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Quit My Job For Consulting: Two Months Later

157 points by stevenklein 14y ago

tokenizer 14y ago
Some advice: Get some clients before you do this. I tried to go contractor after my last job and didn't make any money as I spent most of my first month getting a client, and the second month finalizing the details and working on the project. Two months for $2500 isn't much if it's your only client. The trouble I encountered was working as a web dev at a marketing agency before. They were strict about working for "potential clients", which meant anybody with money... My advice: Get at least 5 projects lined up for the foreseeable future (next 3 or 4 months) and also save up about six months of money for bills and your normal expenditures minus savings. This will help you invest in a business for at least, 8 to 12 months, working with 5 or 6 projects and tiding your other 6 months with savings will be the worst case scenario. Best case you find more clients and don't even get to touching that money.
psweber 14y ago
I've found that if you charge a day rate and deliver the things you promise, clients will never worry about time. You still need to have the discipline to get things done, but it takes the pressure off making sure you are billable for a certain number of hours.
- yogo 14y ago
  Daily billing is definitely the way to go. It is a great way to manage risk for both parties versus fixed-price (potential for abuse from the client's end) or hourly (potential for abuse* from the professional's end). Once you have a good idea of what you can complete in a day you can gather requirements and break them up into days resulting in more accurate scopes to work with. From my experience it seems everyone is happy (especially if you throw in daily invoicing). It's easy to avoid deadbeat clients this way and you have more consistent cash flow this way. If not consistent then at the very least it is predictable since you can see how far into the future you can book days. *: The abuse referred to here is for clients to keep requesting changes when they pay fixed-price. They are of the mentality that it is unlimited changes, and it is often difficult to draw the line on what is a billable change with this approach. Hourly can result in a professional delaying things to rack up hours.
- tptacek 14y ago
  This! I consider it a professional obligation to yell at people who default to hourly billing. Other good things come from day and week rates besides not having to track time; for instance, it incentivizes you to find faster ways to deliver the same work, and makes it easier for you to negotiate scope/price without taking a rate hit.
wasd 14y ago
I can feel a lot of the same sentiment about working at home. I think its psychologically important to separate your work and personal life. Maybe consider creating room which you only go to work or joining shared office. it really works for me.
keithnoizu 14y ago
Good stuff Steve. My last day at microsoft is october 19th and i'll being doing similar. Splitting my time between my existing projects that currently bring in some revenue, working part time as the software architect for greatnonprofits.org and spending the rest of the time consulting.
- stevenklein 14y ago
  Good luck!
tjtrapp 14y ago
Nice post! I've been thinking about this a lot and glad you wrote about it. I appreciate you sharing your experiences. I completely agree with breaking up your time into blocks. I try to keep my schedule to 4 hours in the morning of heads down coding (9a - 1p), 4 hours in the afternoon of heads down coding (130p - 530p) and 3 or so again at night (8-11/12). The other time is for me to do tasks which are relevant to coding but not actually coding, significant other time, or whatever I need to get done so I can think straight during those coding sessions. I don't answer email while coding, or give in to other distractions. The reason being that I have scheduled time for that and its coming up soon. Anyways, back 2 work ;)
- cocoflunchy 14y ago
  Are you saying that you actually do 11 hours of coding per day plus a few more hours of other work? It sounds insane to me. Do you work on week-ends too?
  - tjtrapp 14y ago
    I code about 8hrs / day. Weekends are mine.
gcp123 14y ago
I've just left a company to do the same-ish thing in marketing strategy. These are some helpful learnings, thank you!
- stevenklein 14y ago
  Good luck!
quickpost 14y ago
Good advice. How have you been identifying and marketing yourself to the clients paying with "House Money"?
- pdenya 14y ago
  Funded startups and Ad agencies are often looking for freelancers and a cold email can go a long way.
- psweber 14y ago
  Yeah, that was the line that stood out to me: "If possible, work with clients who are somewhat removed from the money they're paying you." Going after that type of client often means the work itself isn't as interesting, but it's great advice when you are getting the momentum (and savings account) going.
hackerpolicy 14y ago
You'll only have trouble with unbillable hours if you, well, bill by the hour.
- walrus 14y ago
  I imagine it takes some time to learn to properly estimate how much to charge for a project. Until then, billing by the hour is a way to build heuristics.
  - stevenklein 14y ago
    We're still just starting out and estimating time is always a bit nerve racking. I'm hoping it gets easier as time goes on.
  - tptacek 14y ago
    No it doesn't. You simply say "I charge in 1 day increments", and the hourly-billing problem goes away. When you come to the day at the end of the project where you only use 4 hours, you have a very complicated logistical conundrum that after careful analysis and financial modeling you solve by billing the full day because you charge in 1 day increments.
    - devb0x 14y ago
      So Thomas, you always bill like that? I guess I will have to try it. The Southern African market may not respond to it so I will have to think of the upsell.
      - tptacek 14y ago
        We tend towards fixed-price contracts. We don't bill hourly ever.
    - walrus 14y ago
      When you said "No it doesn't", were you responding to my statement that "I imagine it takes some time to learn to properly estimate how much to charge for a project"? Yes, it does. However, your charge-by-the-day method is a great workaround! I'm glad you mentioned it.
benzor 14y ago
As someone who works from home a lot, his advice about working in blocks of time is the most useful to me, as I've started exactly the same thing to keep productivity up. Being able to take breaks and tackle some life chores during the day is an awesome perk of working from home, but you can easily get carried away and miss out on doing any actual paying work.
orangethirty 14y ago
Good stuff. Also, HN is a great source of clients, but you have to be willing to advertise yourself correctly. Many freelancers here write me-too ads that fail to get them noticed. I do attention grabbing ads and them alone have made my practice grow about 500%.
- stevenklein 14y ago
  I would be interested in reading a blog post on what things work and what don't if you have the time to write it.
  - orangethirty 14y ago
