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How to be a consultant, a freelancer, or an independent contractor (2009)

346 points by wofo 3y ago

dang 3y ago
Related: How To Be a Consultant, a freelancer or an independent contractor (2009) - https://news.ycombinator.com/item?id=2255463 https://news.ycombinator.com/item?id=2255463 - Feb 2011 (7 comments) How to run a small consultancy / freelancing business - https://news.ycombinator.com/item?id=848370 https://news.ycombinator.com/item?id=848370 - Sept 2009 (63 comments)
10g1k 3y ago
If you can put in the effort to get good (better than average) at one marketable skill, present yourself well, and commit to it, you'll do ok as a contractor/freelancer.
- russnes 3y ago
  this has been my experience so far, being 3 years into it
- dclowd9901 3y ago
  It’s not hard. Most people suck. Honestly, if you just answer the phone and reply to emails, people will think you’re some kind of god.
  - yuvadam 3y ago
    I lol'd, but this is very true.
  - ehnto 3y ago
    Good communication is 80% of the job for sure. Managing expectations is your own secret weapon. A good communicator can give themselves plenty of time and the client will be happy about it. Poorly communicating timeframes will have people distrusting and frustrated, and you'll be under pressure to boot.
Johnythree 3y ago
The push for employees to become a "Consultant, freelancer or independent contractor" was the hope from companies that they could unload many costs of business to their ex-employees. Things like phone rental, insurance, car running costs, tools, etc. However, people quickly learnt that unless the remuneration was increased in proportion, then the ex-employee was much worse of. Plus the Tax Man quickly got involved and ruled that many Contracting arrangements were actually a sham. There are now a list of standard tests to determine if a supposed contractor is actually an employee.
- antupis 3y ago
  It is not that simple and varies country to country. Here Finland best software developers usually go consulting/freelancing in their later career because that is where big money is in our software ecosystem and it has some rather big tax benefits.
  - WJW 3y ago
    Here in the Netherlands I've seen this too. It's somewhat confusing to speak about freelancers as a single group because they stretch all the way from doordash drivers making minimum wage (and sometimes less) to well-paid someware developers making about twice what a employed senior dev would. One of those is economically precarious and needs (government) assistance, the other is doing just fine.
    - bryanrasmussen 3y ago
      also I should note for being a consultant to make any sense you should really make twice as much as a permanent employee since you have to take care of your own pension, vacation, often have to pay for meals where employees get them paid for, and have the chance of going some months without work when a contract gets over.
      - saiya-jin 3y ago
        Also sick days, public holidays etc. Yeah, twice the rate is just about right to compensate all the added stress and potential to have 0 income for months, without much of a social safety net. Good year and you will come on top easily, a bad one can literally wipe you off the face of Earth. Also depending on given system pension savings can be minimal. Once you have kids and whole family to feed and pay various expenses for, the pressure to keep earning is non-trivial. There is some envy from perm employees towards better paid contractors, but I always tell them to try that. A lot of 'but but XYZ' reasoning for why it can't be done now happens afterwards.
wheresmycraisin 3y ago
Can we separate out the phrase "Consultant, freelancer or independent contractor"? It encompasses both experts with deep knowledge in some lucrative niche, as well as wordpress devs on upwork making $5/day. Not to mention "normal" programmers who are indistinguishable from employees, but get paid hourly for some reason (often because they are in another country, but often because they are being taken advantage of).
- Thoeu388 3y ago
  Many programmers prefer hourly pay over proper employment. As contractor, I can put hardware, my rent, and leisure travel into expenses. Real taxation is 15% versus 45%. I can have multiple clients...
  - eloisius 3y ago
    I’m surprised you’re able to expense your rent, but otherwise I agree. I like being free to arrange my schedule how I like. I’ve traveled almost 3 months out of 7 this year, take long weekends to go diving, etc. When I was W-2, even when I ostensibly had unlimited PTO it always felt like I was begging for my own time.
    - Thoeu388 3y ago
      Technically I still live with my parents, but one of my clients requires me to maintain office 300km away. There is no trick, I asked at tax office if that would be OK.
    - xmcqdpt2 3y ago
      In Canada there is some complicated formula for how much you can expense rent, based on the floor size of your office compared to that of the living space in your home and how much you use it for working etc. When my partner applied for it, it ended up being a ridiculously small amount.
      - ghaff 3y ago
ensocode 3y ago
Lots of good, valid information in this article. After more than 10 years in this field I would add, that it can be beneficial to do the book keeping yourself. It is useful to get a feeling for your numbers and expenses which helps you when doing financial decisions.
dclowd9901 3y ago
> This time should be removed from the log, it’s still there but it is your time, not your customers time. Oof, lost me here. Guess what? It is the customer’s time. Software is huge. Huge huge. Gargantuan. I don’t have an eidetic memory and if the customer wants a developer with eidetic memory they’re free to look for one. I will always be learning and re-learning. It’s a big field with lots of long small pitfalls. If you have a non-standard system, it means I’m digging and re-learning some shit I thought I had the luxury to forget. That is _definitely_ on the customer.
