In the business advice I encounter, I’ve noticed certain ideas coming up again and again:
- It’s better to sell more stuff to existing clients than to go find new clients
- Repeat business is a great thing and you should try to get it
- Referrals are very important
- Testimonials are very important
- Charge more
I would consider all this very good advice when applied under certain circumstances. However, it seems to me that the vast majority of freelance programmers are not in the right circumstances to apply most of this advice. Let me explain what I mean.
Consulting vs. contracting
A lot of freelance programmers, including myself, call themselves “consultants”. The word “freelancer” has bad connotations, like somebody who’s between jobs or not fully committed. The word “consultant” sounds more professional. But that doesn’t make a difference in the work that’s being done.
Most “consultants” are really contractors. Specifically, most consultants do staff-augmentation contacting. A business has an employee-shaped hole and I fill that employee-shaped hole. I get plugged into the client’s GitHub account and the client’s issue tracker. I attend all the client’s regular meetings. I work roughly the same schedule as the rest of the client’s development team which consists of full-time employees. I’m paid by the hour. Maybe I’m even required to work exactly 40 hours a week. Maybe the only thing that differentiates me from the client’s employees is that the employees have W-2 paperwork and I have 1099 paperwork.
Hopefully I have more flexibility than that, like maybe I work 20ish hours a week instead of 40 and I have a little schedule autonomy. Maybe I’m paid by the day or week instead of by the hour. But the nature of the relationship is still staff augmentation.
So that’s contracting. Now here’s my definition of consulting. The way I define consulting is that the client has a desired outcome of an engagement and you’re hired to help achieve that outcome. In this case the client doesn’t really care how many hours you spend to achieve the outcome (to an extent of course) or what technologies you use (within certain constraints) or any of the stuff that’s so rigidly dictated within staff-aug-style contracting. In this case hourly billing wouldn’t make sense. The compensation goes by the project.
Now let’s talk about why most freelancing advice doesn’t apply to contract programming.
Why “sell more to existing clients” doesn’t work for contracting
If I’m in a staff-aug relationship with a client, I’ve been strongly pigeonholed into a narrow role. I’m seen as a “coder” and a “geek”. I might even be seen as a “wizard” or a “genius” but, in my opinion, in a negative way because programmers have acquired (perhaps deservedly) a reputation for being interpersonally inept geeks who are myopically focused on technical matters to the exclusion of the more pertinent and important business realities. In my experience this is a very hard perception to shake.
In my experience, business owners and other stakeholders aren’t interested at all in getting business-related input from developers. They’ll almost certainly claim to be interested, and even take time to solicit superficial feedback (“Do you guys like the version of the marketing site design with the blue background or gray background better?”) but they aren’t genuinely interested in the developers’ input on these matters. And frankly, they’re probably right 95% of the time not to be interested, because most developers aren’t qualified to comment on business matters. Programmers have a reputation for not being knowledgeable on business because, most of the time, they really aren’t.
So that’s one problem: there’s a perception that I’m a coding machine and that they should use the coding machine to write code. There’s another problem, too, which is that I’ve already arranged with the client that for $X/hr, the client can give me stuff to do and I’ll do it. Let’s say a client is paying me $100/hr or $4000/week for 40 hours a week. It’s going to be pretty tough then to pitch the client on, for example, flying me to their office to train their staff for a fee of $10,000/week. I’ve already demonstrated to the client that my time is worth $100/hr. Now I want them to pay me $250/hr? It’s a pretty tough sell. And it’s weird to come out of nowhere and offer some additional service. Nobody ever does this (in my experience) and on the few occasions that I’ve tried, it hasn’t worked, and only made me feel stupid for trying.
Now let me explain why selling more to existing clients can work much more easily in a true consulting relationship. Let’s a say a client hires me to deliver a training engagement and, during the training, I notice that a couple students are so inept that they shouldn’t really have been allowed to participate in the class in the first place. I can mention this to the client and offer the additional service (for an additional fee) of helping process the applicants. In this case the “upsell” is very welcome because the amount of additional value I’m proposing to provide probably well exceeds the additional fee I’d require. Plus the client already sees me as someone who’s totally qualified to perform the service and naturally fitting in this role. (By the way, the example I just gave isn’t hypothetical. It’s from a real experience I had.)
Why “repeat business” doesn’t work for contracting
When I’m working in a staff-aug relationship, the work doesn’t really consist of discrete projects for the most part. It’s just a continuous stream of features and bugs, some big and some small. And my performance probably isn’t evaluated on a per-project basis but just the general impression of how I’m doing with this continuous stream of features and bugs. If the client likes me, my reward is more work. My reward is I don’t get fired and I get to keep working with the client for another week or month. The “best” scenario is that the client likes me so much that they never fire me and I get to work there for the rest of my life. A thoughtful person might ask how that’s freelancing and my answer would be that it’s fucking not. It’s a fucking bummer is what it is.
