Seven ways to maximise your profit potential as a freelancer
Posted: Fri 7th Dec 2012
It can be feast or famine as a freelancer and you may find that your earnings fluctuate a lot from month to month. Freelance writer Ian Greaves looks at how you can steady the boat, build your profile and secure more profit from your work.
As a freelancer, there is often only you to create that masterpiece, perfect that design or manage that project and you need to ensure that you spend your valuable time on the work that will bring you the best return, writes Ian (left). Being able to discern which work you should and shouldn't take on will become a valuable skill in your freelance career.
There are some practical steps that you can take to try to hone this skill.
1. Network, network, and network!
The benefits, to a freelancer, of networking are well documented, but it should be seen as a long term time investment. If you treat every networking event like a sales pitch, people will soon see though you as someone interested in only furthering your own means. Rather, treat your sales pitches like networking events! Exchange information and learn as much about the other person as you can,. Even if you fail to win business immediately, make sure you leave the right impression and with a way of contacting that person again. Robert Kerrigan observed: "The way of the world is meeting people through other people."
2. Analyse your time.
As a freelancer, your clients are buying your expertise. The only factor that limits how much you can earn is your time. How do you spend your time? This is important, so be honest with yourself. Calculate what you need to earn and then look at the hours available to you - as a guide, you should assume that half of your time will be fee-earning and half of your time will be spent marketing and chasing new business. Now calculate what you will need to charge per fee-earning hour (you might be surprised at the result). Novelist Richard Bach is quoted as saying: "I don't want to do business with those who don't make a profit, because they can't give the best service."
3. Recognise which of your clients are profitable.
Using your hourly rate calculated above, analyse the time you spend on each client's work (include everything - travelling, printing, phone calls, and so on) and see the 'real' cost of that project or job. Compare this to the fee you earned and you will begin to understand which of your clients are most profitable for you.
4. Price yourself realistically.
Don't be afraid to put your prices up - if you believe you are worth it, then so will your clients. Remember, if you don't make money, you won't be around for long. World-renowned investor Warren Buffet provided an ideal response for any freelancer when questioned about price by a potential client: "Price is what you pay, value is what you get."
5. Look at the big picture.
When dealing with clients, if accepting a lower price - or dare I say it, working gratis for a short time - helps in developing a great working relationship with a client, they will remember, and hopefully pay your full rate next time (however, if they expect that rate forever, dispense with them!).
6. Become an expert in your field.
Then shout it from the rooftops! As you build your reputation as an expert, your opinion or comments will be in greater demand, and, as a consequence, you will be able to charge clients more for your time.
7. Keep yourself up-to-date.
The late Stephen Covey referred to 'sharpening the saw' in his book The 7 Habits of Highly Effective People, describing the process as "preserving and enhancing the greatest asset you have""you". As freelancers, it is vital that we keep ourselves up-to-date with developments and the latest trends in our specialist area. Being able to offer a considered opinion on a current topic in your area when asked, often at short notice, will certainly help you 'build your brand'. Ian Greaves is a freelance writer and qualified management accountant. On his blog, Write Away, he discusses self-employment and looks at resources available to anyone interested in working for themselves.