Monday, August 15, 2016

3 Top Financial Concerns Freelancers Have To Deal With

"With great power comes great responsibility." Whosoever said that first, whether it was Uncle Ben or not, must have realized the implication of having great power through his own experience. People who lacks experience, understanding and empathy wouldn't be able to say something as strong as that statement with conviction.

Why did I brought that up? Several years ago, while working in the corporate world, I often hear colleagues complained about their career and salary; they would put their blame to their bosses. When I chose to work freelance, I realize that this career path have given freelancers flexibility and independence that the 8 to 5 corporate job couldn't provide--and that I equate to power, my friends. But then again, power comes with responsibility. It is something that we can't enjoy without repercussion. The financial is just one of the many aspects of the career that freelancers have to take charge by themselves. If it fails, there is no one else to blame but yourself.

In this blog post, I discuss the top 3 of the financial-related issues that I personally come face-to-face as a freelancer. I assume most freelancers deal with the same issues and it is worth discussing because it's a big deal,

1.  How to price your freelance service

When I started my freelance career, I was clueless on how to set my freelance rate. I thought that this issue would losen up as I stayed longer in the business. I never knew that I would still be facing the same question until now.

Not knowing how to rate your freelance service is pretty understandable when you are still starting out. Your paycheck from your previous 8-hour job is not a good basis to compute your rate as a freelancer. There are just so many things you have to pay on your own to operate your business. You have to consider all of those stuff plus the kind of lifestyle you want to live.

The dilemma on how to price your freelance service is not because you really don't know how much but because of the status quo. Our colleagues in the industry have set some standards on the rate and somehow we are expected to follow it. If not, some clients would say that they could get the same service at a cheaper price. Well, it could be a strategy and it is up to you to take the bait.

Here is a summary of the 2016 freelancer salary survey of Freelancing,ph. This is a very helpful guide on how to set your own price.

Credit: Freelancing,ph

Another reason for a dilemma is out of frustration or fear. Let's be honest, a freelance journey is not always a happy one. You could experience some dry spell which might force you to lower your rate.

I hate to admit this but I experience months of drought which actually force me to change my strategy and compromise my rate. It is not exactly a favorable decision now but I know it would be later on as I also take the time to learn new skills and expand my knowledge.

2.  Should you negotiate your rate

Lowering your rates or giving discounted price is discouraged in the industry because it is like devaluing your service. Lowering your rates, especially if it is too low, may create a ripple effect to the freelance community. When you are setting a low price, you are also pulling other freelancers down and tolerate the unfair practices of some clients/employers.

However, budgetary concern of your client may lead you to reconsider. Again,this could be true or it could be a bait but some client would say that they are only budgeted for a certain amount. Saying NO to his dictated price could be tough when you are desperate to have a project.

3. Raising your freelance rate

Rate increase is a freelance discretion but it is something that you have to consider doing periodically.

Here are some of the reason why you should raise your freelance rate and why you deserve it:
  • Cost of living increase
  • You are working long hours but you are not getting anywhere
  • Your rate is low compared to your colleagues
  • You need money for your health insurance and retirement fund
  • You need to upgrade your PC or office equipment
  • You acquired new skills
  • You offer additional service
Some clients would ask you why the increase or why such rate. Be ready to justify it. I've been there and it is quite tough. I actually lose some potential clients along the way but I think that is really how it is.

Share your thoughts about this post. Feel free to write your comment. Thanks

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