I’ve experience the other kind of repeat business and it’s great. When I’m not doing contracting, I’m doing corporate training or some other kind of teaching. A few weeks ago I went and taught a class for a very large company for whom technical training is a new thing. (I taught this class under a training company I’ll call Company A.) After I taught this class, the end client called Company A and told them they’d like to make them their “premier training partner” and the training company told me they want to use me for future classes. When I heard this, it was such a great feeling. It felt like a big win. I’ve also had other teaching clients use me multiple times and it felt like a huge win in those cases as well. I don’t think I’ve ever felt like I’ve “won” by having a staff-aug client simply not fire me. Again, the idea of “repeat business” for staff-aug clients just doesn’t even really apply.
Why referrals don’t work (very well) for contracting
If I teach a one-week class for a client and the client likes it, that client may refer me to other prospective clients. This in fact has happened to me. The situation is a little different with contracting clients.
Let’s say I’m working with a contracting client and the client absolutely loves me. What the client will want to do, of course, is hang onto me for as long as possible. The client won’t refer me to somebody else. Why would they? They want as much of my bandwidth as they can possibly get. What if we stop working together? Well, if I mention to my now former client that I have some availability again, they’ll probably want to hire me again. Why would they send me to somebody else if they can have me themselves? And of course if we parted ways on bad terms, they probably won’t be singing my praises around the neighborhood. So whether the client liked me or didn’t, I’m probably not getting many referrals from them.
When I get a contracting referral, it’s usually not from a past client but a “co-worker” from a previous client engagement. That’s fine, and in you could even say it’s necessary, but there’s a key weakness to these types of referrals in that it’s not a buyer-to-buyer referral. I’ll explain what I mean shortly.
I’m going to keep using examples from my teaching experience because that’s what I know. If I teach a class for a client, that client probably won’t need/want 100% of my available time extending into the indefinite future, which is what a contracting client would want. The client probably just wants somewhere between a few days and a few weeks of my time. So there’s plenty of room for multiple clients to use me without those clients competing too much for my time. And it’s entirely possible for these referrals to be buyer-to-buyer referrals. This is significant because buyers (that is, the people with the decision-making and check-writing authority to hire me), I believe, trust recommendations from other buyers more than they trust recommendations from their subordinates.
It’s also much more natural for me to ask a training client for referrals than a contracting client. At what point, exactly, would I ask a contracting client for referrals? Again, if the contracting client likes me, they’ll want to keep using me, and if not, they probably won’t want to refer me anyway. I guess the only “referrable” scenario I can think of is if the client likes you but goes out of business or gets a new job.
Why testimonials don’t work that well for contracting
As I mentioned earlier, contracting usually doesn’t consist of a series of distinct projects with measurable outcomes but of a steady stream of features and bugs. Not only is the work typically not of a measurable nature, but the work of any one programmer is often blended together with the work of all the other programmers on the team, making it pretty thoroughly impossible to measure the value of any particular programmer’s contribution. Even if the client loves the shit out of you, the kinds of testimonials the client could provide don’t really match up with the kinds of testimonials a freelancer would want. The kind of testimonials you want are “Jason helped us double the conversion rate on our sales page which immediately doubled revenues.” But the kind of testimonials you can get from contracting clients are more like, “Jason is a rock-solid communicator and I knew I could absolutely trust him to run our development team.” The latter kind of testimonial might make me feel good, and it might even help me get more clients in the future, but it’s more of a “character” testimonial, not a “results” testimonial. And in my experience, contracting testimonials are kind of awkward to get, because when do you get them? The only purpose of a testimonial is to help get a new client. So if I try to get the testimonial while you’re still working with a client, it’s kind of weird because from the client’s perspective what am I doing, am I trying to leave? The other option is I can ask for a client’s testimonial after I tell them I don’t want to work together anymore, which is also weird for obvious reasons. And the last scenario is that the client is the one who ends the relationship, in which case a asking for a testimonial would be weirdest of all. I know I might be overthinking it but that’s the way I look at it.
Testimonials for project-based work, on the other hard, are much more natural. Projects pretty much by definition have a beginning and end. If I teach a one-week class for a client, it’s totally natural for me to have a conversation with the client afterward which includes the solicitation of a testimonial.
Why “charge more” can be hard with contracting
Lastly, it’s very common to hear the advice “charge more”. It’s absolutely true that no matter how much you’re charging, you could be charging more. The reason this is true is that no matter how valuable your services are, you could always make them more valuable. There’s a very important nuance to this truth, though: market rates are real. I’ll explain what I mean.
