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Thanks in part to globalisation and the state of the world economy, the number of freelancers and freelance opportunities have grown rapidly in the past decade.

For individuals, freelancing offers the possibility of an entrepreneurial lifestyle and a level of self-determination that is hard to find at a nine-to-five.

For businesses that may not have the luxury of hiring a full-time employee or need expertise that is hard to find and/or develop in-house, retaining a freelancer may be the most attractive way to get a job done.

But freelancing isn't all roses. Most individuals who become freelancers aren't billing themselves out at thousands of dollars a day, and many fail to earn more than they used to earn (or could earn) as full-time employees.

Some, sadly, are unable to find their way and are forced out of freelance-dom.

For those wanting to 'make it', here are 11 life-saving tips.

Dot your i's and cross your t's

While few freelancers like dealing with legal issues and attorneys, having a formal agreement in place for each gig can help protect you against non-payment and avoidable legal headaches.

As such, savvy freelancers will seek out competent legal counsel early on, and at a minimum, invest in the drafting of a solid template agreement that can be applied to common projects.

Demand a deposit for every project

New freelancers in particular are often hesitant to require an up-front deposit from clients, believing that it will cost them business. But the truth is that no reasonable client will refuse to pay a reasonable deposit, making the deposit one of the best tools for filtering out the clients most likely to be deadbeats.

Once a long-term client relationship is established, it may be appropriate to consider alternate arrangements, but it's wise to treat those arrangements as you would a loan that doesn't require a down payment.

In other words, understand what you could lose if the loan is not repaid, and make sure that loss is tolerable.

Don't get distracted by the "hourly versus fixed price" debate

While it's not always the case, the general belief is that freelancers love hourly engagements and clients love fixed price engagements.

At the end of the day, however, the "hourly versus fixed price" debate is usually a red herring. If you're billing hourly for a project, your client is going to want an estimate of how many hours the project will take to complete.

And if you're billing a fixed amount for a project, you're going to base the amount on an hourly rate and the number of hours you believe the project will take to complete.

The key is making sure that you have enough information to establish the scope of the work required, and that you have enough skill to accurately estimate work time based on scope.

If scope isn't established and/or you're not capable of estimating accurately, the project is at risk regardless of whether you're billing by the hour or for the whole shebang.

Invoice well, invoice religiously

One of the most common reasons individuals fail at freelancing is that they don't generate the cash they need when they need it. In other words, they have clients and gigs, but it's a constant struggle to pay the bills.

Many freelancers find the lesson that strong revenue does not necessarily equate to strong cash flow to be a harsh one, but once learned, it's much easier to address the matter.

Building strong cash flow starts with invoicing. First, you need to set fair if not favorable invoicing terms (hint: net 45 or 60, or higher, can be painful).

Then, you actually need to submit your invoices in a timely fashion (eg. when they're able to be submitted or due), something that, surprisingly, many freelancers fail to do even though there are plenty of cost-effective tools that can make the process easy.

Minimize your ratio of new client acquisition to billable work

Freelancing can be very profitable -- when you're billing. But many freelancers spend a lot of time not billing, and for many of these freelancers, new client acquisition is the biggest source of non-billable time.

It shouldn't be. While you probably don't want to be dependent on one or two clients, if you're spending more than 25-30% of your time each month looking for new ones, you may eventually find it hard to be successful.

Find your optimal rate

One of the best ways to minimize the amount of new client acquisition you need to engage in is to find your optimal rate and pricing structure. Charge too little and you'll find it hard to thrive. Charge too much, however, and you'll find that your clients may send you a lot less work than they'd otherwise like to.

At the end of the day, finding your optimal rate is effectively the same thing as maximizing your revenue. A freelancer who bills 120 hours a month at $100/hour makes more money than a freelancer who bills 60 at $150/hour, and incidentally, is probably more likely to be staying sharp and working on interesting things.

Focus on what you do best and what you want to do, not on what you can do

Many freelancers make a huge mistake: they make their sole criteria for taking on a project the answer to the question, "Can I do this, and make money?" Instead, it pays to focus on what you do best and take on work that's aligned with your long-term positioning and goals.

Everything else can distract you from getting to where you want to go, even if it helps pay a few bills in the short-term.

Be realistic about scale

Service businesses have unique scaling challenges, and individual freelancers will obviously find it difficult to grow revenue beyond their hourly rate times the number of hours in a working day.