xupybd 3y ago
Work 8-10 hours a day 6 days a week. How can you do that with a family?
- bartvk 3y ago
  I live in Europe as a subcontractor and I work 32 hours per week. That's billable hours, which excludes travel/commute, bookkeeping, trainings, and searching for new projects. It works fine with family. I do my own bookkeeping and taxes.
  - velosol 3y ago
    How do those 32 hours end up by day (ie 6, 8, 6, 8, 6)?
  - adamsmith143 3y ago
    But 32 hours a week is far less than 8-10 hours a day for 6 days. Not sure what you are getting at.
- zer0tonin 3y ago
  I have never done that when working as an independent contractor.
- jlnho 3y ago
  Simple, you neglect your family!
- dgb23 3y ago
  With or without a family, the reality is that you work in spikes. You have times where you work much less than that on client projects, maybe just 50% of that, and use some of the "free" time to tinker, learn, improve your internal tooling etc. And of course spend more time with family and friends. Then there are times where you have to squeeze in as much (billable) work into a week as possible. Deadlines need to be met, quality & testing needs to be rock solid. Then there are times where you spike up with work and start neglecting family and friends. It's just how it goes. No amount of planning can prevent these spikes completely. I'm sure there are exceptions, but generally you are in part hired for your flexibility and high engagement. You give certain guarantees that employees don't and you make absolutely sure that those expectations are met. But again, it's an ebb and flow thing. Or it should be. There needs to be times where you decompress for a while, look at the big picture and sharpen your tools.
lencastre 3y ago
In certain Latin American countries if 90+ Oct of your revenue comes from a single client, the tax office determines that this client is de facto your employer and you become entitled to severance and other perks when you leave or contract is ended.
- mcv 3y ago
  But I don't want severance and other perks. I just want money so I can save up my own buffer and buy my own perks. I think it's very good that the tax service is looking out for underpaid freelancers struggling on the edge of poverty (or often below it), but highly paid software engineers can take care of themselves. If my current client wants to end our contract tomorrow, I'm fine with that. That's why he's hiring me, and not an employee. And that's why he's paying me as much as he is. I'm all for drawing a line somewhere based on hourly rate. Below $50/h (or wherever you want to draw that line), you may be entitled to employee benefits, above that line, you're on your own, because you can take care of yourself.
  - e_i_pi_2 3y ago
    I don't think the pay rate really matters, and you could always decline it. I think this is more meant to safely allow someone to put most of their eggs in one basket - generally that's a risky move and the client could simply refuse to pay and put you out of business, but as a client there's a lot of value in being the main priority
Tade0 3y ago
> Hourly rates Your price should be a reflectance of your skills level and your reputation. In the beginning of your consultancy career I would suggest to lowball the price, but not too much. I've found that in my case it was beneficial for both parties if I asked a rate that made it worth it for me. Worst case scenario they said no. Every time I lowballed, I regretted it and didn't do my best and couldn't help it.
- mcv 3y ago
  I lowballed in the beginning just to get a foot in the door and get some experience. But once you've had a few jobs that way, it's time to stop lowballing and get a bit more selective. And then there was this one project that I really liked, and I ended up taking an enormous cut to continue on that project. That was a bad idea. It was a cool project, but being underpaid so dramatically did hurt my enjoyment quite a bit. (And it wasn't a charity or anything; it was a bank.)
  - bob1029 3y ago
    > it was a bank Ah yes the irony of capitalism. I feel like banks are one of the last places you should try to peddle B2B/SAAS/consulting packages unless you already have a gigantic reputation to work with and/or deep domain expertise + a professional network. Many bank execs want to sign contracts with a minimum of 5 year duration. No one wants to spend all that due diligence time & energy on a 12 month contract. So, the stakes are really high. They're going to want you to prove you will be around in a decade. If their executive team is worried about your business continuity, but still really like the technology idea, that is where you run into the undercutting angle. They'll move it under a different cost center like "tech research and transformation initiatives" as opposed to "principal, line of business systems". They'll still talk to you, but it will be on entirely different terms than you would desire.
    - brtkdotse 3y ago
      If you’re ok with the pace and general culture, “boring” places like banks and insurance companies can be fantastic for contractors. Especially if you know some of the niche products it’s pretty easy to command very respectable rates without the stress or grind of sexier companies. Oh, they _always_ pay on time and unless you’re terrible you can usually stay as long as you want. Disclaimer: the above is my experience in Sweden, but I imagine the same applies elsewhere
chiefalchemist 3y ago
