Ask HN: What mistakes did you make when starting as a consultant/freelancer?
What was the specific mistake, what did you learn from it, and how did you change the way you do business as a result?
For example, I was told by someone who started a project without taking an advance, only for the client to decide not to pay. So he now refuses to take on a project without at least 30% advance.
What lessons did you learn the hard way?
I'm setting up my own consulting practice: kartick.org and would like to learn from other people's mistakes rather than repeating them myself.
275 comments
[ 2.8 ms ] story [ 223 ms ] threadMany times it wouldn't even be my underestimating but rather the clients changing their plans halfway through and I would end up losing out rather than risking having them give me a bad review.
It is always better to estimate high then charge less than the other way around.
If you don't get a job because your too expensive don't be too upset, don't sell yourself short. IMHO it's better to not get the job than to work your fingers to the bone, miss out on other jobs and get burnt out only to go broke in the end.
The freakonomics podcast had a good episode on the topic this year [2]. There's an amusing quote by Daniel Kahneman in the episode that brings me some comfort: "If you realistically present to people what can be achieved in solving a problem, they will find that completely uninteresting. You can’t get anywhere without some degree of over-promising."
[1]: https://en.m.wikipedia.org/wiki/Planning_fallacy
[2]: http://freakonomics.com/podcast/project-management-rebroadca...
A significant amount of your income earned is gained through having someone walk you through handling taxes & health insurance. I'm not suggesting cheating on taxes. There are common practices such as knowing how to best incorporate your business for your situation. How to best pay yourself (dividends vs income) & how to handle your personal & company expenses. This can easily make a difference of between 20-30% of your income.
By a good person, I mean someone willing to sit with you for over an hour & understand you family situation, what expenses you have & what expenses you plan to have as a business. Someone who will also sit down with you once or twice a year & re-discuss as well.
This points out another good tip: find a network of other software consultants that you can trust and ask questions of. I found mine, years ago, by keeping in touch with past colleagues; some of them had gone independent. Now I'd probably look on a local slack and organize a few lunches.
Do they seem like they care about your best interest?
Are they explaining things or making it sound over complicated?
Are they trying to sell you on services or nickel & dime you.
Remember, you can always fire them & go somewhere else. It's why I also suggested going to two different people. They're fairly cheap for small businesses.
So when it comes to hiring someone where I don't get a personal reference I always look for this, I also start with professional association member lists and or their referal services.
Most good accountants will provide you with a free consultation at their office or at the very least over the phone, just don't get hung up on fancy clothes and expensive furniture as that can all be just a facade.
The best accountant I ever had wore jeans and plaid shirts, drove a twenty year old car and his desk was always stacked with papers but he knew his stuff and was a huge part of my success, unfortunately he retired but again as a good accountant he referred me to another account before he retired.
Most of all
Recommendation
Imagine that I run two firms - one that provides primary top-level advice, guidance, etc. here in the states, and with the other doing some or all of the implementation work in a U.S. territory like Puerto Rico. Much of the profits can end up in PR, and when your continental entity needs cash it can borrow it from your PR-entity at a decent interest rate to further reduce states-based taxable income. You don't really even need to be a citizen of PR for that to begin working. That's one of innumerable ways to reduce your tax burden here. An ambitious accounting and legal team can help you ensure that you keep as much of your total billings as possible.
We don't do this - we're too small and due to ambitious growth we end up eating most or all of our earnings each year anyway. Definitely seen it before.
I don't believe it's dysfunctional for this particular reason. There are for sure trade-offs between simplification & trying to optimize for the best outcome. A simpler tax code would be nice but then people on all sides of the political aisle would start saying we should really give X a break for Y reasons and that's how it seems to get complicated.
There is literally a 20% tax break for most small businesses this year in the US.
Healthcare can be cut in half if you are below certain requirements but make a $1 more & you pay the whole bill. This one I agree seems silly. Though it's maybe to simplified & should be more complex with a sliding scale.
A popular move for freelancers is to start an S-Corp LLC where you pay yourself a fair wage compared to others in the industry. This money gets taxed hard. Harder personally for you than if you worked for someone else. You can pay yourself dividends though with any extra money your earn as long as it's less than your wage income. This money gets taxed much less.
How you invest your money is also taxed all sorts of different ways.
Note - I'm not a tax professional & the above is just my understanding. Someone who is a professional or has more experience would give better advice hence my original post.