    Well, to start you can do the following: 1. Search my comment history. You will see all of the ads I've posted. From the ultra conservative to the crazy "code with me maybe" fiasco that got me more hate mail than Hitler, but also got me a lot of work (a lot). I'm not afraid of being different and of standing out. Though this requires a flame suit. 2. Talk about what potential clients want to read about. I always talk about how my focus is on shipping. It really is. I dont stop working until the damn thing is done and out the door. Turns out, that is not very common with programmers these days. They are too busy dreaming of perfect code and arguing with each other about how Go deals with errors. Like I said, talk about what they want to read about (most of them just want to make sure you can and will deliver). 3.Do write a good headline. My best one so far reads "I ship software." Simple. To the point. And will make them read the rest of the ad. 4. Talk rates right there in the ad. Disqualify people right from the start. You dont want to waste time with people looking to under pay you. Plus you will chase away any dreamer who will gladly give you 5% of his made up company in exchange of "just some code." The higher the rates, the less shit you have to deal with. Honestly. I currently charge $100/hour with a minimum of one week of work. Thats $4000 a week if you want to hire me. But you do get someone who delivers. I have no problem getting paid that amount. 5. Make yourself available. Skype, email, phone. Just answer and take time to talk with clients. Let them know you will listen right there on the ad, and then follow through by listening. 6. Offer them a free 30 minute consultation. This helps both sides because it will give you a good chance to feel the client out, and same for them. Chemistry is very important when doing consulting and a free consultation is a great tool to use for that. Good luck, and get in touch with me through email (in profile) we can always bounce ideas off each other.
bprater 14y ago
One of my suggestions: sub-contract with one or more web development "house". I've been consulting for 15 years -- and it is one of my favorite ways to work. They do all the work of collecting requirements, billing the client, etc. -- and I get a checklist of items that I sit down and work against, often with a distributed team. Do good work and these places will keep you busy, especially when they are overloaded with work for their in-house teams.
- slaunchwise 14y ago
  Be very careful with this. Web dev companies are NOT playing with house money. Everything they don't spend on you, they get to keep. They tend to be the most likely to argue billables at the minute level, and they always want concessions (like a lower rate or some free time). In my experience it's a false economy.
- jyu 14y ago
  How do you find these web development "houses"? Seems like a really sweet gig, all the fun stuff without the chasing dead beats for money hassle.
  - HyprMusic 14y ago
    Try contacting your local development agencies just making yourself known. They usually need freelancers on hand for when things get too busy, and they are great pay. Agencies tend to stick to local freelancers when they can, plus you get the advantage of possibly being able to go and work in their office occasionally.
    - gnaritas 14y ago
      You added no additional information; saying agencies instead of houses is not helpful information.
      - stevenklein 14y ago
        I think his answer was more or less in the "contact local agencies part". To add some color, it's likely there are already design/development shops in your city if you live somewhere with any kind of technology presence. If you don't know of any, go to local meetups in the web space and ask around about which ones are local to you. As was previously mentioned, many development shops subcontract out work to local developers. Talking to them at meetups or sending an email letting them know you're interested in working with them is a great way to kick off a conversation that could lead to you working with them.
k-mcgrady 14y ago
>> "Book Clients Playing With House Money" This is good advice. I've found that this and working with solo people paying out-of-pocket works fine (providing you get some assurance of payment - I usually get 50% up front). The worst clients I've experienced tend to be people who run a business with 5-10 employees but still have enough time to work with you directly. I work with these types of businesses least but in 3 years of freelance work I've had 3 screw me over. Here's why I think it happens. People 'playing with house money' will pay whatever it takes to get the job done because they are removed from the money - it isn't theirs. Solo people who want work done (usually a website or app idea) want a completed product after paying you half up front. They don't want to bail because they want something to show for their money. They probably can't afford to lose the 50% and get someone else. The small businesses I mentioned can afford to lose the 50% they pay up front (unlike the solo people). So if what you are doing doesn't meet their exact (constantly evolving) standards they are happy to kill the project. I've found these people constantly make changes to what they want and add extra features (which of course, they say 'just add to the bill'). I try my best to avoid these clients now.
- matthew-wegner 14y ago
  Another reason to play with "house money" is how most corporate budgets work. Yes, the money isn't "theirs"--they don't open up their own wallet to pay you--but they also NEED TO SPEND their budget. A budget that isn't spent at the end of the quarter/year/whatever simply vanishes, and it's actually harder for that person to request a same-size budget next time (they will be asked why they need the money if they didn't even use it all the last time around).
- ww520 14y ago
  People who use "house money" are good clients because their job is to get the project done so it looks good on their portfolio. The house money is just a tool for them to get things done. As long as you deliver, they would love you.
ojiikun 14y ago
The series of posts is great stuff so far. I've long been curious about freelancing, both in considering it for myself during certain phases of my career and in wanting to hire independent folks in the near future. I've so many questions I'd love to ask an experienced freelancer: - Who actually writes the contracts, you or the buyer? - What does a sample contract look like? - Do you use a résumé or something more like a sell sheet when approaching buyers? - In what city are you working? - Big biz vs. startups? - What is your on-site vs. remote work ratio?
- Silhouette 14y ago
  Just to give one perspective: Who actually writes the contracts, you or the buyer? What does a sample contract look like? I joined a professional group that provides a variety of useful services, including starting points for common legal documents written by actual lawyers with actually informed notes about using them. So far I've not had a problem getting any clients to sign some usually simple variation of one of those documents. No-one has ever offered me a contract they'd written themselves; that sort of thing usually happens on larger scale projects than individual freelance/consultancy work. Do you use a résumé or something more like a sell sheet when approaching buyers? Ideally, neither. The best leads often come word-of-mouth via friends/colleagues in the early days, and then via referrals from former clients later as you build up a track record. In what city are you working? I'm based in Cambridge, UK. Some clients are too, others are further away, but all UK-based in my case. Big biz vs. startups? Ideally neither, if you're just starting out and going into freelancing alone. Big biz is full of overheads and is notoriously bad at paying on time, and you won't be in a position to take advantage of the other side where big biz has big budgets available if you get to the right people and present what you offer in the right way. Your mileage may vary, but