> How to be a Consultant, a Freelancer, or an Independent Contractor It's important to note that: - Consultant - Coach (added by me) - Contractor - and Freelancer Are four distinct species, if you will. These titles are typically used interchangeably. That's a mistake, often a costly one. Furthermore, the key is to find fit with clients'/projects' needs and expectations. For example, the client - not knowing any better[1] - could say they're looking for a freelancer, but what they really expect is a consultant or a coach. Or you anticipate a steady contract engagement and it turns out to be more on/off freelance-y and in order to be available to this "great client" you end up leaving hours on the table. And then the client ghosts? [1] Or because they know a freelance rate is lower/lowest, and then will effectively demand more and better because they can, not because that's what they agreed to pay for.
azlev 3y ago
> that this skill is marketable That's the hardest part to me. How do I know that? Looking at others consultants?
stared 3y ago
Personally, I think "charge by hour" is not a good piece of advice. If you are a low-tier freelancer, there may be no other way to go, and you must accept that. For most things, mid-tier to high-tier, from my experience, it works better by day or (even better) by project. Suppose there are only a few billable hours. In that case, there are many times more non-billable, for anything, from negotiating, through communication in between, to finalizing and invoicing. Also, 8x1h is much more work than 1x8h. The latter is a typical workday; the former is exhausting with its context-switching. See also https://training.kalzumeus.com/newsletters/archive/consulting_1 https://training.kalzumeus.com/newsletters/archive/consultin... (discussed here numerous times, including https://news.ycombinator.com/item?id=4805091 https://news.ycombinator.com/item?id=4805091).
- ssharp 3y ago
  You're going to find a lot of (completely valid) advice on both sides -- bill by hour and bill by project. Out in the wild, there are a ton of factors that are going to make that advice either good or bad. For example, the book, Million Dollar Consulting, is pretty famous for advocating the "charge by value" approach. I think a lot of what's stated in that book can make sense when you're 1) highly specialized and 2) are in high-demand. You have a lot more leverage in those situations and both sides of the equation likely know what value you're creating. These are the types of situations where managers inside the company you're working for are motivated to get through any red-tape your "non-standard" pricing models create. However, in a lot of cases, businesses have policies and controls around how they structure contractor pay. You should certainly be flexible to not limit yourself, especially if you don't have a whole host of companies knocking at your inbox. I'd suggest really thinking through how much time it takes to acquire (pitching, negotiations, other pre-contract meetings) a client, how much admin time it takes, and just build that into your hourly rate. Setting up retainer agreements is also usually a good idea for you and something clients don't typically balk at -- e.g. you will be paid a minimum of 10 hours per week, even if you only worked 5 hours. For anyone worried about limiting their income by charging hourly rates, I'd suggest looking around at what high-end law firms, creative agencies, management consultants, accounting firms, etc. charge. As a solo consultant, you're ALWAYS going to be constrained by hour many hours you're willing to work, regardless of how you bill.
scarface_74 3y ago
I absolutely refuse to be a “contractor” or anything that looks like “staff augmentation”. Strategic consulting where I am talking to decision makers and people in control of budgets where I’m brought in for expertise is different. When I was a dev lead and saw the difference between what we were paying “consultants in name only” staff aug C# developers and what we were paying “AWS consultants” who were just old school net ops folks who knew how to duplicate on prem infrastructure and processes and make it more expensive in the cloud, it changed my entire career trajectory. I knew I could bring more to the table as someone who had a development background, knew some about infrastructure if I knew “cloud”. I spent the next two years getting experience.
- jasmer 3y ago
  [dead]
- lizardking 3y ago
  I've done a lot of this staff aug work you talk about. How did you go about finding your initial contracts there were in the dev ops space?
  - scarface_74 3y ago
    I got a full time job at AWS in the Professional Services department where I still work. ;) And I stay away from any project where it looks like it’s going to be staff augmentation. I want to have clear objectives and clear definition of done with success criteria not “the customer bought a bucket of hours and they will add you to their team and assign tasks”.
germandiago 3y ago
Thank you. This has been useful. I have been wishing to be a freelancer for years but never jumped in... yet. I like all this advice from practice.
ricksunny 3y ago
Interested in what the community thinks of his post's sub-bullet on self discipline https://jacquesmattheij.com/be-consultant/self-discipline/ https://jacquesmattheij.com/be-consultant/self-discipline/
- wofo 3y ago
  > Work 6 days per week. Use that saturday to work on things that are harder to do during the week because of interruptions. In my own case I haven't found it necessary to overwork. In fact, if overworking was the only way to make it I'd probably become an employee. My current schedule is 4 days / week, consisting of 8 hour work days. Three of those days are for billable work, one for other stuff (bookkeeping, sales, blogging, keeping up with HN :P). I plan to write a proper article with more details by the end of this year, when I feel I have enough things to tell.
  - BMc2020 3y ago
    If the virus is man made, why does it have synonymous mutations?
jmconfuzeus 3y ago
As a programmer, it's always a few months of work before the client stops spending on development. At that point, I can go up to 3 months without work, which means high anxiety because if I wasn't able to save much, I have to scurry around trying to find work. Sometimes I get a referral or two but it'd be nice to have about the same stability as being employed. How do you programmers here manage to land a constant amount of work while freelancing?
