How can you make more money as a freelancer? That’s the golden question for freelancers looking to boost their profits and make life more sustainable. The profitable freelancer isn’t going to be stressed about bills. They’re going to be doing well. So let’s explore some ways freelancers can increase profitability.
But first, let’s talk about money. People don’t like to talk about money. It’s a personal and private issue, and we like to keep it to ourselves. OK, that’s fair. But that can also mean we’re internalizing some ideas that aren’t too helpful and allowing them to continue unchallenged. That can be dangerous.
One such downer of an idea is that money is bad, and wanting to make more money is greedy. That’s not necessarily true. Wanting to make more money so you can pay your bills is not greedy. Wanting to make more money so you can eat your weight in tacos is definitely greedy (though maybe tasty).
You’re probably not the only one who’s felt a little squishy about embracing money. Our founder, Cory Miller, struggled with this. But he learned to embrace prosperity. No, he didn’t grow a twirly mustache and get a monocle, he simply redefined what it means to prosper. It doesn’t have to mean excessive wealth, gold fixtures and haughty rudeness. It can also mean taking care of your people and making room for work you love.
Quite simply: You deserve to get paid.
Just remember that money isn’t everything. Making more of it does give us freedom and options, but for most of us the goal isn’t swimming in a pool of money.
As Eric Dye says:
“Investing in others, building something to be proud of, taking care in your craft—you might not get rich, but you’ll be a happy person and that’s the kind of profitability I want to have more of.”
Studies have shown that more money doesn’t make you more happy.
How to Be a Profitable Freelancer
OK, enough with the disclaimers. Let’s talk about how you can increase your profitability.
1. Raise Your Prices
The very first step to being a profitable freelancer is to raise your rates. Time and time again this is what the experts recommend. And most folks report little fallout from raising their prices. In fact, most regret not doing it earlier.
Quite simply, raising your prices is the easiest way to become a more profitable freelancer.
2. Charge By the Project
The second step to being a profitable freelancer is to stop charging by the hour and start charging by the project.
When you charge hourly you limit your income potential. When you charge by the project you can build more profit into each job, depending on how fast you work.
It’s called value-based pricing, and it will change how you view your business.
3. Change Your Business Model
A third approach to becoming a more profitable freelancer is to change or tweak your business model. Refine what you do and how you do it to make more money:
- Focus: “The biggest thing I’ve done to improve my profitability as a freelancer is focus,” says Naomi C. Bush. Narrow your focus and find your niche.
- Premium: You could offer higher end services, like pros Kim Doyal, Kronda Adair and Tom McFarlin did.
- Recurring income: Focus on developing recurring revenue.
- Products: Turn your services into products.
- Higher standards: Get better clients. Be honest: Some clients should be fired.
4. Be More Efficient
Another way to make more money is to be more efficient. Work smarter, not harder.
- Track your time: If you’re not already, start tracking your time. Ruthlessly cut out wasted time. Check out our productivity tips on scheduling.
- Build a team: We’ve got a step-by-step guide to hiring your first employee. Don’t be afraid to hire people to do what you’re not good at. The less time you waste pretending you know how to fix a toilet or do math the better. Seriously. Just ask Tom McFarlin: “Hiring a CPA is one of the smartest things I did.”
- Proposals & contracts: Create a streamlined system for proposals and contracts so you can crank them out quickly and get back to work. Smarter contracts can keep you from getting stiffed.
- Offer helpful upsells: When you’re selling a new website, pitch an ongoing maintenance plan. You’re giving the client real value and you’re making more.
- Referrals: Do everything you can to encourage referrals. “Ask your best, happiest and most favorite clients for referrals,” says Jennifer Bourn. “They will love to help you out, and often will be happy you asked.” Good referrals are your easiest and best marketing.
- Feast or Famine: Do what you can to avoid the feast or famine cycle by focusing on your marketing funnel. That speed up/slow down cycle can give you whiplash and crush your efficiency.
- Spend less: Sometimes the best way to make more money is to keep more of it. Learn the value of being frugal.
5. Pay Attention to What Works
Figure out what type of work makes you the most money, and do more of that.
To determine what’s most profitable you’ll need to track your numbers and see what works. Don’t just guess. Bill Erickson is a big fan of using data: “You need to be making data-driven decisions, rather than going off your gut. Because often your gut is wrong.”
By knowing what makes you the most money you can make better decisions. You can shift your business to better focus on what’s most profitable.
Though you might discover that your most profitable service is something you don’t enjoy. So maybe you don’t want to do more of it, but at least you’ll know and can be satisfied with lower income because you’re doing what you love. And maybe it’s worth outsourcing.
Becoming a Profitable Freelancer
There are a lot of different ways you can tweak your business and boost your bottom line. Don’t be afraid to make changes, question how you’ve done things and try something new.