realistically it probably won't for quite a long time, unless you have some really compelling advantage that most people don't before you turn freelance. Startups have the opposite problem. There is a much higher risk than average of working with people who lack professional experience and have wildly unrealistic expectations, who have relatively little budget to spend and therefore penny pinch at every opportunity, or who want you to put in the same kid of effort as they do when they own the business and you're just a freelancer who can be dumped in the time it takes to write a letter. Obviously those are stereotypes, but if I were you, I would aim for the safer middle ground until you've learned how the game works. There are plenty of small/mid-size businesses who are established enough to have sensible money available but not big enough to have dedicated in-house people for everything. If you can get a few decent clients like that and do good work for them, you have a fair chance of repeat business and/or referrals that brings some financial security. If you keep your ear to the ground, you'll also start to figure out where you can really contribute something valuable, which in turn you'll be able to charge for at rates they consider fair even if they're way above what you thought you were "worth" because you took your old salary and multiplied it by 2. What is your on-site vs. remote work ratio? I work exclusively at my own facilities day to day, though I'm happy to make visit clients for meetings, presentations, on-site testing, or other useful activities that work better if everyone's in the same place. This has a number of major advantages, including not getting dragged into areas outside my role or, heaven forbid, the politics in your client's organisation. Another big advantage is being able to take on multiple projects concurrently, which can be very useful if they are useful projects but no one project consistently provides the equivalent of full-time work. And of course, you get complete freedom in choosing how to set up your working environment, tools, usually working hours, and so on, which is a huge win for work/life balance and was my #1 reason for going freelance originally.
lectrick 14y ago
This is all in fact why I went back to working at (smallish) companies after trying solo gigs out. Other bennies: 1) Coworkers to chat tech with/enjoyable rapport/shared nerd-citement 2) Far clearer separation between workspace and playspace, which is really just a catalyst to get your brain in the right place (similar to one popular argument for wearing suits), but whatever works 3) Better bennies (U.S. healthcare scheme, I hate you, even if I also like not paying 50% of my income to tax) 4) People available to fill your gaps in knowledge or weaknesses 5) The fun of mentoring/helping others 6) More likely to travel for work now and then, which is kind of fun 7) Being at home day-in and day-out got me depressed. In my region on earth we have changing weather and it is not always feasible to get outside. In short, people work for companies for a reason and that reason is not always "i live paycheck to paycheck and have no other option"
- whileonebegin 14y ago
  I agree, freelance development is a lot of overhead. Plus, once your freelance business really gets moving, you end up with 1 or 2 primary clients for all of your work. Eventually, you ditch the other client to focus on the bigger paying one, and what do you end up with? Working projects for a single client, which is the same as an employee, but minus the benefits. And this seems to be the end-goal for most freelance developers, a single stable client, providing enough work to take up 100% of their 9-5 time.
  - blacksmythe 14y ago
    >> end up with 1 or 2 primary clients for all of your work This can work out much better than being an employee, particularly if you have a spouse that gets health benefits.
binarysolo 14y ago
As a fellow consultant with a (somewhat) similar structure, I wonder if you have a boilerplate consulting contract you use? I kinda wanted to get a reality check and what templates others have.
- zenocon 14y ago
  Nolo Press has a book with some standard boilerplate contracts in them. http://www.nolo.com/products/consultant-and-independent-contractor-agreements-CICA.html http://www.nolo.com/products/consultant-and-independent-cont... They are a decent starting point. Sometimes a client will take my boilerplate, or sometimes they will have their own. I'm ok using theirs after I have a lawyer read it. Whoever wrote the contract will have the advantage. Even the Nolo book provides each contract written from the perspective of the client vs. consultant -- keep that in mind.
  - binarysolo 14y ago
    Just used it on a client instead of my nonlegalese word doc -- thanks, great advice!
gte910h 14y ago
8 billable hours a day? Jesus, that's lawyer hours. Try for 5.5-6.5.
- polemic 14y ago
  Yeah, 8 hours is only possible for short stretches on long term secure contracts. And usually that means lower fees. You need a certain amount of time for admin, marketing and maintenance work. From previous experience, 80% productive time is considered high-acceptable and 60% is getting to the low end. Depends on your role as well. Also as a general rule, cost multipliers are important. Standard multiplier of 2.3x of costs (then margin on top) seems to work out about right - longer term / safe / secure projects can go a little lower if you know we can bill consistently, a higher multiplier if the work is less certain / short term.
  - tptacek 14y ago
    Again, you can avoid this whole unproductive discussion by simply charging a day rate.
    - ashray 14y ago
      So would you say that the day rate would be the same as an 8 hour slab ? Or would you charge for only 5 hours.. or how does this work ? I'm curious on how to do a fair calculation on this because, to be honest, I do spend a lot of time (that can't be calculated) thinking about the problem at hand, etc.
      - patio11 14y ago
        If you work on a day, you charge for that day. It is that simple. Work five hours? Charge for a day. Eight? A day. Eleven? It isn't your company and you only owe them eight, do I would avoid making a habit of that, but it is one day. Spend half the day thinking and half doing? Charge for the day. Spend six hours waiting for decision maker to get in for the meeting? Charge for a day.
btilly 14y ago
Another item to consider is what a fair rate is. Let's suppose that a full-time developer is paid $120K/year. (There are developers who get more, a lot who get less, but this gives us a nice round number to work with.) When you add up benefits, taxes, office space, etc, the average employee costs 2x their salary. So that developer probably costs $240K/year. You tend to work about 50 weeks per year, so that's about $4,800/week. You work 5 days/week so that's $960/week. After you get rid of lunch, discussing the weather, HN, etc, you're probably only putting in 6 hours of actual work per day, so that's $160/hour. Therefore an employee who makes $120k/year is likely costing the employer $160/hour. As a contractor you have to bear those costs that employees do not. Plus you have to bear costs such as not getting paid for the time it takes to find more work. Most people who contract do not charge enough. Perhaps after running through these sample numbers, you'll do the calculation for yourself and ask for a more realistic rate for what it costs for you to be a contractor.
- vanni 14y ago
  Thank you for your analysis. Just a typo: $960 per day not per week.
- DeepDuh 14y ago