- tonyedgecombe 3y ago
  You have to be comfortable with the unpredictability of the work. It isn't for everyone. Also it helps if you are a saver rather than spender. You should be able to put away half your income in good periods.
  - jmconfuzeus 3y ago
    I live frugally and am a big saver. However, the anxiety gets me every time. I suppose it's a small price to pay.
tptacek 3y ago
Don't lowball your consulting rate! * Your price sends a signal that attracts particular clients, and the ones you attract with lowball prices are the worst, most demanding kind. * Your ordinary good clients aren't shopping on price, beyond a vague notion of what the normal range of prices for your field is. Remember: they're generally not spending their own money. * Any client big enough to have a purchasing department is never going to let you get your rate back; their whole job is to prevent vendors from ever raising rates. * There are a zillion things you're selling as a consultant that you don't realize you're selling, from schedule flexibility and freedom to fire at will to answering phone calls about the project deliverable 3 weeks after the project is done to not having to pay benefits and payroll taxes to documentation, and you're much more likely to forget to capture this stuff in your prices than you are to overcapture it. I'm not sure I've ever met a new consultant that had unrealistically high rates. But most new consultants I've met have had unrealistically low rates. If a client balks at your rate, you can still get the project cost where they need it to be: negotiate on scope instead of rate. Never bill hourly. Hourly is cursed.
- manmal 3y ago
  I‘ve been billing hourly for over ten years now, and I agree that it is cursed. But as much as I’d like to switch to daily/weekly billing, it feels like I would never allow myself to leave the desk to run errands, play with the kids etc - because I promised to work the (whole?) day/week. Even if you don’t actively tell clients when exactly you do work, clients can see your away/offline status in Slack/Teams, or they might call you out of the blue, which would feel to me like being caught with pants down - talking about a failed deployment on the phone in the supermarket? And I’d be worried then that the client comes to the conclusion “Oh that guy, bills the whole week but doesn’t even work in the afternoon. What a slacker!”. How do you or other people handle this?
  - toyg 3y ago
    "yeah I often work at night" But tbh, customers aggrieved at your working practices are simply not worth having. If they don't trust you enough to do the work, they probably won't trust the output of it either, which all that it entails (not paying etc). I've been a consultant in a previous life, and the best customers were invariably the ones who just let you get on with the job.
sharts 3y ago
Are most consultants/freelancers/contractors generally working on product-side or customer-visible projects? I have always been interested in going this route but for backend dev / infra / build/cicd kinds of things. But how can one sell or advertise that which isn't "seen" by customers unless something breaks catastrophically?
- kmoser 3y ago
  Freelancer here. I'm just a data point of one, but I work on all kinds of projects, both product-side and customer-visible. For the "invisible" (to the customer) work, you can always add a description of it to your CV (along with some suitable graphics to show, for example, performance or positive outcome). Occasionally I'll show the front end of the project, even though I didn't work directly on that part, simply because it's what potential customers understand and identify with. I try to make it clear what part I worked on, but when I'm using it in a portfolio I sometimes leave that to the imagination of the viewer, until I'm actually speaking with them about their potential project.
lakomen 3y ago
I always wanted to find out, wtf are those consultants doing all day long?
- kmoser 3y ago
  Often reading HN. Not kidding, I spend down time surfing sites containing everything from news to coding advice. At any time I'm either developing, learning more about development, or learning more about industry happenings. Once in a while I'll check in on something like Facebook, but that's only about five minutes a day.
28304283409234 3y ago
Counterpoint: definitely bill “learning on the job”. That learning leans on your knowledge and expertise that you have accumulated over the years. That is worth paying for. No consultant ever had all knowledge beforehand and any client claiming they should are not worth your time.
jononomo 3y ago
I've been working a consulting contract for the last 4 months or so and I am definitely under-billing and over-delivering big time. I'm charging $58/hour for Django development and I've built these guys a nice backend with a rock-solid test suite. I also have almost 20 years experience as a software developer now, and I'm giving them high-level design and architectural guidance as well. I have no idea what they'd do without me at this point. I like the flexibility, but I think I'll need to start making a bit more money soon. It is just such a headache going through the whole interview process, though.
- Shocka1 3y ago
  Why not try to work for the company you are consulting with, but negotiate a raise in your hourly rate? You've basically already served a probationary period, and if you've shown how good you are it should be a no brainer for them. $70 to $100 an hour or $140k to $200k a year would be reasonable given your experience level, of course depending on the cost of living justification.
  - jononomo 3y ago
    Yeah, I think I'm easily worth $85/hour, maybe even $115/hour. But I don't want to try to negotiate until I have another $10k of savings and I have a couple of leads elsewhere so that I have a bit more bargaining power.