The cheaper (with AI and automation) it gets for IRS to chase for transfer pricing violations, the more likely it is to get a fine.
However it is a pretty simple one off step to incorporate, which your accountant should handle easily for you. After that optimise to maximize cashflow, and don't get excited about other tax savings. Some people get bogged down trying to save little pieces of tax by, for instance, buying assets they don't really need. Optimise for best cashflow. Optimise for best cashflow. There I said it three times. I am a finance professional who has held fc roles. I think about tax very rarely. I think about cashflow constantly.
Optimise cashflow for consultants:
Charge more Charge up front If you supply anything make a margin on it, and get paid upfront Bill on time Bill on time. Seriously stop working and write your bill out. A well functioning finance department at the client will pay all authorised invoices around the due date. Authorisation takes time, get in the queue early. Chase your debts immediately, if you have large bills due for payment call your clients accounts payable (know who this is) and ask them if they have the bill and ask them to confirm what date it will be paid on and the amount. Send statements too. I see this every day, where someone is waiting for co to pay them but co has no record of the invoice, it is in spam, in the wrong persons inbox etc. AP departments don't mind being chased, they expect it, it is their job, don't be shy!
Copy your bills directly to accounts payable as well as your direct contact. AP are generally good at chasing internal people for things they know about
And don't be the cheap client yourself in that regard 120€/hour for a good/excellent freelance accountant, I never want to go back to less experienced/professional/passionate ones.
Some examples: When you open a one person business in France there is a program to give you a 0% tax rate in the first year, but you need to apply and for that you need to know it exists.
Employing yourself can cost you 70% taxes. At the start when you rates might be low you can pay around 25% with the right corporate structure, instead of up to 45%.
edit: typo
You might not want an out of state accountant unless they're familiar with the peculiarities of your state (or even city)
Pay your taxes on time (quarterly), assuming you are US based and on a 1099. Put that money away as soon as possible with ea. payment - just like an employer were withholding it.
I managed my finances poorly, and it gets increasingly difficult to catch up. All good now but was the most expensive lesson I learned.
Edit: seeing other replies here, I would meet with a tax/financial person from the start.
But I would also find a good accountant in advance.
The 21% will always be less, because you also have to pay for other things that include tax. So that (should) never be higher. In the end you've put more aside then you have to pay so that's a nice bonus.
With regards to the income tax, in The Netherlands you pay +/- 37.1% till 68.507eu, after that you pay 49,50% for everything that is above the 68k. So if I put away 50% for every euro I earned I'm sure that at the end of the year I've got a nice bonus and don't have to pay more then I put aside. (For other dutch people, I'm using the new tax brackets that start in 2020.)
I echo the advice to get a good accountant, but "estimating" is what I've been doing for the past 5 years. I had an unexpectedly good year a few years ago and wound up underpaying on my quarterly taxes. The IRS and the State of NY both charged me a small fine and I just sucked it up and paid it. It's quite a racket they've got going on considering income tax was supposed to be a temporary measure to get us through WWI.
Here's what I figured out those many years ago. Clients who are cheap are also really into wasting your time and trying to micromanage the project. Clients who will pay a lot more also give you latitude to do your job (after all they're paying you to be the expert).
Keep jacking up your rates with each new client until you hit a ceiling. Whatever you're charging now, without even knowing what it is, I'm certain it's too low.
When I got started I billed $35/he. When I ended 5-6 years later I billed $300/her. Now in what very limited ad-hoc consulting I do, I bill significantly more than that.
When you charge per hour you make sure you are getting payed for all the work you are performing. However, I often see it recommended that you charge per week (best) or per day (next best). I believe the rationale behind the per week (or per day) pricing model is that it weeds out the customers that are just looking for the cheapest labor they can find, leaving only those that are serious about a project and can commit to paying reasonably for the work.
One may try to calculate (in their mind) how much time they will take to complete the project and then quote a fixed amount based on the no. of hours that came up.
I'd feel more comfortable presenting a fixed project quote for a creative project than a software project, because in the case of a creative project I can choose to dedicate a fixed amount of time, and have the result - to be judged subjectively - that I was able to produce in that time.
In the case of software, I would need to keep working until it objectively meets requirements. The quality of software I deliver doesn't degrade smoothly under time pressure, it falls off a cliff.
which is the whole point of the agile manifesto
which is why agile fails under most circumstances, as having fixed time, requirement and budget but under scrum and sprints is anything but agile.