  I've worked as a Software consultant for a small company known for quality work and I can confirm your numbers. I've been billed for up to 230$/h, however this is Switzerland - on US price levels it should add up with your calculation pretty well.
  - ww520 14y ago
    That's a healthy rate. I guess the company takes a cut as well.
- ww520 14y ago
  Yeah, most people don't bill enough to cover the cost. Remember you are paying your own medical, social security (both employee and employer portions), insurances (professional, worker comp, life), retirement, office, utility, etc. A rough rule of thumb is to charge 2X of what you would be paid as an employee.
senko 14y ago
Getting out of the house and going to a coffee shop helps make sure you don't get distracted by things around the house. Not only this, but separating your work environment from your living environment can help you (a) focus more while working, and (b) not think about work when not (from my own anecdotal evidence). After a few years working from my bedroom, I decided to rent an office a short walk away from my home. It reduced 12 hour work days with 5-6 hours of actual work to ~8 hour work days with ~7 hours of actual work done. YMMV - local Starbucks, coworking space, or a separate room in a house could work equally well, but IMHO, having a dedicated work space definitely helps. (EDIT: corrected typo, "20" -> "12" hour work days).
wglb 14y ago
As Thomas and Patrick frequently say, and I wholeheartedly support, do your work in increments of weeks, not hours. Things will go much better.
deleted 14y ago
[deleted]
tptacek 14y ago
If you have one, work at your local public library instead of a coffee shop. Even though they're usually nice about it, coffee shops don't really want you there, unless they're not doing a lot of business; they're driven by turnover. Your library, on the other hand, needs you there; your usage of the library justifies their budget. I found our Oak Park library to be a better work space than the coffee shop anyways.
- ricardobeat 14y ago
  But libraries don't let you bring coffee in.
  - tptacek 14y ago
    Ours did.
- scootklein 14y ago
  on the contrary, i've had a coffee shop owner tell me to come and stay as long as i want for one simple reason. more people at a coffee shop is validation for the passers-by that have no context for the value of said coffee shop. lot of people being there is the only data point they'll get.
  - djt 14y ago
    I do two things at coffee shops: - go outside the busy times (ie morning and lunch trade peak times). - Tell the owner that if they need the table then to let me know and I dont have any problem moving at all since i know I'm only going to be drinking a few coffees.
- josephcooney 14y ago
  Plus there are some truly amazing library interiors. The state library of NSW is one that springs to mind. A really uplifting setting. [large-ish image, but doesn't do it justice] http://upload.wikimedia.org/wikipedia/commons/d/da/Mitchell_Library,_State_Library_of_NSW.jpg http://upload.wikimedia.org/wikipedia/commons/d/da/Mitchell_...
zenocon 14y ago
Going on 7 years as an independent now doing only corp-to-corp contracts. Full-stack dev. is a necessity. I enjoy it b/c I tend to get bored, so I move project to project and pick up new tech, learn it, build it, and then move on to something different. I worked from home for the longest time, and it can be a lonely endeavor. The best mix I've found is home 75% and 25% on site. You get to interact with real humans once in a while, but go back to no distractions. Friendly tip: If you have small children, forget it. Get an office space. Also: Get a good accountant -- pay yourself a reasonable wage and take the rest in distributions at the end of the year in a tax-deferred retirement account. I aim to retire at 55; so far, I am on target.
- derrida 14y ago
  (offtopic) What do people mean by a 'Full-stack developer', surely, they don't mean a Full-(computer)stack developer: someone that knows a hardware specification language to machine language to assembler to C to a higher-level language, then SQL and Javascript, Ethernet, IP, TCP etc but I suspect they do. I'm not against the terminology, keep using it if you think that applies to you.
  - zenocon 14y ago
    Yes -- in a sense, what people also term "generalizing specialist". Someone who may not necessarily be an expert in technology Y, but they can be very effective in it. If I don't know it: I learn it, and fast...and while I'm studying it, and reading every god-awful book / resource I can find on it, I don't charge the client. This is necessary b/c unless you have a dedicated team of people -- each who is good at a respective thing, you -- as a consultant, will just be expected to get it done...quickly, and with high quality. You can do consulting in your own comfort niche. I choose not to do that.
    - derrida 14y ago
      While I believe you could use all of these technologies when they have been abstracted away into APIs / programming languages etc, I have a hard time believing anybody could understand these technologies to the point of creating abstractions which is what is meant when one says they 'develop in assembly': you expect them to know stuff that, C, for example, abstracts away.
dsolomon 14y ago
This place really needs a downvote feature to quickly call BS on the ficticious salary information that occasionally pops up.
31reasons 14y ago
I have not started consulting yet, but I have a question. In software development we often have to learn new APIs and learn some tools. Can we charge hours for jobs that require some learning or is learning considered personal time ?
- tdfx 14y ago
  As long as you did not misrepresent your experience with said APIs or tools, I think it's perfectly reasonable to bill for time you spend educating yourself in the pursuit of someone else's project.
guelo 14y ago
BTW, if anyone is looking for 1-2 months of HTML/CSS/JS work hit me up, my email is in the profile. Thanks.
__dontom__ 14y ago
whats the CMS of this page called? thanks!
luke_s 14y ago
I'm interested in doing something similar myself. If the HN hivemind could help out, I have a few questions: 1 - How important is it to have some sort of public profile (eg, High ranking StackOverflow account, Github account, well trafficked blog) or public portfolio? I've done lots of good work as an employee but almost all of it is on internal corporate networks. 2 - Where do you find the all important first few customers? Should I be going to every local users group I can find and handing out business cards? Or hitting up sites like http://www.guru.com/ http://www.guru.com/ ? What worked for people? 3 - What size jobs are feasible? I would like to start this on a part time basis while still working my day job. Is it possible to find jobs small enough to keep me working 1 or 2 days a week?
- Sodaware 14y ago
  1 - Nobody has ever asked if I have a GitHub or StackOverflow account. This might be different for high-priced jobs, but for everything I've done it's never come up. Normally a quick email exchange or phone call has been enough. 2 - I found my first client on oDesk, and they referred me to just about everyone else. I haven't used it since, and it's thoroughly depressing to look at how low pay the jobs are. Posting in the HN freelancer topic, and posting an ad on /r/forhire is another good way to get clients. 3 - Whatever you want - there are tonnes of people that need software building (and plenty that don't even realise it). Just remember that a few hours of time can quickly get eaten by emails, phone calls, "can you just check this", bathroom breaks, leg stretching, quick drinks etc. It takes a while to get in a good rhythm.

