Freelancing Isn't Free
Costs And Challenges Of Freelancing

Marco Zarate :: Solution Factor
Jan. 10, 2013

Why a talk on freelancing?

Who Am I?

Also Not An Expert

Goals for this talk:

  1. Share my mistakes and losses
  2. Share a tiny bit of my wins
  3. Discuss pros and cons of freelancing
  4. Help existing freelancers improve their business
  5. Help anyone decide if freelancing is for them


  1. How many freelance full time?
  2. How many freelance part time?
  3. How many don't freelance at all, but have considered it?

Let's Start With Hard Truths

More Hard Truths:

In year 1, many freelancers:

Given All That, Why Freelance?

  1. Flexibility?
  2. Potential to make more money?
  3. More diverse experience?
  4. Better quality of life?

How realistic are those?

Fact vs. Myth: Flexibility

If given total freedom, how well would you manage your own schedule?

Fact vs. Myth: More Income?

Fact vs. Myth: More Diverse Experience?

Full Time vs. Freelancing: A Realization

In a lot of ways, freelancing isn't better or worse than a full time job, you're just trading one set of problems for another.

"When it comes to money, my full time job provided it in the easiest way, but freelancing has provided it in the most enjoyable way."

Ultimate goal: obtain the best of both worlds.

Making The Jump
Getting started, business topics, etc.

Considerations Before Starting

Not all required, but do form patterns among successful freelancers.

Why Industry Experience Is Important

There's too much to be learned that's either too costly, or not obtainable, learning on your own without experience.

Don't Jump In Head First

I Took The Gradual Approach

Freelanced 2.5 years while full time.

By the time I left my full time job, I had:

Why Is That Important?

Because year 1 will always be your hardest year.

Build your business to the extent possible while still having a reliable source of income.

The big benefit: you won't have to trade billable time for those activities.

Company Formation

Most freelancers agree it's more professional to operate under a business name.

Income Tax

Sole Proprietors, DBAs, and single-member LLC's are all taxed the same.

Income is reported on Schedule C on personal tax return.

Expenses are tax deductable.

A good accountant is a must!

Business Bank Accounts

Have separate bank accounts for personal and business purposes.

Don't use business funds for personal reasons.

Time Tracking and Invoicing

You'll need a tool for this.

Don't rely on spreadsheets and manual number crunching.

Personal plug: TimePanel makes time tracking and invoicing really fast and easy.

Finding Work
Clients, understanding their business, etc.

Finding Clients

My Income - Year 1
New Clients (Marketing/Networking) 19%
Ex-employer 40%
Repeat Clients 41%
Forums, Blog Posts 0%
My Income - Year 4
New Clients (Marketing/Networking) 14%
Ex-employer 6%
Repeat Clients 71%
Forums, Blog Posts 9%

Understanding Two Types Of Clients

Technical type (developers, DBAs, designers, etc.).

Non Technical type (most everyone else).

How you deal with one isn't how you deal with the other.

Success selling to both depends on understanding that.

Technical Clients

Easy to work with from a technical standpoint.

Usually have experience with project management.

Highly value technical expertise.

A great source for work early on.

You can talk tech with these types of clients.

Non Technical Clients

Don't understand the technology.

Can't relate as much to technical expertise.

Only care about value you provide.

You can't talk tech with these types of clients.

Nor should you.

Common Focus Mis-match

Where Our Focus Should Be

Non Technical Clients Care About

Clients require that your work advance their business in some way.

Selling Your Services

A client's pain point is your opportunity - capitalize on that.

An Ineffective Sales Pitch

Client: Geez, these spreadsheets are killing me!

Consultant: Have you considered using a script to automate that? You know, like with a cron job? You should import those into a sql database and use aggregate functions to do your calculations for you.

Too much technical jargon the client doesn't understand.

A More Effective Sales Pitch

Client: Geez, these spreadsheets are killing me!

Consultant: I bet we could cut your time w/those in half.

Client: Wow, how could we do that?

Consultant: There's lots of ways to automate that stuff. Would you mind telling me what these are for and how often you deal with them?

Why The Latter Is Effective

The second point is key! It allows value discovery, and the ability to quantify it.

Discovery: What are these spreadsheets for?

Quantifying: how often do you deal with them?

Pricing Your Services

Hourly vs. Fixed Pricing

Day Rates

Value Based Pricing


Freelancing is harder than a 9-5 job.

Think hard about the decision; start gradually.

Success depends on selling and value delivery.

Know what your worth. A big way to achieve that is by understanding and quantifying the value you provide to your clients.

Thank You!