And while both need to deal with unclear goals, figuring out what it is the client and truly needs, in one case you're selling what they have, or what they are, in the other you have to make something they want and will be able to use, support and sell.
That's very often a tremendous amount of uncertainty to work through.
Edit: also what this comment says https://news.ycombinator.com/item?id=21729677
Edit 2: And this one, featured some time ago on HN https://erikbern.com/2019/04/15/why-software-projects-take-l...
Per hour is not adequate for this type of work; you're delivering a product or service that will increase your client's bottom line, you're not a seat-filler who punches a clock. I charge in the smallest increment of time that I believe I can provide a meaningful impact or deliver a complete solution. When asked for a quote I translate my billing into weeks, as in $X000 per week. Accounting for admin tasks and paperwork, back and forth emails and phone calls, plus showing off the work completed and waiting for approval/notes, a week often seems like not enough time (I can't count the number of times a client asking for a simple font change took literally a week to order and get approval on). There are very rare instances where I know I can accomplish a task in days instead of weeks and if the client asks, I will bill in days instead.
"My rate is $X000 per week and my initial estimate is that this will take XX weeks to complete. I require an up-front retainer of X weeks to get started and I bill every two weeks after. Who should I address the initial invoice to?"
I would typically never reveal this tip, but here it goes: "I bill weekly and my normal rate is $X000. For you I would be happy to reduce that to $X000-20%." The client is told up front that they are getting a discount without having to ask for it and the Discount line item on the invoice(s) very much help in getting that invoice paid faster. The secret is that the rate quoted is always 20% higher than what my ideal number is. I make it rain discounts on everyone.
No one wants to have the rate conversation but I've noticed that clients who don't shy away from that talk or flinch at your rate will not be a problem. Clients who complain that you cost too much will be a problem. Politely suggest you are not a good fit for their project and end the call, you're better off. If you get to the point that your non-flinching clients say yes a little too fast to your rate, increase it. You want a little resistance, but not much. Saying yes too fast means you need to charge more.
And lastly, this is not about what work "costs" or "market rates", this is about what your completed solution is worth to your client and how much it will increase their bottom line. You're playing a different game so stop charging like you're mowing lawns or digging ditches. Charge more.
One thing I disagree with is the automatic-discount thing. Firstly, I think it's cheesy. Makes me think of street vendors saying "...But just for YOU, I have a SPECIAL price!" Secondly, I think it cheapens the perceived value. As in, "Why is Joe throwing around 20% discounts? Is he desperate? Is he not confident in his abilities?" Etc.
That being said, if you’re working with someone who actually deserves a discount - a client referred by a friend, a startup on a budget, etc., then it’s totally fair. I’d just be wary of tossing around discount claims to everyone.
In this instance what’s the tactic to increase the price you’re quoting the client? Are they not going to think it’s weird you’ve changed your mind about the price?
Don't punish yourself by charging only $100 for the hour you worked on it.
Know your value - which in capitalism depends on market demand - and charge accordingly.
When you are a distinguished expert you can charge more of course as well.
Make a name for yourself and ensure that everybody knows upfront that you are not a "cheap outsourcing" drone.
Why wouldn't ur hourly rate be 100k then (vs $100) ?
- what if it takes you a bit longer, 2 hours, is it fair to charge the client 2x?
The point is, the client wants a car, not an hour of car-making.
Also, the moment you provide an hourly rate you get compared to other hourly workers, whether it’s fair or not. “What?! $100k an hour? Even our lawyers cost less!”
Except most clients don't know what they want in such clearcut way before the project begins.
Don't be embarrassed of your rates. If they're flirting with but not plainly past what potential clients are willing to pay, you're in/around the right territory. Additionally, explicitly the definition of successful deliverables in your SOWs - make sure that you get enthusiastic client sign-off on these criteria. This can only serve to make everyone better off when work is marked as complete.
Last, "Due on Receipt" with some understanding and grace is a lot better than having to send "Hey just wanted to check in about invoice #1113" emails 10 days after your 30-day receivables haven't come in.
I used to have one client who was otherwise both a good customer and a nice person but he was terrible for constantly trying to incrementally increase scope. It was always an effort during the SOW process to really nail down exactly what the deliverables were.
I started at a little more than that, and maxed out at less before I retired. I increased rates for new clients, and did my best to encourage more work from ones that paid more, and more promptly.