157 points by stevenklein 14y ago

Some advice: Get some clients before you do this. I tried to go contractor after my last job and didn't make any money as I spent most of my first month getting a client, and the second month finalizing the details and working on the project. Two months for $2500 isn't much if it's your only client. The trouble I encountered was working as a web dev at a marketing agency before. They were strict about working for "potential clients", which meant anybody with money... My advice: Get at least 5 projects lined up for the foreseeable future (next 3 or 4 months) and also save up about six months of money for bills and your normal expenditures minus savings. This will help you invest in a business for at least, 8 to 12 months, working with 5 or 6 projects and tiding your other 6 months with savings will be the worst case scenario. Best case you find more clients and don't even get to touching that money.

psweber 14y ago

I've found that if you charge a day rate and deliver the things you promise, clients will never worry about time. You still need to have the discipline to get things done, but it takes the pressure off making sure you are billable for a certain number of hours.

yogo 14y ago
Daily billing is definitely the way to go. It is a great way to manage risk for both parties versus fixed-price (potential for abuse from the client's end) or hourly (potential for abuse* from the professional's end). Once you have a good idea of what you can complete in a day you can gather requirements and break them up into days resulting in more accurate scopes to work with. From my experience it seems everyone is happy (especially if you throw in daily invoicing). It's easy to avoid deadbeat clients this way and you have more consistent cash flow this way. If not consistent then at the very least it is predictable since you can see how far into the future you can book days. *: The abuse referred to here is for clients to keep requesting changes when they pay fixed-price. They are of the mentality that it is unlimited changes, and it is often difficult to draw the line on what is a billable change with this approach. Hourly can result in a professional delaying things to rack up hours.
tptacek 14y ago
This! I consider it a professional obligation to yell at people who default to hourly billing. Other good things come from day and week rates besides not having to track time; for instance, it incentivizes you to find faster ways to deliver the same work, and makes it easier for you to negotiate scope/price without taking a rate hit.

wasd 14y ago

I can feel a lot of the same sentiment about working at home. I think its psychologically important to separate your work and personal life. Maybe consider creating room which you only go to work or joining shared office. it really works for me.

keithnoizu 14y ago

Good stuff Steve. My last day at microsoft is october 19th and i'll being doing similar. Splitting my time between my existing projects that currently bring in some revenue, working part time as the software architect for greatnonprofits.org and spending the rest of the time consulting.

stevenklein 14y ago
Good luck!

tjtrapp 14y ago

Nice post! I've been thinking about this a lot and glad you wrote about it. I appreciate you sharing your experiences. I completely agree with breaking up your time into blocks. I try to keep my schedule to 4 hours in the morning of heads down coding (9a - 1p), 4 hours in the afternoon of heads down coding (130p - 530p) and 3 or so again at night (8-11/12). The other time is for me to do tasks which are relevant to coding but not actually coding, significant other time, or whatever I need to get done so I can think straight during those coding sessions. I don't answer email while coding, or give in to other distractions. The reason being that I have scheduled time for that and its coming up soon. Anyways, back 2 work ;)

cocoflunchy 14y ago
Are you saying that you actually do 11 hours of coding per day plus a few more hours of other work? It sounds insane to me. Do you work on week-ends too?
- tjtrapp 14y ago
  I code about 8hrs / day. Weekends are mine.

gcp123 14y ago

I've just left a company to do the same-ish thing in marketing strategy. These are some helpful learnings, thank you!

stevenklein 14y ago
Good luck!

quickpost 14y ago

Good advice. How have you been identifying and marketing yourself to the clients paying with "House Money"?

pdenya 14y ago
Funded startups and Ad agencies are often looking for freelancers and a cold email can go a long way.
psweber 14y ago
Yeah, that was the line that stood out to me: "If possible, work with clients who are somewhat removed from the money they're paying you." Going after that type of client often means the work itself isn't as interesting, but it's great advice when you are getting the momentum (and savings account) going.

hackerpolicy 14y ago

You'll only have trouble with unbillable hours if you, well, bill by the hour.

walrus 14y ago
I imagine it takes some time to learn to properly estimate how much to charge for a project. Until then, billing by the hour is a way to build heuristics.
- stevenklein 14y ago
  We're still just starting out and estimating time is always a bit nerve racking. I'm hoping it gets easier as time goes on.
- tptacek 14y ago
  No it doesn't. You simply say "I charge in 1 day increments", and the hourly-billing problem goes away. When you come to the day at the end of the project where you only use 4 hours, you have a very complicated logistical conundrum that after careful analysis and financial modeling you solve by billing the full day because you charge in 1 day increments.
  - devb0x 14y ago
    So Thomas, you always bill like that? I guess I will have to try it. The Southern African market may not respond to it so I will have to think of the upsell.
    - tptacek 14y ago
      We tend towards fixed-price contracts. We don't bill hourly ever.
  - walrus 14y ago
    When you said "No it doesn't", were you responding to my statement that "I imagine it takes some time to learn to properly estimate how much to charge for a project"? Yes, it does. However, your charge-by-the-day method is a great workaround! I'm glad you mentioned it.

benzor 14y ago

As someone who works from home a lot, his advice about working in blocks of time is the most useful to me, as I've started exactly the same thing to keep productivity up. Being able to take breaks and tackle some life chores during the day is an awesome perk of working from home, but you can easily get carried away and miss out on doing any actual paying work.

orangethirty 14y ago

Good stuff. Also, HN is a great source of clients, but you have to be willing to advertise yourself correctly. Many freelancers here write me-too ads that fail to get them noticed. I do attention grabbing ads and them alone have made my practice grow about 500%.

