A new session of Beth Temple‘s popular class on successful freelancing, Be Your Own Boss, will be held at The Hired Guns Academy next Thursday, May 5th. We thought we’d give you a taste by asking Beth to discuss the three most common questions that have popped up in previous sessions.
“How (and how much) should I charge?” Hands down, this is the top question. Of course, if I had an exact answer to the “much” question I would start a side business and add it to my own revenue line! The “how much” question usually refers to an hourly rate, which affects the “how should I charge?” end result. So let’s break it down.
The classic ways to charge are by the hour, by the project, and by a retainer fee. All methods require some knowledge of what an hour costs you in relation to how much a client is willing to pay for that same hour. Start by estimating an hourly rate based on what you were making at your full-time job using this equation: salary / 2000 (hours) + hourly costs of benefits = hourly rate. Then estimate the hours it would take to complete the project, and charge a project fee based on the total hours multiplied by your per-hour rate. (There are a lot of other variables that can come into play, of course, and I go over them in the class.)
Once you start the project, be sure to track your actual hours. At the end compare the number of hours you thought you’d work with what you did work. You will likely come up short that first time–but over time you’ll easily make that up.
“Should I incorporate?” This is a complicated question; you’ll need to do your own research. There’s no easy answer, and I’m not a lawyer. The bottom line is that you want to have some sort of legal designation to protect yourself and your assets. The stories I tell about what can happen when you aren’t protected are usually enough to scare anyone into doing a little reading. You need to know the costs and benefits between being a limited liability corporation (LLC) and an S-Corporation. (Although I don’t necessarily endorse mycorporation.com, its chart does a good job of laying out the various forms of incorporation.)
Finally, most people want to know the downside: “What’s the hardest part of being your own boss?” This is a very personal question–every independent has his or her own Achilles’ heel. For some of us it’s the isolation (to combat this, get out and have coffees and lunches, at least five times a week). For others it’s looking and asking for work (have targeted coffees, lunches, and meetings that include other independents whom you can partner with). Other independent workers struggle with organizing their day or their work. For help with this, take a time management class or get an adviser. And some potential freelancers can’t imagine working without a team. For this, keep in mind that being independent does NOT mean “being by yourself.” It’s a rare project in which I don’t work with a team of smart and engaging people. They bring me in to do my part, and together we make a whole. That’s one of the most rewarding parts of being your own boss!
To find out more about becoming independent and to sign up for Beth’s class: Be Your Own Boss. Image: Justin See/flickr.