What was mind-blowing was eventually discovering what one of my first clients had been charging its clients for my work. It was over five times what they had paid me!
$350/hr+ was distributed database related consulting, and then started going North from there for increasingly niche and specialized consulting services. Though only on very rare occasion these days. The highest rate I've ever been able to negotiate was $1,000/hr. But, it was also for a very short engagement (~10 hours) for some especially weird knowledge I have about replacing critical mainframe infrastructure with commodity systems.
Point being, you might be surprised how much you can charge for the right services to the right customers who have a clear sense of need and appropriately value a solution.
Reason I'm asking is because I recently started freelancing in software/web development (about 6 months ago) and I think I'm doing okay. I love to design and think out all of the odd, interesting or difficult back-end problems and so far all of my clients love my work, and with that I'm slowly increasing my rate, started at 50eu/h ($55/hr) and am currently at 75eu/h ($82). This is all in Europe (The Netherlands) However I feel like I'm a bit stuck, the clients I'm able to find don't want to pay more then $80 and with that the work isn't as challenging as I'd like it to be. At the same time it feels like the clients that do want to pay more aren't looking for me.
To make it easier to charge more you have to go after customers who are less price sensitive, whose problems are costing them a lot of money, and who are accustom to acquiring outside help for things outside what they consider to be their core business & expertise.
In my case this was big enterprises. Nationwide law firms, banking & fin. tech. institutions, international distribution & logistics companies, etc.
It took a long time to build up to that point and to get access to those parts of the market. The way it worked for me was, early-on, I'd be doing smaller jobs for big companies. Sometimes with another vendor as an intermediary. So, I might work with Boeing or Lockheed indirectly, but I was fastidious about establishing direct personal relationships. Once I hit the media & marketing world, it was the same pattern. Work through an existing vendor of say Pepsi or Nike, and then make direct personal relationships that could grow later for their adjacent or orthogonal needs.
Eventually you have enough contacts and enough of a reputation that you don't need to leverage the credibility of intermediaries anymore.
I don't know that such a path would work for everyone for all kinds of work (everything I ever did was kind of esoteric for its time), but that's what worked for me.
This is gold. It happens far too often.
Happened like this: one very huge phone company wanted some very specific self contained component written in Java. They shopped around and did not find anyone willing to do it. My friend was working there and told them that he knows that genius consultant (yours truly). So they called me up and during negotiations I told them that I will do it for $20,000. I was prepared to bargain but they told me that I am very reasonable for that functionality. At no point they asked about exact time frame/hourly rate. They just said that the expect it to take no longer than a month.
Came home, fired up my PC and spent 3 very long days coding it. That was all about it. I wish I could nail contracts like this more often ;)
Meanwhile. This project required some imagination and multi-disciplinary knowledge. Sure the company have some geniuses but the company is huge multinational and for one department of their branch it was probably way simpler and cheaper to get someone from outside then shop their other brunch. Big companies are very bureaucratic
I've seen a lot of talent go in and out. Usually it goes out like this:
- PM is seeking resources internally, you could be reached out and be told on what they are trying to do. - The project can be complex or easy. Honestly it doesn't matter within the context of working for a company. As far freelancer, you can go on a nitty-gritty with the client on what it takes to do and justify your rates to them... for a already-hired developer:
- There's absolutely no guarantee they will incentivize you after all the efforts (working as a developer for a company). So it really doesn't matter if the project is super complex or not. Management is pretty stupid most of the time and they can't see the level of effort in things even if you break them out to them. Or they can simply be ignorant about it.
- I've said no. Usually I'm very driven with new challenges but I've learned the hard way that it doesn't matter at all. These days I just say "I don't know, sorry." and "yea I just never worked on that". I've seen people gone the road of talking about training courses so they could stall management a lot if they don't have many options.
Why? Because there's really no end goal. You are already hired within the company. Employers take for granted that that's reason enough for you to do it.
Honestly it could go many ways. Not all companies will be as awful as mine. If you are lucky enough to land with a company that recognizes your efforts and incentivizes you for it good for you. I don't think many people are that lucky.
I'd say, believe me there are quite a lot of geniuses, but I've yet to meet a fool that takes the bait of taking more complex work in without proper incentive. (excluding fresh graduates and those still in their starting years)
I did not say they were not. Some products said company did develop do require a genius. But from my experience those tend to compartmentalize in appropriate departments and the rest is just average.
Of course there are always exceptions.