stevenklein 14y ago
I would be interested in reading a blog post on what things work and what don't if you have the time to write it.
- orangethirty 14y ago
  Well, to start you can do the following: 1. Search my comment history. You will see all of the ads I've posted. From the ultra conservative to the crazy "code with me maybe" fiasco that got me more hate mail than Hitler, but also got me a lot of work (a lot). I'm not afraid of being different and of standing out. Though this requires a flame suit. 2. Talk about what potential clients want to read about. I always talk about how my focus is on shipping. It really is. I dont stop working until the damn thing is done and out the door. Turns out, that is not very common with programmers these days. They are too busy dreaming of perfect code and arguing with each other about how Go deals with errors. Like I said, talk about what they want to read about (most of them just want to make sure you can and will deliver). 3.Do write a good headline. My best one so far reads "I ship software." Simple. To the point. And will make them read the rest of the ad. 4. Talk rates right there in the ad. Disqualify people right from the start. You dont want to waste time with people looking to under pay you. Plus you will chase away any dreamer who will gladly give you 5% of his made up company in exchange of "just some code." The higher the rates, the less shit you have to deal with. Honestly. I currently charge $100/hour with a minimum of one week of work. Thats $4000 a week if you want to hire me. But you do get someone who delivers. I have no problem getting paid that amount. 5. Make yourself available. Skype, email, phone. Just answer and take time to talk with clients. Let them know you will listen right there on the ad, and then follow through by listening. 6. Offer them a free 30 minute consultation. This helps both sides because it will give you a good chance to feel the client out, and same for them. Chemistry is very important when doing consulting and a free consultation is a great tool to use for that. Good luck, and get in touch with me through email (in profile) we can always bounce ideas off each other.

bprater 14y ago

One of my suggestions: sub-contract with one or more web development "house". I've been consulting for 15 years -- and it is one of my favorite ways to work. They do all the work of collecting requirements, billing the client, etc. -- and I get a checklist of items that I sit down and work against, often with a distributed team. Do good work and these places will keep you busy, especially when they are overloaded with work for their in-house teams.

slaunchwise 14y ago
Be very careful with this. Web dev companies are NOT playing with house money. Everything they don't spend on you, they get to keep. They tend to be the most likely to argue billables at the minute level, and they always want concessions (like a lower rate or some free time). In my experience it's a false economy.
jyu 14y ago
How do you find these web development "houses"? Seems like a really sweet gig, all the fun stuff without the chasing dead beats for money hassle.
- HyprMusic 14y ago
  Try contacting your local development agencies just making yourself known. They usually need freelancers on hand for when things get too busy, and they are great pay. Agencies tend to stick to local freelancers when they can, plus you get the advantage of possibly being able to go and work in their office occasionally.
  - gnaritas 14y ago
    You added no additional information; saying agencies instead of houses is not helpful information.
    - stevenklein 14y ago
      I think his answer was more or less in the "contact local agencies part". To add some color, it's likely there are already design/development shops in your city if you live somewhere with any kind of technology presence. If you don't know of any, go to local meetups in the web space and ask around about which ones are local to you. As was previously mentioned, many development shops subcontract out work to local developers. Talking to them at meetups or sending an email letting them know you're interested in working with them is a great way to kick off a conversation that could lead to you working with them.

k-mcgrady 14y ago

>> "Book Clients Playing With House Money" This is good advice. I've found that this and working with solo people paying out-of-pocket works fine (providing you get some assurance of payment - I usually get 50% up front). The worst clients I've experienced tend to be people who run a business with 5-10 employees but still have enough time to work with you directly. I work with these types of businesses least but in 3 years of freelance work I've had 3 screw me over. Here's why I think it happens. People 'playing with house money' will pay whatever it takes to get the job done because they are removed from the money - it isn't theirs. Solo people who want work done (usually a website or app idea) want a completed product after paying you half up front. They don't want to bail because they want something to show for their money. They probably can't afford to lose the 50% and get someone else. The small businesses I mentioned can afford to lose the 50% they pay up front (unlike the solo people). So if what you are doing doesn't meet their exact (constantly evolving) standards they are happy to kill the project. I've found these people constantly make changes to what they want and add extra features (which of course, they say 'just add to the bill'). I try my best to avoid these clients now.

matthew-wegner 14y ago
Another reason to play with "house money" is how most corporate budgets work. Yes, the money isn't "theirs"--they don't open up their own wallet to pay you--but they also NEED TO SPEND their budget. A budget that isn't spent at the end of the quarter/year/whatever simply vanishes, and it's actually harder for that person to request a same-size budget next time (they will be asked why they need the money if they didn't even use it all the last time around).
ww520 14y ago
People who use "house money" are good clients because their job is to get the project done so it looks good on their portfolio. The house money is just a tool for them to get things done. As long as you deliver, they would love you.

ojiikun 14y ago

The series of posts is great stuff so far. I've long been curious about freelancing, both in considering it for myself during certain phases of my career and in wanting to hire independent folks in the near future. I've so many questions I'd love to ask an experienced freelancer: - Who actually writes the contracts, you or the buyer? - What does a sample contract look like? - Do you use a résumé or something more like a sell sheet when approaching buyers? - In what city are you working? - Big biz vs. startups? - What is your on-site vs. remote work ratio?

Silhouette 14y ago
Just to give one perspective: Who actually writes the contracts, you or the buyer? What does a sample contract look like? I joined a professional group that provides a variety of useful services, including starting points for common legal documents written by actual lawyers with actually informed notes about using them. So far I've not had a problem getting any clients to sign some usually simple variation of one of those documents. No-one has ever offered me a contract they'd written themselves; that sort of thing usually happens on larger scale projects than individual freelance/consultancy work. Do you use a résumé or something more like a sell sheet when approaching buyers? Ideally, neither. The best leads often come word-of-mouth via friends/colleagues in the early days, and then via referrals from former clients later as you build up a track record. In what city are you working? I'm based in Cambridge, UK. Some clients are too, others are further away, but all UK-based in my case. Big biz vs. startups? Ideally neither, if you're just starting out and going into freelancing alone. Big biz is full of overheads and is notoriously bad at paying on time, and you won't be in a position to take advantage of the other side where big biz has big budgets available if you get to the right people and present what you offer in the right way. Your mileage may vary, but realistically it probably won't for quite a long time, unless you have some really compelling advantage that most people don't before you turn freelance. Startups have the opposite problem. There is a much higher risk than average of working with people who lack professional experience and have wildly unrealistic expectations, who have relatively little budget to spend and therefore penny pinch at every opportunity, or who want you to put in the same kid of effort as they do when they own the business and you're just a freelancer who can be dumped in the time it takes to write a letter. Obviously those are stereotypes, but if I were you, I would aim for the safer middle ground until you've learned how the game works. There are plenty of small/mid-size businesses who are established enough to have sensible money available but not big enough to have dedicated in-house people for everything. If you can get a few decent clients like that and do good work for them, you have a fair chance of repeat business and/or referrals that brings some financial security. If you keep your ear to the ground, you'll also start to figure out where you can really contribute something valuable, which in turn you'll be able to charge for at rates they consider fair even if they're way above what you thought you were "worth" because you took your old salary and multiplied it by 2. What is your on-site vs. remote work ratio? I work exclusively at my own facilities day to day, though I'm happy to make visit clients for meetings, presentations, on-site testing, or other useful activities that work better if everyone's in the same place. This has a number of major advantages, including not getting dragged into areas outside my role or, heaven forbid, the politics in your client's organisation. Another big advantage is being able to take on multiple projects concurrently, which can be very useful if they are useful projects but no one project consistently provides the equivalent of full-time work. And of course, you get complete freedom in choosing how to set up your working environment, tools, usually working hours, and so on, which is a huge win for work/life balance and was my #1 reason for going freelance originally.

