This post is a result of a exploratory conversations that happened over two hookah club meetings.

Freelancing is a fascinating societal phenomena. Freelancer sounds cool, regularly jets off to exotic places, and other stereotypes of the current day and time. How does one start freelancing? It requires so many conversations with oneself and mindset changes that need to happen so that one could allow themselves to dive in freedom (another bang on that stereotype).

It’s gonna be my 10 year anniversary since I left freelancing for a corporate job soon. My freelancing time was amazing, I got to travel to many countries, drove picturesque roads and even a race track (that I did not know it was a track until later), met wonderful people, created the experiences to keep and memories to share.

A lot of water flew by since then, although the basics of freelancing stayed the same:

1. Freelancer and client find each other.
2. They have conversations about potential project, share ideas, estimates, ask questions and generally get to know each other.
3. They discuss price for the project.
4. Shake hands
5. …
6. ????
7. PROFIT!!!!111

I want to focus on price.

How Much Does It Cost?

At some point either customer or freelancer will mention something “depending on the price” and suddenly there will be a short period of awkward silence because from now on each of the participants has to think carefully… A seasoned freelancer hijacks the initiative at this moment and leads the conversation down the path if that’s relevant. Less experienced freelancer will also hijack the initiative, but will talk too much of not quite the thing that they actually wanted to explain. I’ve been in both roles during my freelancing years. It’s the experience no freelancer can avoid.

Lucky freelancers have the price discussion as a separate agenda item on the email invitation. In any way, it’s better to come up prepared for the conversation. A map of thoughts that would later be used for the fact and data placement, that eventually justifies the price.

There are ways to present the price as an hourly rate. It could be any period of time: month, week, etc. Your rate then is multiplied by the amount of time units freelancer worked to get the actual money.

Hourly rate works great when there’s a steady flow of projects from the customer on a predictable point in future.

Although, at the beginning of relationships, people will try to work on a per project basis. They want to manage their risks, control their costs, evaluate the quality of work, understand nuances of collaboration, build that trust.

Price estimation of the entire project is an art of its own, and my thoughts are exactly aimed in getting better at this. Every project has expectation of things, metrics, events, or actions that we can call a deliverable. I never participated in the project with requirements “just sit and do nothing so that nothing changes in this world”. People start projects to change the world, small step at a time.

Deliverables Identification

Understanding deliverables is crucial to setting the correct expectation on the project. Make sure they are well defined in form of the artifact: something that did not exist before and now it does. Here’s a quick example:

The end result is usually what matters for freelance project. Demo to the board does not add any value, while something that already works can be used by other people or being built upon.

Artifact may be a marketing campaign running, or a application deployed or the electricity in each of the outlets in the house, anything that is shipped (in makers slang). It makes very clear that the part of the project is done or not: it’s is there or it’s missing, it works or it doesn’t. I acknowledge that it may be challenging to ship something in research projects, that’s why the collaboration is required between the parties.

You would like to aim for up to 5 deliverables within the project, as tracking each of them will be taxing your work. You can’t focus more than on a couple things at a time anyway. These deliverables will help build a plan, a timeline, milestones for your work.

Deliverables Value

Usually, the company reaches out for the help of a freelancer is when it’s small. Medium-sized businesses tend to have partners for cooperation in certain secondary business areas, for instance marketing itself can be a line of business. A lot of companies do marketing, but only a bunch have their in-house department, while most partner with advertisement agencies for their marketing needs. Small business will reach out for a freelancer to get their marketing in order.

On the other hand, companies hire freelancers as the additions to their staff: “oh, we have this engineering project with great potential, yet nobody has a capacity to do it”. For a seasoned freelancer, that’s a project up for grabs because it usually leads to more business, either as direct continuation or as a proxy to the similar small business with similar problem from a recommendation.

How would you put a price tag on that project though? Indeed, one can estimate the number of minutes that are required to accomplish each of the identified deliverables and multiply by the rate. Other approach suggests analysis of the potential value from the customer’s business perspective and getting the cut of it. I cannot recommend any particular approach, it fully depends on the context of the project.

What I can recommend is the payments structure to suggest to your customer. Charge by the deliverables, money upfront. Investigate into the delivery timeline and put a price tag to reaching each of the high level objectives. It’s even easier, if these objectives a well-defined and are the artifact of the milestone completion, i.e.: a Jira plugin published on Atlassian Marketplace. As a deliverable, it can be identified by the marketplace URL with the plugin for download. In this case each milestone start is identified by the transfer of the funds to the freelancer.

Once deliverable’s value is identified using one of the two (or any other you can come up with) methods specified above, project’s value becomes obvious: sum of all deliveries.

How to Sell It?

Remember that tough conversation from the former paragraphs? That’s exactly for what we are preparing our freelancer for. There’s no better moment for this conversation to happen. Assuming the customer representative is a decision-maker (because they discuss price), a freelancer is magically in the right place in the right time.

It’s great to propose the option with time sheets, screenshot upload, and other conveniently invented ways to count the time spent on the job. Also make sure that you can present the alternative approach to the billing: that doesn’t require time sheets, instead aligns both parties on reaching to the fruits of their work as fast as they can. It builds trust between a freelancer and customer, as it limits the need for difficult conversations later down the line.

Let’s guide the freelancer over this conversation a little more with the reasonable points from buyer’s perspective:

• Fixed price: versus any other price always wins. Most of the times even when competing with free.
• Limited Risks: if by chance, the estimate was dramatically wrong, freelancer eats the costs by default without need for another difficult conversation and risk of paying with reputation.
• Work Experience: great for initial phase of collaboration where people adapt to each others work style that gets transferred in more business or better rate afterwards.

Critics

Trust must be established between freelancer and their customer before having such conversation.

Well, yes and no. Consider trust as predictability over time. This conversation plants trust seeds between the parties as motivation is clear, deliverables are clear, and the starting points are aligned and well understood by other parties.

I had a “this much dollars per hour” conversation before, it makes me nervous enough. Now project-based conversation is even more scary because I never had it before.

Project-based compensation is without doubt much more difficult conversation that one has to do prepared. Hourly rates discussion easily falls into the details pit of how the time sheet look like and how to track your time inside Jira or where to download the time tracking software. They are elementary when compared to this idea.

Project-based pricing requires better understanding of the fellow human on the other side. It requires to become a better version of oneself.

Freelancing provides freedom in forms of flexibility to dedicate your time, your actions and your focus around the things that matter. Reflection on previous experiences in terms what could be done better, how things could be communicated smoother, where does the misalignment come from, brings you professionally to the next levels. Just like corporate politics does that in Arasakas.