The thing is, it's not just some Kentucky Postal Service inc. but it is quite common in such BigCo's as Microsoft, Google, etc...
It turned out they couldn't produce their compliance documentation and that was delaying the release of a new drug.
The solution wasn't that complex but it did involve the intersection of several different skills. They had in-house devs but none of them wanted to touch it, to them it looked like a problem, to me it looked like an opportunity.
I currently work as a lube tech for a local dealership. (Saving up for the future, and they have better hours and pay than $LocalFastFood.) My coworkers dislike A) vacuuming vehicles and B) doing tire rotations- because both of them take time and effort.
I like doing both of those- they take time- which means I get paid (job security!) and also helps the customer want to come back (arguably more important than any time savings from skipping a rotate or not vacuuming underneath floor mats.)
It wasn't an opportunity for them. The Risk/Reward was probably insanely bad. If they fixed it, they are just "doing their job" and get a pat on the back. If it was that big of a deal though, if they screwed it up its possible they would get fired.
The difference was that they worked for different big shots.
This section laid out the things that might sound like they are related but would not be part of the enhancement. For example, a speed-up of the filesystem might have a non-goal of adding new file types.
Just one question. How do you approach future clients?
Even when they know your work is of good quality they will think that by being unaware of its worth you are probably not very experienced. Last but not least you of course get exploitative clients that way.
The worst thing you can do is offering free work for "friends". Often they will not even say "thank you" or use the actual work you delivered.
Some other folks mentioned taxes -- I highly suggest reading the book Profit First and implementing the system. I'm not a freelancer myself, but I'm solo & self-employed, and it's such a relief to have a pre-destined pile of cash to be sent off to the appropriate authorities each quarter.
Example: https://freelancember.com/excuses-for-not-raising-your-rates... - how to deal with raising the rates and not ending up stuck at the bottom level.
I also use a tool called FreshBooks that has been killer as far as invoicing and tracking time.
And the Weinberg book is top notch. Anyone who wants to solve problems in business should read it.
It also depends on what country you live in. Where I live it is 60 days by rule unless it is in a contract signed by both parties.
All this "overlooking" is bullshit anyway. Nobody would "overlook" you not doing any work for a couple of weeks. So why should it be any different when it comes to payment?
I mentioned it in my post, but the number one reason a reasonably sized company doesn't pay is that your invoice is not on their ledger. Call their accounts payable dept up after a few days, check they have the invoice, ask them when it will be paid. Don't be shy, this is what they expect!
The clients who pay late will pay their invoices without the late fees anyway, in my experience. Now you’re tracking down payment for your work and the fees.
Nothing is.
>> Discount incentives work much better.
This is not a universal truth. See what I did there?
2) When looking for opportunities (any kind really), the 80/20 rule applies. Try to focus on the 20% that produce 80% of the results. In our case we started by cold contacting, with quite poor results. Instead, we've been pretty successful using local freelancing networks/sites ran by larger consultancies to outsource the work they don't have the resources to do. Granted that's just subcontracting but it's a decent way to start out. I'd imagine the way the 80/20 rule applies when building direct client relationships is to focus on large-ish corporatios with decent financials that are already using contractors.
I can tolerate being an employee where I do what I'm told. After a month I get a feel for the environment so it becomes low stress and then I can keep my head down programming. Or I can tolerate selling software or having a SaaS. If I'm CEO I decide the direction of the product and then just have to handle customer support.
But the BS and stress of dealing with clients, contracts, undefined specs and getting paid... I have no f-ing idea how people tolerate it. So good luck with that. It took me way too long to figure out that I absolutely hate working as a contractor.
I especially hate, when I've been brought in for my expertise and I tell them what they should do with the least risk and best outcome and they refuse, because no. I realize there might be some important technical constraint I might not know about, but most of the time they just want to respect something their boss said once, some constraint that wasn't that important at all but makes my work 10x more complicated.
Usually contractors are hired to fix rotten stuff that in some way is a commodity. You can find 10 other contractors with the same skillset, maybe cheaper.
Do you mean something like deploying every client with the same stack which is easy to admin? I noticed I started this freelancing thing not giving a second thought about how I would mantain systems running for my clients. I should at least include some kind of monthly fee... (otherwise documentation so they can admin it..)