lectrick 14y ago

This is all in fact why I went back to working at (smallish) companies after trying solo gigs out. Other bennies: 1) Coworkers to chat tech with/enjoyable rapport/shared nerd-citement 2) Far clearer separation between workspace and playspace, which is really just a catalyst to get your brain in the right place (similar to one popular argument for wearing suits), but whatever works 3) Better bennies (U.S. healthcare scheme, I hate you, even if I also like not paying 50% of my income to tax) 4) People available to fill your gaps in knowledge or weaknesses 5) The fun of mentoring/helping others 6) More likely to travel for work now and then, which is kind of fun 7) Being at home day-in and day-out got me depressed. In my region on earth we have changing weather and it is not always feasible to get outside. In short, people work for companies for a reason and that reason is not always "i live paycheck to paycheck and have no other option"

whileonebegin 14y ago
I agree, freelance development is a lot of overhead. Plus, once your freelance business really gets moving, you end up with 1 or 2 primary clients for all of your work. Eventually, you ditch the other client to focus on the bigger paying one, and what do you end up with? Working projects for a single client, which is the same as an employee, but minus the benefits. And this seems to be the end-goal for most freelance developers, a single stable client, providing enough work to take up 100% of their 9-5 time.
- blacksmythe 14y ago
  >> end up with 1 or 2 primary clients for all of your work This can work out much better than being an employee, particularly if you have a spouse that gets health benefits.

binarysolo 14y ago

As a fellow consultant with a (somewhat) similar structure, I wonder if you have a boilerplate consulting contract you use? I kinda wanted to get a reality check and what templates others have.

zenocon 14y ago
Nolo Press has a book with some standard boilerplate contracts in them. http://www.nolo.com/products/consultant-and-independent-contractor-agreements-CICA.html http://www.nolo.com/products/consultant-and-independent-cont... They are a decent starting point. Sometimes a client will take my boilerplate, or sometimes they will have their own. I'm ok using theirs after I have a lawyer read it. Whoever wrote the contract will have the advantage. Even the Nolo book provides each contract written from the perspective of the client vs. consultant -- keep that in mind.
- binarysolo 14y ago
  Just used it on a client instead of my nonlegalese word doc -- thanks, great advice!

gte910h 14y ago

8 billable hours a day? Jesus, that's lawyer hours. Try for 5.5-6.5.

polemic 14y ago
Yeah, 8 hours is only possible for short stretches on long term secure contracts. And usually that means lower fees. You need a certain amount of time for admin, marketing and maintenance work. From previous experience, 80% productive time is considered high-acceptable and 60% is getting to the low end. Depends on your role as well. Also as a general rule, cost multipliers are important. Standard multiplier of 2.3x of costs (then margin on top) seems to work out about right - longer term / safe / secure projects can go a little lower if you know we can bill consistently, a higher multiplier if the work is less certain / short term.
- tptacek 14y ago
  Again, you can avoid this whole unproductive discussion by simply charging a day rate.
  - ashray 14y ago
    So would you say that the day rate would be the same as an 8 hour slab ? Or would you charge for only 5 hours.. or how does this work ? I'm curious on how to do a fair calculation on this because, to be honest, I do spend a lot of time (that can't be calculated) thinking about the problem at hand, etc.
    - patio11 14y ago
      If you work on a day, you charge for that day. It is that simple. Work five hours? Charge for a day. Eight? A day. Eleven? It isn't your company and you only owe them eight, do I would avoid making a habit of that, but it is one day. Spend half the day thinking and half doing? Charge for the day. Spend six hours waiting for decision maker to get in for the meeting? Charge for a day.

btilly 14y ago

Another item to consider is what a fair rate is. Let's suppose that a full-time developer is paid $120K/year. (There are developers who get more, a lot who get less, but this gives us a nice round number to work with.) When you add up benefits, taxes, office space, etc, the average employee costs 2x their salary. So that developer probably costs $240K/year. You tend to work about 50 weeks per year, so that's about $4,800/week. You work 5 days/week so that's $960/week. After you get rid of lunch, discussing the weather, HN, etc, you're probably only putting in 6 hours of actual work per day, so that's $160/hour. Therefore an employee who makes $120k/year is likely costing the employer $160/hour. As a contractor you have to bear those costs that employees do not. Plus you have to bear costs such as not getting paid for the time it takes to find more work. Most people who contract do not charge enough. Perhaps after running through these sample numbers, you'll do the calculation for yourself and ask for a more realistic rate for what it costs for you to be a contractor.

vanni 14y ago
Thank you for your analysis. Just a typo: $960 per day not per week.
DeepDuh 14y ago
I've worked as a Software consultant for a small company known for quality work and I can confirm your numbers. I've been billed for up to 230$/h, however this is Switzerland - on US price levels it should add up with your calculation pretty well.
- ww520 14y ago
  That's a healthy rate. I guess the company takes a cut as well.
ww520 14y ago
Yeah, most people don't bill enough to cover the cost. Remember you are paying your own medical, social security (both employee and employer portions), insurances (professional, worker comp, life), retirement, office, utility, etc. A rough rule of thumb is to charge 2X of what you would be paid as an employee.