For ambitious, established freelancers, building a team or outsourcing may seem like a good way to grow revenue. But growing the number of hours you can bill in this fashion and maintaining quality can be very difficult to do.

Also consider that this type of expansion may force you to do more project management, so make sure your project management skills are sufficient and, more importantly, than you're willing to trade some of your 'real' work for project management.

Don't underestimate the importance of location

The stereotypical freelancer lifestyle can be attractive, but don't get too infatuated with the notion that you can live on the beach in some exotic, inexpensive land while billing out design or development work at London day rates.

The market for freelancers is competitive, and location can matter. If the majority of your clients are based in, say, New York, and you're based in Phuket, the distance between you and your clients could eventually become a major liability.

Don't be afraid to part ways with clients

Few things are as rewarding than long-term client relationships. But that doesn't mean that you should maintain a client relationship for the sake of maintaining the relationship.

If a once-solid client becomes a headache (eg. they're not paying you on time or are treating you disrespectfully), you shouldn't feel obligated to keep providing your services. And sometimes, your areas of focus may diverge from a client's needs.

In these cases, doing what's right for you (moving on), as difficult as it may be, is probably also what needs to be done if you're going to do right by your client.

Become a business owner

Most freelancers start off thinking of themselves as a 'freelancers', but at some point, a successful freelancer should recognize that she's really a business owner.

That means learning about, and taking responsibility for, business activities like bookeeping, accounting and marketing. Doing this can often mean the difference between success and failure, as there are many talented freelancers who fail to succeed because they're poor business owners.

As an example, consider the importance of building a cash position. A good business owner will try to build a solid cash position, as this can provide a safety net for a rainy day, expansion capital, or the ability to offer more flexible payment terms to clients.

A freelancer who is not a good business owner, on the other hand, is less likely to think of her freelancing operation as a business for which a strong cash position is desirable or necessary.

Patricio Robles

Published 5 September, 2011 by Patricio Robles

Patricio Robles is a tech reporter at Econsultancy. Follow him on Twitter.

2419 more posts from this author

Comments (7)

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Thomas Harvey Design

Great tips! As a freelance graphic designer myself, I'm always trying to think of ways I can tighten up the whole process and not leave anything to chance. Particularly like the point about parting ways with clients - in the long run, it really will save a lot of stress!

about 5 years ago


Patrick Walshe

Great article. One best practice I would add to your penultimate point (having learned the lesson painfully) is to have a clear exit point established before you enter the engagement. That is, know when to state that the engagement has been concluded. This can be especially difficult when you have close personal relationships with clients. It is easy, and all to human, to want to stay connected with the people that retain you. It can be hard to say to people with whom you have spend many hours thinking about and building a business that you have to move on. The price of not doing so is to diminish their opinion of you and the work you have done for them. It is important to have regular status updates in which you and your client can gait your progress and talk frankly about end dates.

about 5 years ago


Nikola Vukasinovic

Great! I always wanted to write something like this on my blog, but I haven't finished it yet, though :)
And although I live in a country with a specific market, situation is pretty the same, with couple of differences, of course

about 5 years ago

James Gurd

James Gurd, Owner at Digital JugglerSmall Business Multi-user

Hi Patricio,

Nice blog. For me the most salient point is "Focus on what you do best and what you want to do, not on what you can do".

It's easy to get snow-blind from all the potential projects out there - when I first started freelancing, I made the mistake of trying to say yes to everything, worried I'd not get enough work. I soon learned to focus and prioritise and accept quiet periods instead of filling them with work that I wasn't best qualified to deliver. You get more repeat business if you're good at what you do and you love what you do - delivery will be better, so Client satisfaction will be higher.

I'm not convinced about the deposit payment suggestion though - it might work with some Clients but not all. For me it's about flexibility and trust. However, that said, it is important to protect your commercial interests.

On the legal side, freelancers need to think seriously about indemnity insurance - if a Client decides to sue, are you covered?


about 5 years ago


sam howard

Great article. I've been freelancing in tech for about 18 months now and agree with all your points. I've just written a couple of blogs on how to price up work as a freelancer, which might be useful too


over 4 years ago



Great work and full of knowledgeable information for freelancers. And I really enjoy being a freelance programmer. I do all my work over the internet. I use freelancing platforms like 99hours.com.. I must admit, when I first started, it was a little tough, but with sheer determination I’m now an independent programmer and web designer.

over 3 years ago


derek davis, Co-Founder at Tabby

Keeping track of business expenses is the best way to reduce your tax liability.

over 1 year ago

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