346 points by wofo 3y ago

dang 3y ago

Related: How To Be a Consultant, a freelancer or an independent contractor (2009) - https://news.ycombinator.com/item?id=2255463 https://news.ycombinator.com/item?id=2255463 - Feb 2011 (7 comments) How to run a small consultancy / freelancing business - https://news.ycombinator.com/item?id=848370 https://news.ycombinator.com/item?id=848370 - Sept 2009 (63 comments)

10g1k 3y ago

If you can put in the effort to get good (better than average) at one marketable skill, present yourself well, and commit to it, you'll do ok as a contractor/freelancer.

russnes 3y ago
this has been my experience so far, being 3 years into it
dclowd9901 3y ago
It’s not hard. Most people suck. Honestly, if you just answer the phone and reply to emails, people will think you’re some kind of god.
- yuvadam 3y ago
  I lol'd, but this is very true.
- ehnto 3y ago
  Good communication is 80% of the job for sure. Managing expectations is your own secret weapon. A good communicator can give themselves plenty of time and the client will be happy about it. Poorly communicating timeframes will have people distrusting and frustrated, and you'll be under pressure to boot.

Johnythree 3y ago

The push for employees to become a "Consultant, freelancer or independent contractor" was the hope from companies that they could unload many costs of business to their ex-employees. Things like phone rental, insurance, car running costs, tools, etc. However, people quickly learnt that unless the remuneration was increased in proportion, then the ex-employee was much worse of. Plus the Tax Man quickly got involved and ruled that many Contracting arrangements were actually a sham. There are now a list of standard tests to determine if a supposed contractor is actually an employee.

antupis 3y ago
It is not that simple and varies country to country. Here Finland best software developers usually go consulting/freelancing in their later career because that is where big money is in our software ecosystem and it has some rather big tax benefits.
- WJW 3y ago
  Here in the Netherlands I've seen this too. It's somewhat confusing to speak about freelancers as a single group because they stretch all the way from doordash drivers making minimum wage (and sometimes less) to well-paid someware developers making about twice what a employed senior dev would. One of those is economically precarious and needs (government) assistance, the other is doing just fine.
  - bryanrasmussen 3y ago
    also I should note for being a consultant to make any sense you should really make twice as much as a permanent employee since you have to take care of your own pension, vacation, often have to pay for meals where employees get them paid for, and have the chance of going some months without work when a contract gets over.
    - saiya-jin 3y ago
      Also sick days, public holidays etc. Yeah, twice the rate is just about right to compensate all the added stress and potential to have 0 income for months, without much of a social safety net. Good year and you will come on top easily, a bad one can literally wipe you off the face of Earth. Also depending on given system pension savings can be minimal. Once you have kids and whole family to feed and pay various expenses for, the pressure to keep earning is non-trivial. There is some envy from perm employees towards better paid contractors, but I always tell them to try that. A lot of 'but but XYZ' reasoning for why it can't be done now happens afterwards.

wheresmycraisin 3y ago

Can we separate out the phrase "Consultant, freelancer or independent contractor"? It encompasses both experts with deep knowledge in some lucrative niche, as well as wordpress devs on upwork making $5/day. Not to mention "normal" programmers who are indistinguishable from employees, but get paid hourly for some reason (often because they are in another country, but often because they are being taken advantage of).

Thoeu388 3y ago
Many programmers prefer hourly pay over proper employment. As contractor, I can put hardware, my rent, and leisure travel into expenses. Real taxation is 15% versus 45%. I can have multiple clients...
- eloisius 3y ago
  I’m surprised you’re able to expense your rent, but otherwise I agree. I like being free to arrange my schedule how I like. I’ve traveled almost 3 months out of 7 this year, take long weekends to go diving, etc. When I was W-2, even when I ostensibly had unlimited PTO it always felt like I was begging for my own time.
  - Thoeu388 3y ago
    Technically I still live with my parents, but one of my clients requires me to maintain office 300km away. There is no trick, I asked at tax office if that would be OK.
  - xmcqdpt2 3y ago
    In Canada there is some complicated formula for how much you can expense rent, based on the floor size of your office compared to that of the living space in your home and how much you use it for working etc. When my partner applied for it, it ended up being a ridiculously small amount.
    - ghaff 3y ago

ensocode 3y ago

Lots of good, valid information in this article. After more than 10 years in this field I would add, that it can be beneficial to do the book keeping yourself. It is useful to get a feeling for your numbers and expenses which helps you when doing financial decisions.

dclowd9901 3y ago

> This time should be removed from the log, it’s still there but it is your time, not your customers time. Oof, lost me here. Guess what? It is the customer’s time. Software is huge. Huge huge. Gargantuan. I don’t have an eidetic memory and if the customer wants a developer with eidetic memory they’re free to look for one. I will always be learning and re-learning. It’s a big field with lots of long small pitfalls. If you have a non-standard system, it means I’m digging and re-learning some shit I thought I had the luxury to forget. That is _definitely_ on the customer.

