The freelancer’s biggest worry: Am I losing money when I bid on projects?
I have always been a little vague about numbers. One result of this vagueness is a peculiar amnesia about how much time I spend on any activity, including work activities. With such a dysfunctional view of time, it is a miracle that I have survived as a freelancer.
After I read Laurie Lewis’s What to Charge: Pricing Strategies for Freelancers and Consultants (2nd edition) recently, I now understand that my ignorance is costing me money when bidding for work on a project basis. Lewis suggests that as a general practice, we should log EVERY activity on every current project and then mine those logs to understand more clearly how long the tasks of a prospective project might take.
You can see how to do this in Chapter 3, where she explains how to use these logs to estimate any new project. Laurie argues: “For six months, keep task-oriented logs on every project you do, whether you are paid by the hour, the day, the job, or whatever. After you’ve used the information in your logs to price other jobs and to manage your business better, you will be convinced that the little bit of record-keeping effort was totally worthwhile” (p. 34).
I’m convinced! Before I had read this book, I had just estimated and bid a training customization at 3 hours―but it required 13 hours. Of course, I couldn’t charge for the 10 extra hours. You can bet that I will use this painful experience to bid more realistically next time.
Chapter 8 shares some excellent negotiating tactics. One that I have used with success appears on page 96: “Call your suggested project rate a cap, and say you will try to make the final bill less.” Another strategic suggestion is not to suggest your price right away―continue to ask questions and maybe they will reveal their budget for the project. In any case, you’ll get more insight into the project before you commit to a price.
I was also fascinated with her triple-scenario, multiple-rate, task-based estimating method; Lewis claims “The more numbers, the better” (p. 67). She suggests that you prepare three time-estimate scenarios and she even nicknames them:
- Everything goes exceptionally smoothly (Cream Puff)
- The job is fairly typical (Average)
- Every task is more complicated than usual (Job From Hell)
By projecting different rates and possible scenarios, you provide yourself with room to negotiate based on what you understand about the project and your client’s budget. You will be able to more accurately bid jobs so that you get paid a fair rate.
Who can learn from this book
Lewis’s book can help three audiences: new freelancers, experienced freelancers, and employees. New freelancers will get a glimpse into a rational method of setting rates and negotiating. Experienced freelancers will understand the value of keeping detailed task logs. (This practice had always seemed so compulsive to me, but now I am a convert). Employees will learn how (and why) to keep a task log that can help them justify time estimates for projects that management may be underestimating; they will also learn some negotiating tips and tactics for their next raise or job negotiation.
What if you don’t have time to go through the exercises suggested above? Lewis offers Freelance Fee Setting: Quick Guide for When a Client Demands a Price NOW on Kindle ($9.99 at this writing).
© 2016 The Text Doctor LLC