2) Not saying 'no'
3) Not making contracts and accepting changes mid project
- Not booking myself in advance. - Taking rush jobs. - Not limit myself to a set no. of hours - Absolutely no systems in place other than a Calendly meeting link that I set up very recently. - Not able to estimate the time I need to complete a task. - Not producing enough content so that I could get pre-sold, inbound leads.
e.g. I'm a direct response email copywriter and I've been told by many gurus & coaches to write emails on a daily basis and publish on the web. Yet, I've been slacking off.
Result? I've to reach out to prospects and try to sell them on myself. Not an easy thing to do.
Some things I learned through mistakes:
- Charge more.
- Travel like a professional and bill the client. For my first business trip I used airline points, stayed at an Airbnb on my own dime, and even refused the client's offer to reimburse me. Stupid. (Full story here: https://www.gkogan.co/blog/stupid/)
- If I'm not enjoying the work, request a change or move on. Don't just "tolerate" it and chug along. One of the greatest benefits of consulting is the freedom to chose whom you work with... Take advantage of it.
- Remember who the client is, and don't get too involved with their subordinates.
- If you don't feel "Hell yes!" about taking on a project or prospect, just skip it. It's not going to get more interesting over time.
- Find a great accountant. Fire bad accountants fast (and lawyers, and other service providers).
- Tell the client the hard truth.
- Impostor syndrome is normal. Get over it.
- Stop trying to go above-and-beyond all the time. Do what you were brought in to do, and do it exceptionally well. If other opportunities come up, suggest them as follow-on projects instead of just doing extra stuff for free.
- If you're clashing with an exec at the company, tell the client, instead of just backing away from the project.
- There are hundreds/thousands (depending on specialty) of potential clients out there, you just have to find them. So don't worry if a deal falls through, don't envy other consultants, and don't take on bad projects out of desperation.
One additional tip here is to purchase cancellable / refundable airline tickets and hotel reservations. You don't want to get stuck with the bill if your client cancels a meeting or whatever. Made this mistake with a long-term client where it wasn't worth trying to get reimbursed for travel expenses for a canceled meeting.
Either bill them in advance or have them purchase your ticket in advance.
Any major travel expense shouldn't be on your dime unless you're very acquainted with the customer.
I always find it easier to just have a fixed line item for "travel to client events", and usually I end up coming out ahead by a substantial margin by not booking fancy hotels.
The bottom line is on your end, you should be capturing receipts, you should be logging costs per project, and you should be providing all this data to an accountant for a nice quarterly rollup.
- Bill the client for actual expenses
- Paid out of pocket for travel that was baked into the day rate
- Had major travel (air/hotel) paid for directly by a client's travel agent. (Which I actually preferred to avoid when reasonably possible because now you're dealing with your client's travel policies.)
I'm not an accountant but I tend to agree you shouldn't be billing a broken-out travel line item that's not actual expenses or expenses plus explicit overhead [or a standard per diem].
It's possible a client will ask you for the travel expenses receipts and it would not be nice to show him that there is difference between what you charged and what it did actually cost.
In the UK there's, for example, a standard "mileage charge" which people tend to claim for driving to a place for work. It's not "the cost of travel" it's an approximate.
When a company charges for sending an operative to a site, they pay the operative £10 ph, and charge the company receiving them £100 -- presumably you think that's fraud too?
How about when Guchi (made up company) charge you $500 for a plain white tshirt made by people who aren't paid a living wage, wouldn't that also be fraud under the same sort of consideration?
Standard "mileage charges" in the US are actually set by the IRS. I assume it's similar in other places so that's a well-established practice for car-related expenses. I'm not sure how else you would do it as there's no way to directly capture expenses other than fuel.
I assume that in most cases billing some standard travel day rate/per diem (perhaps based on location) would be fine as well with, possibly, air charged separately for the actual amount.
The key is that you're being explicit that you're not charging the actual amount but rather some standard rate that, in principle, approximates average/typical expenses.
There are similar mileage rates in the UK, published by HMRC. They have the same purpose.
The mileage rate you agree with your client needn't be related to those rates at all.
I was just asking. You are putting "travel expenses" @ $xxx which doesn't seem to include your rate; so it should be how much you spent to "get there". If you want to charge extra (and I think you should since it's time you spent for the client) then maybe put "travel expenses" + "x hours spent traveling".
e.g., a month ago someone wanted me to travel to their site.