xupybd 3y ago

Work 8-10 hours a day 6 days a week. How can you do that with a family?

bartvk 3y ago
I live in Europe as a subcontractor and I work 32 hours per week. That's billable hours, which excludes travel/commute, bookkeeping, trainings, and searching for new projects. It works fine with family. I do my own bookkeeping and taxes.
- velosol 3y ago
  How do those 32 hours end up by day (ie 6, 8, 6, 8, 6)?
- adamsmith143 3y ago
  But 32 hours a week is far less than 8-10 hours a day for 6 days. Not sure what you are getting at.
zer0tonin 3y ago
I have never done that when working as an independent contractor.
jlnho 3y ago
Simple, you neglect your family!
dgb23 3y ago
With or without a family, the reality is that you work in spikes. You have times where you work much less than that on client projects, maybe just 50% of that, and use some of the "free" time to tinker, learn, improve your internal tooling etc. And of course spend more time with family and friends. Then there are times where you have to squeeze in as much (billable) work into a week as possible. Deadlines need to be met, quality & testing needs to be rock solid. Then there are times where you spike up with work and start neglecting family and friends. It's just how it goes. No amount of planning can prevent these spikes completely. I'm sure there are exceptions, but generally you are in part hired for your flexibility and high engagement. You give certain guarantees that employees don't and you make absolutely sure that those expectations are met. But again, it's an ebb and flow thing. Or it should be. There needs to be times where you decompress for a while, look at the big picture and sharpen your tools.

lencastre 3y ago

In certain Latin American countries if 90+ Oct of your revenue comes from a single client, the tax office determines that this client is de facto your employer and you become entitled to severance and other perks when you leave or contract is ended.

mcv 3y ago
But I don't want severance and other perks. I just want money so I can save up my own buffer and buy my own perks. I think it's very good that the tax service is looking out for underpaid freelancers struggling on the edge of poverty (or often below it), but highly paid software engineers can take care of themselves. If my current client wants to end our contract tomorrow, I'm fine with that. That's why he's hiring me, and not an employee. And that's why he's paying me as much as he is. I'm all for drawing a line somewhere based on hourly rate. Below $50/h (or wherever you want to draw that line), you may be entitled to employee benefits, above that line, you're on your own, because you can take care of yourself.
- e_i_pi_2 3y ago
  I don't think the pay rate really matters, and you could always decline it. I think this is more meant to safely allow someone to put most of their eggs in one basket - generally that's a risky move and the client could simply refuse to pay and put you out of business, but as a client there's a lot of value in being the main priority

Tade0 3y ago

> Hourly rates Your price should be a reflectance of your skills level and your reputation. In the beginning of your consultancy career I would suggest to lowball the price, but not too much. I've found that in my case it was beneficial for both parties if I asked a rate that made it worth it for me. Worst case scenario they said no. Every time I lowballed, I regretted it and didn't do my best and couldn't help it.

mcv 3y ago
I lowballed in the beginning just to get a foot in the door and get some experience. But once you've had a few jobs that way, it's time to stop lowballing and get a bit more selective. And then there was this one project that I really liked, and I ended up taking an enormous cut to continue on that project. That was a bad idea. It was a cool project, but being underpaid so dramatically did hurt my enjoyment quite a bit. (And it wasn't a charity or anything; it was a bank.)
- bob1029 3y ago
  > it was a bank Ah yes the irony of capitalism. I feel like banks are one of the last places you should try to peddle B2B/SAAS/consulting packages unless you already have a gigantic reputation to work with and/or deep domain expertise + a professional network. Many bank execs want to sign contracts with a minimum of 5 year duration. No one wants to spend all that due diligence time & energy on a 12 month contract. So, the stakes are really high. They're going to want you to prove you will be around in a decade. If their executive team is worried about your business continuity, but still really like the technology idea, that is where you run into the undercutting angle. They'll move it under a different cost center like "tech research and transformation initiatives" as opposed to "principal, line of business systems". They'll still talk to you, but it will be on entirely different terms than you would desire.
  - brtkdotse 3y ago
    If you’re ok with the pace and general culture, “boring” places like banks and insurance companies can be fantastic for contractors. Especially if you know some of the niche products it’s pretty easy to command very respectable rates without the stress or grind of sexier companies. Oh, they _always_ pay on time and unless you’re terrible you can usually stay as long as you want. Disclaimer: the above is my experience in Sweden, but I imagine the same applies elsewhere

chiefalchemist 3y ago

> How to be a Consultant, a Freelancer, or an Independent Contractor It's important to note that: - Consultant - Coach (added by me) - Contractor - and Freelancer Are four distinct species, if you will. These titles are typically used interchangeably. That's a mistake, often a costly one. Furthermore, the key is to find fit with clients'/projects' needs and expectations. For example, the client - not knowing any better[1] - could say they're looking for a freelancer, but what they really expect is a consultant or a coach. Or you anticipate a steady contract engagement and it turns out to be more on/off freelance-y and in order to be available to this "great client" you end up leaving hours on the table. And then the client ghosts? [1] Or because they know a freelance rate is lower/lowest, and then will effectively demand more and better because they can, not because that's what they agreed to pay for.

