consultant. If you show up as Compu-Global-Hyper-Mega-Net they treat you differently. Also people skills is spot on. Even if you do have people skills, it can help a ton to have a sales guy working for you as well.

photoguy112 8y ago
Transitioned simply by trying something different, until per project quotes succeeded. It was hard so I gave up and decided to try something else, seemed to have worked. My projects usually last a month or two, sometimes longer. Smaller businesses with smaller teams seem a lot more accepting of weekly invoices. It becomes a line item for them, just an expense among many (this is my guess). In terms of products, I am not qualified enough, but if I had to guess, it's best not to compete with the mega SaaS. Position differently and find a unique niche that won't necessarily make you super rich. As for naming, that's an interesting point. I don't know if it's true as I've seen consultants go by their name and make a lot of money. Some people simply build a brand out of their name and become well known for the work they do. Sadly, I don't have a brandable name so I went with a business name. I think there is some truth to your point when it comes to being seen as a company to do business with than "hiring a consultant".

stevage 8y ago

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

alistairSH 8y ago
Not sure about the OP, but to me... The freelancer is building product on their own, or mostly so. Somebody hires them to do the majority of the project. "Hi, I need a website that does X, here's $20k to build it." The consultant is embedded in an existing team and either building some niche portion of the product OR providing some sort of training. "Hi, I need a website that does X, we're only qualified to build subset Y, here's $20k to build the remained OR train us to build the remainder."
photoguy112 8y ago
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.

mancerayder 8y ago

Freelancing can be highly stressful and demoralizing, unless you take the steps to go into consulting or beyond. It's a ladder, just like your corporate gig, you gotta do the work to move up or suffer where you are stuck. I have one sticking point I'd love to hear what the HN crowd does to deal with it. I'm freelancing and I find gigs that are long-term via recruiters / LinkedIn. And never directly with companies. While the pay is high, the feeling is I'm just another employee, except temp. How do you market your skills directly with firms, and where do you go, if you're not the 'social media broadcaster' type who's on Twitter / etc. all day? I DO have people skills, I DON'T spend any time doing presentations at tech conferences or blasting myself on Twitter / social media. Do you partner with a marketing type? Or become that type?

zilian 8y ago
Outsource this to a profiler/marketer to build yourself an identity Don't work under your name but create a brand even if it's just you ;)
- mancerayder 8y ago
  I think the problem is that, in the U.S., recruiters have captured that market. Since they captured it, they also capture 20-40% + of the rate because of this "added value." And I say that with the maximum possible cynicism. How do individuals compete against recruiters? Why would this marketing person take a few grand from me, when they can be a recruiter and take 20-40% + of my rate for doing nothing but the intro?
- Blaiz0r 8y ago
  This sounds like a really interesting idea, have you done this yourself or seen any good examples of it?
  - zilian 8y ago
    Yes, I know companies but do that very well, but they are in France and work only in French. Distinctive features to look for : small companies (2-3 is best for their focus on you, 10 max) but it's just my opinion. Once they grow, they tend to lose their initial verve. It doesn't seem to scale well.

porker 8y ago

> 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. When I added 30-50% to the prices, I didn't win the jobs. I could write a spec 80 pages long (which no client would pay for) and still there were variances which cost me. On my current $50k+ project I've got the client to bear the risk because he's the worst client for cost overruns I've had, and it's on a time and materials system. However because he has no more money than the top range of estimates, and because he wants everything and more, I feel trapped and as stressed as if it was fixed price (which it's turning out to be). It feels like I am missing something obvious that other developers/consultants have got. I want to price on value so I'm not stressed about every minute's productivity. My clients want fixed price so the risk is stacked on me; they won't/can't do sprints (often because their board of directors won't approve it, even if they say they see the benefits); and the projects are unique systems each time, so the estimation is not accurate. I freelance/consult because it pays well, but this way of working sucks.

gk1 8y ago
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.
- photoguy112 8y ago
  The reason I did weekly vs monthly pricing is simply because it breaks down to a "smaller" amount, visually ;) But yeah.. in essence you are just asking for a monthly retainer. Also, with weekly you don't need to worry about collecting as much in case of nonpayment, at most you'll lose a week's worth of pay.
jameslk 8y ago

gk1 8y ago

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.

FigBug 8y ago

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.

vicbun 8y ago

I found transitioning to full project billing extremely satisfying. The main downside is not clear project requirements, scope creep and you said / I said issues. One way I found very helpful in mitigating it is getting a prototype of the UI, with some comments about what's unseen. Getting an "idea to prototype" thing done is not expensive in context of any 25k+ projects and gains are huge on both sides.