Although I didn't end up going, my fee to do that would have been much more than just the travel (6 hour drive to another state) and hotel costs: I also have to factor in that while I'm travelling, those are hours I can't bill to any other project, so the client would have been billed for the full two work days of travel even though my out of pocket costs would have been much less.
I am not willing (in order to be 9am on the client site (in another country) to spend half a Sunday away from home and loved ones for free. I usually charge 1h commute +2h in the airport pre flight + duration of flight + commute to hotel post flight.
No, it's a travel fee. When I hire service workers to make house calls, I'm under no impression that the line items for traveling simply covers their expenses. I expect them to make a profit for the privilege of having a professional show up in person.
For flights, you have a couple options. Either make the client buy your tickets, or tell them about your policy of purchasing refundable tickets. Alternatively, you could just eat the change fee (but that has its own set of issues - if you use the ticket personally, you need to pay income tax on the cost of the ticket; if you use it for a different client meeting, billing THAT could be tricky) or you could just write it off as a loss.
This so much. I used to waste hours doing small things (for free) that the client may never even notice. Just because it bothered me personally. Stick to the contracted list of things .
This isn't to say do a half-assed job, but deliver what was promised
What is bad? What is good?
I guess I expect my accountant to be a bit of a financial advisor sometimes, which they aren't.
What makes a good accounts I guess can also depends on your country legislation. From my experience, I'd ask those questions: are they working in my interest? Am I paying any late fees, arrears or interests on top of the taxes I'm supposed to pay? Are they staying on top of changes to the laws/regulations? Do they return my emails timely and with comprehensive answer to my questions?
Those things are off the top of my mind of course, there is more. In my case, although I'm not a very demanding or complicated client, I've been lucky enough to have found an accountant who I completely trust and, after the initial "setup" phase, it has mostly been a set it and forget it kind of situation. I get reminders for when tax payment deadlines are coming up, and neatly filled forms which I just have to pay. They notify me of changes to regulations (which in my country seems to be at least every year) and how that affects me. And whenever I need an estimate of how much in taxes I'm expected to pay in a given year, I send them an email and get an answer within 24 hours.
YMMV, I'm sure the things you need to worry about and ask yourself to asses the situation vary from country to country.
- I'm a junior developer and I mostly freelance for larger companies.
- I feel like $100/hour is the industry standard and if I charge 150-300 I need to do work that requires managerial work.
- 300+ comes from charging a percentage of revenue increase or creating such a narrative, which often requires additional business and strategic consulting.
- On the flip side, I enjoy coding and want to avoid additional managerial and business consulting as much as possible.
And some areas like law are very hourly-based. The one time I did some legal work it was strictly based on time. (At a very good hourly rate including travel time.)
You mitigate the risk of getting paid not enough in case the hours spiral out of control while still getting paid a lot when you outperform expectations.
So nobody can check how many hours you work a day.
If you bill $2000 a week and only work 4h a day, you get your $100.
Yep. I don't eat at McDonald's or stay at Motel 6 on my own dime. I'm sure not going to on a company's dime.
The counterpoint is that it needs to be a big enough market and one that you can service. Another thing to be careful of is that markets move on. I've known consultants who were world experts in some company's products or specific technologies. And then that company or technology ceased to exist and they really weren't sure what to do with themselves.
Why would you do this versus any other business or job?
Genuinely curious what the appeal is.
- I get to work on something new every few months. New company, new people, new challenges, etc. This keeps things interesting.
- I get to do what I think is best for the client, rather than taking orders from someone.
- Pays much better than salaried positions (for me, at least).
- I get to define my own job. If next year I decide to switch from marketing consulting to, say, operations consulting or sales consulting or illustration work or some narrow marketing thing like site conversion optimization, I just update my website headline it's done.
- Experience the joy of running a business. Project cash flow, close deals, scope out projects, deliver results, collect feedback, track invoices... Love it.
- Ultimate flexibility. Last year I took a month off to travel, and this year I took a month off for paternity leave. All it took is advance notice to my clients, and a return date so they know when we can pick back up.
How long is your average engagement, if you don't mind asking.
Also I suspect this requires a lot of travel (and time away from home), correct?
Actually I barely travel even though most my clients are in the Bay Area and I’m on the east coast. Everything is done remotely with email, slack, and zoom. I go there once a quarter but even that is just for some face-to-face time and not out of necessity.
Also variety. Lots of different projects for businesses in different industries. It's definitely not boring.