azlev 3y ago

> that this skill is marketable That's the hardest part to me. How do I know that? Looking at others consultants?

stared 3y ago

Personally, I think "charge by hour" is not a good piece of advice. If you are a low-tier freelancer, there may be no other way to go, and you must accept that. For most things, mid-tier to high-tier, from my experience, it works better by day or (even better) by project. Suppose there are only a few billable hours. In that case, there are many times more non-billable, for anything, from negotiating, through communication in between, to finalizing and invoicing. Also, 8x1h is much more work than 1x8h. The latter is a typical workday; the former is exhausting with its context-switching. See also https://training.kalzumeus.com/newsletters/archive/consulting_1 https://training.kalzumeus.com/newsletters/archive/consultin... (discussed here numerous times, including https://news.ycombinator.com/item?id=4805091 https://news.ycombinator.com/item?id=4805091).

ssharp 3y ago
You're going to find a lot of (completely valid) advice on both sides -- bill by hour and bill by project. Out in the wild, there are a ton of factors that are going to make that advice either good or bad. For example, the book, Million Dollar Consulting, is pretty famous for advocating the "charge by value" approach. I think a lot of what's stated in that book can make sense when you're 1) highly specialized and 2) are in high-demand. You have a lot more leverage in those situations and both sides of the equation likely know what value you're creating. These are the types of situations where managers inside the company you're working for are motivated to get through any red-tape your "non-standard" pricing models create. However, in a lot of cases, businesses have policies and controls around how they structure contractor pay. You should certainly be flexible to not limit yourself, especially if you don't have a whole host of companies knocking at your inbox. I'd suggest really thinking through how much time it takes to acquire (pitching, negotiations, other pre-contract meetings) a client, how much admin time it takes, and just build that into your hourly rate. Setting up retainer agreements is also usually a good idea for you and something clients don't typically balk at -- e.g. you will be paid a minimum of 10 hours per week, even if you only worked 5 hours. For anyone worried about limiting their income by charging hourly rates, I'd suggest looking around at what high-end law firms, creative agencies, management consultants, accounting firms, etc. charge. As a solo consultant, you're ALWAYS going to be constrained by hour many hours you're willing to work, regardless of how you bill.

scarface_74 3y ago

I absolutely refuse to be a “contractor” or anything that looks like “staff augmentation”. Strategic consulting where I am talking to decision makers and people in control of budgets where I’m brought in for expertise is different. When I was a dev lead and saw the difference between what we were paying “consultants in name only” staff aug C# developers and what we were paying “AWS consultants” who were just old school net ops folks who knew how to duplicate on prem infrastructure and processes and make it more expensive in the cloud, it changed my entire career trajectory. I knew I could bring more to the table as someone who had a development background, knew some about infrastructure if I knew “cloud”. I spent the next two years getting experience.

jasmer 3y ago
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lizardking 3y ago
I've done a lot of this staff aug work you talk about. How did you go about finding your initial contracts there were in the dev ops space?
- scarface_74 3y ago
  I got a full time job at AWS in the Professional Services department where I still work. ;) And I stay away from any project where it looks like it’s going to be staff augmentation. I want to have clear objectives and clear definition of done with success criteria not “the customer bought a bucket of hours and they will add you to their team and assign tasks”.

germandiago 3y ago

Thank you. This has been useful. I have been wishing to be a freelancer for years but never jumped in... yet. I like all this advice from practice.

ricksunny 3y ago

Interested in what the community thinks of his post's sub-bullet on self discipline https://jacquesmattheij.com/be-consultant/self-discipline/ https://jacquesmattheij.com/be-consultant/self-discipline/

wofo 3y ago
> Work 6 days per week. Use that saturday to work on things that are harder to do during the week because of interruptions. In my own case I haven't found it necessary to overwork. In fact, if overworking was the only way to make it I'd probably become an employee. My current schedule is 4 days / week, consisting of 8 hour work days. Three of those days are for billable work, one for other stuff (bookkeeping, sales, blogging, keeping up with HN :P). I plan to write a proper article with more details by the end of this year, when I feel I have enough things to tell.
- BMc2020 3y ago
  If the virus is man made, why does it have synonymous mutations?