senko 14y ago

Getting out of the house and going to a coffee shop helps make sure you don't get distracted by things around the house. Not only this, but separating your work environment from your living environment can help you (a) focus more while working, and (b) not think about work when not (from my own anecdotal evidence). After a few years working from my bedroom, I decided to rent an office a short walk away from my home. It reduced 12 hour work days with 5-6 hours of actual work to ~8 hour work days with ~7 hours of actual work done. YMMV - local Starbucks, coworking space, or a separate room in a house could work equally well, but IMHO, having a dedicated work space definitely helps. (EDIT: corrected typo, "20" -> "12" hour work days).

wglb 14y ago

As Thomas and Patrick frequently say, and I wholeheartedly support, do your work in increments of weeks, not hours. Things will go much better.

deleted 14y ago

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tptacek 14y ago

If you have one, work at your local public library instead of a coffee shop. Even though they're usually nice about it, coffee shops don't really want you there, unless they're not doing a lot of business; they're driven by turnover. Your library, on the other hand, needs you there; your usage of the library justifies their budget. I found our Oak Park library to be a better work space than the coffee shop anyways.

ricardobeat 14y ago
But libraries don't let you bring coffee in.
- tptacek 14y ago
  Ours did.
scootklein 14y ago
on the contrary, i've had a coffee shop owner tell me to come and stay as long as i want for one simple reason. more people at a coffee shop is validation for the passers-by that have no context for the value of said coffee shop. lot of people being there is the only data point they'll get.
- djt 14y ago
  I do two things at coffee shops: - go outside the busy times (ie morning and lunch trade peak times). - Tell the owner that if they need the table then to let me know and I dont have any problem moving at all since i know I'm only going to be drinking a few coffees.
josephcooney 14y ago
Plus there are some truly amazing library interiors. The state library of NSW is one that springs to mind. A really uplifting setting. [large-ish image, but doesn't do it justice] http://upload.wikimedia.org/wikipedia/commons/d/da/Mitchell_Library,_State_Library_of_NSW.jpg http://upload.wikimedia.org/wikipedia/commons/d/da/Mitchell_...

zenocon 14y ago

Going on 7 years as an independent now doing only corp-to-corp contracts. Full-stack dev. is a necessity. I enjoy it b/c I tend to get bored, so I move project to project and pick up new tech, learn it, build it, and then move on to something different. I worked from home for the longest time, and it can be a lonely endeavor. The best mix I've found is home 75% and 25% on site. You get to interact with real humans once in a while, but go back to no distractions. Friendly tip: If you have small children, forget it. Get an office space. Also: Get a good accountant -- pay yourself a reasonable wage and take the rest in distributions at the end of the year in a tax-deferred retirement account. I aim to retire at 55; so far, I am on target.

derrida 14y ago
(offtopic) What do people mean by a 'Full-stack developer', surely, they don't mean a Full-(computer)stack developer: someone that knows a hardware specification language to machine language to assembler to C to a higher-level language, then SQL and Javascript, Ethernet, IP, TCP etc but I suspect they do. I'm not against the terminology, keep using it if you think that applies to you.
- zenocon 14y ago
  Yes -- in a sense, what people also term "generalizing specialist". Someone who may not necessarily be an expert in technology Y, but they can be very effective in it. If I don't know it: I learn it, and fast...and while I'm studying it, and reading every god-awful book / resource I can find on it, I don't charge the client. This is necessary b/c unless you have a dedicated team of people -- each who is good at a respective thing, you -- as a consultant, will just be expected to get it done...quickly, and with high quality. You can do consulting in your own comfort niche. I choose not to do that.
  - derrida 14y ago
    While I believe you could use all of these technologies when they have been abstracted away into APIs / programming languages etc, I have a hard time believing anybody could understand these technologies to the point of creating abstractions which is what is meant when one says they 'develop in assembly': you expect them to know stuff that, C, for example, abstracts away.

dsolomon 14y ago

This place really needs a downvote feature to quickly call BS on the ficticious salary information that occasionally pops up.

31reasons 14y ago

I have not started consulting yet, but I have a question. In software development we often have to learn new APIs and learn some tools. Can we charge hours for jobs that require some learning or is learning considered personal time ?

tdfx 14y ago
As long as you did not misrepresent your experience with said APIs or tools, I think it's perfectly reasonable to bill for time you spend educating yourself in the pursuit of someone else's project.

guelo 14y ago

BTW, if anyone is looking for 1-2 months of HTML/CSS/JS work hit me up, my email is in the profile. Thanks.

__dontom__ 14y ago

whats the CMS of this page called? thanks!

luke_s 14y ago

I'm interested in doing something similar myself. If the HN hivemind could help out, I have a few questions: 1 - How important is it to have some sort of public profile (eg, High ranking StackOverflow account, Github account, well trafficked blog) or public portfolio? I've done lots of good work as an employee but almost all of it is on internal corporate networks. 2 - Where do you find the all important first few customers? Should I be going to every local users group I can find and handing out business cards? Or hitting up sites like http://www.guru.com/ http://www.guru.com/ ? What worked for people? 3 - What size jobs are feasible? I would like to start this on a part time basis while still working my day job. Is it possible to find jobs small enough to keep me working 1 or 2 days a week?

Sodaware 14y ago
1 - Nobody has ever asked if I have a GitHub or StackOverflow account. This might be different for high-priced jobs, but for everything I've done it's never come up. Normally a quick email exchange or phone call has been enough. 2 - I found my first client on oDesk, and they referred me to just about everyone else. I haven't used it since, and it's thoroughly depressing to look at how low pay the jobs are. Posting in the HN freelancer topic, and posting an ad on /r/forhire is another good way to get clients. 3 - Whatever you want - there are tonnes of people that need software building (and plenty that don't even realise it). Just remember that a few hours of time can quickly get eaten by emails, phone calls, "can you just check this", bathroom breaks, leg stretching, quick drinks etc. It takes a while to get in a good rhythm.