I've also found that consulting gives me a healthy amount of emotional separation from my work. I'm hired for a specific task, and I can take pride in doing that well. The long-term success of the client isn't my problem and I don't have to stress about it.
I am a Python web developer and couldn’t find any work in Northern Ireland. My clients ended up all being in London and I would work remotely. When I actually moved to Japan my client at the time was happy to continue working with me. Which was pretty cool. I have fond memories of that time. Working in a ryokan, sitting on a tatami mat coding Python. So cool.
I ended up working for a company in Japan which was cool. Before my visa ran out my old colleague contacted me out of the blue and asked if I wanted to freelance with him at the same company he was working for. I had my interview over Skype while in Japan so when I came back to the UK I was straight into work. It ended up being more convenient to freelance than to look for a job and I’ve just continued to freelance ever since.
Do not overengineer anything.
Charge for your time - 3.6x what you are currently charging ¯\_(ツ)_/¯ no idea what that is. Don't work for clients that blink at that price at all.
Take the high road in every possible situation and never burn a bridge - your life blood will be repeat business and referrals. Your community and network are tighter than you realize.
At least 20% of your time will be networking, sales, and meetings - buffer your estimates an extra 30% with that in mind plus whatever other buffers you already told yourself you'd do.
Be over enthusiastic, be your own hype person and the hype person of the project you are working on, still under promise and over deliver though.
Don't you think 3.14 would be more scientific?
Didn't market. Didn't network.
Didn't constantly hustle for clients.
Didn't outsource scut work.
Didn't down tools when clients were slow to pay.
Didn't develop/maintain a backlog of client work.
Didn't reject fixed price contracts.
Didn't renegotiate when projects changed beyond contracted scope.
Didn't filter free consults against probability they'd turn into a contract.
Didn't have my heart in it (and have since stopped).
On the 0 to 10 scale:
0: "I don't really do X, thanks for thinking of me."
3: "Hey, I don't really do X, but he may need Y. Let him/her know if they need Y they can call me."
5: "Oh, that's neat. Why don't you introduce us, I'd love to meet them. "
8: "Oh, cool, what's their name/email? Can I mention your name and reach out? "
10: "Cool, let's invite them to grab a drink with us after dinner. What neighborhood do they live in so we can go somewhere convenient?"
Were I to do it again I’d pick 2–3 topics to master and blog, tweet, guest post, relentlessly. Reuse, rewrite, repost the same essay and commentary dozens of times. Get quoted in press and other media coverage. Follow media coverage looking for potential clients, dig into those clients and master all the public information about those clients.
I didn't do any of that.
1. Taking on and continuing to work with asshole clients. 2. Setting my rates too low (I didn't account for taxes, paying both halves of FICA, and healthcare as much as I should have). 3. Not finding a good balance between finding clients and actually doing the work.
My wife also like to talk about what I do to her clients (she was a consultant working on a big consulting company, different field), leading to more projects.
Lather, rinse, repeat. Sometimes the above takes 6-9 months. Sometimes you get a handshake on the spot. Sometimes they never call back. Just like dating, keep your options open to stay fluid and keep talking to potential clients on the regular.
2) Not creating content sooner. There hasn't been one thing that influenced my career as much as my blog - If there would be one thing I would do different it would be this: I would have started blogging earlier.
As a consultant your number one thing is making money. Find high paying clients, establish good relationships, do good work but don't get too far in the weeds of tech stuff. From everything I've read and experienced, deep technical work doesn't pay well or market well. Dumb stuff like setting up Magento is where the big money comes. People who are mainly technical seem to do better at companies. There are of course exceptions.
My business did not succeed. I still enjoyed the three years I spent on it. I got to work with lots of different things that I would never have had much chance to do otherwise, and get paid for it. I ended up going back into industry though once my primary client had to pull back my hours, and so far am happy enough with that decision too.
Ex: wordpress developer vs react / frontend dev, who makes more? React / frontend.
This being said, for really high paying consulting gigs, i think that its definetely not in tech but in sales / marketing/ strategy.
https://www.indiehackers.com/podcast/044-stephanie-hurlburt-...
But these are outliers
I 100% agree with this. Specialization is worth it. Nobody cares if you're fairly close to workplace competence in ten things, but people will beat a path to you door (or inbox) if you're world class at one.
I'd also add that when you add to your skill stack, make sure it's complimentary skills you can use with your existing strength, not alternative skills that accomplish the same thing.
https://youtu.be/bIpgUmn5yK8