jmconfuzeus 3y ago

As a programmer, it's always a few months of work before the client stops spending on development. At that point, I can go up to 3 months without work, which means high anxiety because if I wasn't able to save much, I have to scurry around trying to find work. Sometimes I get a referral or two but it'd be nice to have about the same stability as being employed. How do you programmers here manage to land a constant amount of work while freelancing?

tonyedgecombe 3y ago
You have to be comfortable with the unpredictability of the work. It isn't for everyone. Also it helps if you are a saver rather than spender. You should be able to put away half your income in good periods.
- jmconfuzeus 3y ago
  I live frugally and am a big saver. However, the anxiety gets me every time. I suppose it's a small price to pay.

tptacek 3y ago

Don't lowball your consulting rate! * Your price sends a signal that attracts particular clients, and the ones you attract with lowball prices are the worst, most demanding kind. * Your ordinary good clients aren't shopping on price, beyond a vague notion of what the normal range of prices for your field is. Remember: they're generally not spending their own money. * Any client big enough to have a purchasing department is never going to let you get your rate back; their whole job is to prevent vendors from ever raising rates. * There are a zillion things you're selling as a consultant that you don't realize you're selling, from schedule flexibility and freedom to fire at will to answering phone calls about the project deliverable 3 weeks after the project is done to not having to pay benefits and payroll taxes to documentation, and you're much more likely to forget to capture this stuff in your prices than you are to overcapture it. I'm not sure I've ever met a new consultant that had unrealistically high rates. But most new consultants I've met have had unrealistically low rates. If a client balks at your rate, you can still get the project cost where they need it to be: negotiate on scope instead of rate. Never bill hourly. Hourly is cursed.

manmal 3y ago
I‘ve been billing hourly for over ten years now, and I agree that it is cursed. But as much as I’d like to switch to daily/weekly billing, it feels like I would never allow myself to leave the desk to run errands, play with the kids etc - because I promised to work the (whole?) day/week. Even if you don’t actively tell clients when exactly you do work, clients can see your away/offline status in Slack/Teams, or they might call you out of the blue, which would feel to me like being caught with pants down - talking about a failed deployment on the phone in the supermarket? And I’d be worried then that the client comes to the conclusion “Oh that guy, bills the whole week but doesn’t even work in the afternoon. What a slacker!”. How do you or other people handle this?
- toyg 3y ago
  "yeah I often work at night" But tbh, customers aggrieved at your working practices are simply not worth having. If they don't trust you enough to do the work, they probably won't trust the output of it either, which all that it entails (not paying etc). I've been a consultant in a previous life, and the best customers were invariably the ones who just let you get on with the job.

sharts 3y ago

Are most consultants/freelancers/contractors generally working on product-side or customer-visible projects? I have always been interested in going this route but for backend dev / infra / build/cicd kinds of things. But how can one sell or advertise that which isn't "seen" by customers unless something breaks catastrophically?

kmoser 3y ago
Freelancer here. I'm just a data point of one, but I work on all kinds of projects, both product-side and customer-visible. For the "invisible" (to the customer) work, you can always add a description of it to your CV (along with some suitable graphics to show, for example, performance or positive outcome). Occasionally I'll show the front end of the project, even though I didn't work directly on that part, simply because it's what potential customers understand and identify with. I try to make it clear what part I worked on, but when I'm using it in a portfolio I sometimes leave that to the imagination of the viewer, until I'm actually speaking with them about their potential project.

lakomen 3y ago

I always wanted to find out, wtf are those consultants doing all day long?

kmoser 3y ago
Often reading HN. Not kidding, I spend down time surfing sites containing everything from news to coding advice. At any time I'm either developing, learning more about development, or learning more about industry happenings. Once in a while I'll check in on something like Facebook, but that's only about five minutes a day.

28304283409234 3y ago

Counterpoint: definitely bill “learning on the job”. That learning leans on your knowledge and expertise that you have accumulated over the years. That is worth paying for. No consultant ever had all knowledge beforehand and any client claiming they should are not worth your time.

jononomo 3y ago

I've been working a consulting contract for the last 4 months or so and I am definitely under-billing and over-delivering big time. I'm charging $58/hour for Django development and I've built these guys a nice backend with a rock-solid test suite. I also have almost 20 years experience as a software developer now, and I'm giving them high-level design and architectural guidance as well. I have no idea what they'd do without me at this point. I like the flexibility, but I think I'll need to start making a bit more money soon. It is just such a headache going through the whole interview process, though.

Shocka1 3y ago
Why not try to work for the company you are consulting with, but negotiate a raise in your hourly rate? You've basically already served a probationary period, and if you've shown how good you are it should be a no brainer for them. $70 to $100 an hour or $140k to $200k a year would be reasonable given your experience level, of course depending on the cost of living justification.
- jononomo 3y ago
  Yeah, I think I'm easily worth $85/hour, maybe even $115/hour. But I don't want to try to negotiate until I have another $10k of savings and I have a couple of leads elsewhere so that I have a bit more bargaining power.