Finance Series IV: How to Thrive as a Freelancer

In the past few weeks, I’ve walked you through how I handle money as a freelancer - from my pricing formula to best banking practices. If you haven’t read my first three Finance Series articles, I would go back and read those now:

• Finance Series I: My Pricing Formula

• Finance Series II: How to Price Your Freelance Services

• Finance Series III: Getting Paid as a Freelancer

Today, I’d like to discuss how to make a healthy living as a freelancer. This article is all about how to prosper as a freelancer - which means consistently raising your rates, finding clients, and keeping your clients happy.

How to Raise Your Rates

In my opinion there are two ideal ways to raise your rates:

1. Gain years of experience

2. Acquire new skills

In Series I, I explained how you can charge around $5 extra per hour for every year experience you have. To gain years of experience, you just need stick around and keep at it. Surprisingly, this is harder than it sounds. A lot of freelancers go back to office jobs, because owning your own business is not easy. It’s all about staying positive, and knowing that every year will get better. Also, keeping healthy, sustainable habits is key. For my thoughts on this, check out my article on Happiness Habits for Creatives.

The second way to increase your rates is to acquire new skills. This is my favorite, because your rate can go up much faster this way. If you know how to do things other designers don’t, you will be more sought after. This is why it’s so important to reinvest in yourself. There’s no better way to spend your hard earned money than on classes, or conferences.

I will note that you can increase your rate if you move to a larger city too. However, existing clients may not like this if you already work with them remotely. While I think people in larger cities should make more, I would try to find another way to justify increasing your rate with existing clients. This one really only works with new clients.

When to Raise Your Rates

Obviously, you don’t wait to raise your rates on clients every year. This is a great way to scare them off and create confusion. I try to raise my rates every 2-3 years, or whenever a natural opportunity presents itself. You will know it’s time to raise your rates when you have more work than you know what to do with.

If I decide it’s time to raise my rates, I will obviously charge any new clients my new rate. However, I try to be very tactful in how I increase my rates with existing clients. A great time to increase your rates is at the new year, or when you’ve been given additional responsibilities. Maybe you have acquired new skillset they are taking advantage of, and this justifies an increase. Whatever you do, tread lightly. Try to put yourself in their shoes, and understand how they might feel.

Finding Clients Who Pay Well

I could do an entire post on this but, for the sake of this article, I’ll keep it short. The way I’ve succeeded as a freelancer is to find a handful of larger clients and nurture long-term relationships with them. A lot of these clients are contacts of contacts from my days spent in corporate. This is why it’s so important to have a few years of office work before freelancing. It’s a great place to meet people and get your name out there. Eventually, everyone you work with will disperse and you’ll have an entire list of contacts at various companies.

The biggest lesson I’ve learned is that you don’t want to waste your time with smaller clients who don’t have budgets. In the beginning, you may need to take whatever work you can get. However, never waste marketing efforts on these types of clients. Always be aiming for mid to large-sized companies with a lot of employees. One large client could pay your bills for a year. These clients are harder to find, but they are worth the effort. The best way to meet these clients are through LinkedIn or word-of-mouth.

Eventually, you’ll need to start saying no to clients who don’t meet your criteria. At this point in my freelance career, I say no more than I say yes. For instance, I don’t do branding projects because it never works out well for me. The client ends up happy, but I feel taken advantage of. Branding projects tend to mean start-up, and start-ups usually mean the client doesn’t have money and is super invested in the project. It’s a recipe for disaster. That being said, if Nike asked me to redo their logo, I wouldn’t say no :) Just be choosy about who you work with. This is key to growing your freelance business. The sooner you can start saying no to bad clients, the better.

Nurturing Client Relationships

This is actually quite simple. I have a few rules I live by, and it’s worked out really well for me:

1. Work 9-5 hours: You need to work when the client is available. I know this goes against what a lot of freelancers do, but it’s the recipe for success. No client wants to get e-mails or texts from you at midnight. Also, if a clients sends you an e-mail, it shouldn’t take you all day to respond. I try to be as available as I can without sacrificing my own sanity. The upside to these hours is that I can usually shut my office door at 5 or 6 pm when the client stops working. This rule is also key to good work life balance, so it’s win-win.

2. Be pleasant to work with: This means maintaining your composure, even when you’re frustrated. No client wants to work with a stressed out basket case. I try to be a force of calm in their hectic lives. I’m always nice, and I always have it together. This also means not bothering them too much, but just enough. My rule is that I never want the client to ask about the status of something. I will always try to message them first, so they know I’m on top of things. Also, you never want to be too desperate when it comes to money or getting paid. Clients can sense desperation, and it’s not a good look. It will seem like you don’t have enough work, and ruin your credibility.

3. Be organized and meticulous: If a client asks for a file, it should take you less than a minute to find it. This also means keeping your file versions organized. Spellcheck your e-mails and documents. You will miss things once in a while, but try to look over your work several times before sending. A lot of freelancers don’t check their work enough, and make silly mistakes. The client should think you are the most organized, meticulous person in the world.

I’ve cultivated these rules through trial and error, and client feedback. If you do the three things I’ve listed above, I promise you’ll be turning down work left or right. It’s rare to find freelancers who have mastered these skills.

Having a Healthy Relationship with Money

I believe everyone has at least a little baggage when it comes to money. Because of this, it’s important to be honest about what success means to you. We have to block out what society has told us we should want, and ask our inner voice. You can reference my article here on how to Define Success on Your Own Terms.

If you think success is money, there may be more to it than that. For me, success is freedom and experience. It’s having freedom to work when and where I want, and enough money to have all the experiences I want to have. That’s why freelancing is the perfect career for me. I don’t want a mansion, but a cozy home. I don’t want a sports car, because I like my SUV. I’m not judging you one bit if you want those things. Success means something different to everyone. Once I defined my version of success, I realized I didn’t need much money to be happy. Since letting go of this notion, I’ve actually increased my yearly salary a lot without feeling like I have to try so hard.

I’ll say one last thing to wrap up this finance series. I believe that money is energy. In order for money to flow in, you can’t be too attached to what you have. By that, I don’t mean frivolous spending, but using your money for good. The more generous and giving you can be with your money - whether through self-love or showing love to others, the more that will flow in. I believe this with every fiber of my being, because I’ve seen it in action. For fun, try giving something to someone else today and see what comes your way in the next week. I think you’ll be surprised! The most generous people I know are also the most financially successful, and I don’t think that’s a coincidence.