If you’re charging $25/hr for programming, you absolutely can (and should!) raise your rates to $50/hr. You can even double that again to $100/hr and still get work. But good luck charging $900/hr for programming. There’s a line somewhere. I’ve charged $100/hr for plenty of work in the past, and I’ve even charged as much as $150/hr for emergency work or highly specialized work. But I’ve found that if I want to charge a client something like $150/hr or even $120/hr for regular old staff-aug development work, they’re going to tell me that it’s substantially more than they’re paying any of their other team members and they’re going to want me to explain to them, quite understandably, why they should pay me so much more than anyone else. “Because I’m really good” is not a compelling answer.
I’ve discovered that there seem to be a few particular ways to charge better-than-market rates: 1) do very specialized work that’s not readily available anywhere else, 2) charge a “rush rate” for an emergency, 3) charge by the project and offer a service other than programming. That last point is so important that I made it bold and underlined.
There’s a perception in my experience that coding is coding and that good programmers cost between $50 and $120 per hour. This perception is totally wrong (programmer productivity varies not by a factor of 2X or 3X but by a factor of infinity*X because some programmers are so bad that they provide zero or negative value), but that doesn’t mean that the perception doesn’t have real power with real effects. So I’ve come to believe that if I want to escape market rates for programming, I have to offer a service other than programming. Let me talk about what that has meant for me.
I’m eternally and intensely interested in how to make more money in less time. I raised my freelance rate over time from $50/hr up to $100/hr and, like I’ve said, even up to $120/hr or $150/hr at times. But I’ve discovered a ceiling just above $100/hr that seems really hard to break through. That’s where that force of the market rate perception comes in. Most clients perceive the top of the range to be around $100/hr. I first bumped up against this ceiling in 2014 when I first started trying, unsuccessfully, to make $150/hr my new “official” rate.
For a couple years I desperately wanted to understand how to break through this ceiling that seemed to exist somewhere between $100/hr and $150/hr. Then, in 2016, I heard a podcast episode about technical training and saw it as the potential answer to my question. I didn’t realize that companies regularly pay up to $5,000 a day or $25,000 a week (or more, apparently!) for technical training. So I made it my business to break into training, and I did it. Technical training has made up most of my income so far in 2017. (I’m writing this is June 2017.) I’ve made roughly as much from training in the first five months of 2017 as I did in the whole year of 2016.
So I wouldn’t say that training is the answer but it’s an least an answer. It has worked pretty well for me so far so my plan at this point is to apply the principle of “double down on what works” and just take the training stuff as far as it will go. I’m not charging $5,000 a day yet but I intend to get there. I understand that some consultants charge thousands or even ten thousands for a single one-hour speech, and since training is a form of speaking I imagine that it might be a good stepping stone to even higher fees. But like I said, my plan for now is just to double down on training and see how far I can take it.
Fantastic read. Thanks for taking the time to write abou this.
If you’re doing technical training, you can also productize it by creating ebooks, video courses, etc.
Can you share more details about technical training? What/what technologies do you teach? What’s the format? How did you find your first gig?
Ah, you already wrote about it https://www.jasonswett.net/how-i-got-started-in-training/
What you describe doesn’t sound like the norm or what the majority of freelancers or even contractors actually do. It sounds like you’re taking gigs that are basically employment, minus job security. If you take jobs like that, you may just as well get a regular, full time job and forget all the mincing of words.
“What you describe doesn’t sound like the norm or what the majority of freelancers or even contractors actually do.” What do they do then?
I found this to be refreshing and thought provoking. Thanks for putting this out there.
Very interesting! Do you recall the name of the podcast you listened to?
The Freelancers Show. I remember the episode had “training” in the title.
I agree with you. As a freelancer you quickly get great hourly rates, but can not raise them much higher. It is similar to employment.
If you can sell a product instead, the sky is the limit. But it is not as easy.
Very true about products! “True consulting” can also pay extremely well from what little experience I have with it.
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This is wonderful and totally parallels my experience as a software contractor. Glad we got to work together for a bit. I totally failed to realize how much of a badass you are. Keep it up!
Don’t forget the old saying: “Those who can’t do, teach”
Joking aside, running a business in this day and age is very difficult. The most difficult thing,as I see it, is staying original and having a unique product that people will use. We easily get scared of the rate of change of technology but I think we shouldn’t be. The adaptation rate is much, much slower than the actual rage of change. The key is to find a niche market and satisfy it. Customer loyalty is also an issue. We are bombarded non-stop with crap and it’s hard to keep customers interested. You have to build relationships. That’s what builds the new business.