Those who might consider your paid course would only have the persuasiveness of your sales site to go off of. By offering a free email course, you're able to figure out whether Paul's capable of providing you value. If he is, he'll have a call-to-action that upsells you on his paid course which provides even more value.
There's nothing at all wrong with this formula, and IMO it's much "safer" for the buyer.
Not necessarily true. I offer a free email course (also for freelancers), and I position the free course as the strategy - how should a freelancer think about sales? The premium course is the tactics - an actionable deep dive into the content covered in the free course, along with templates, scripts, video interviews, accountability, and more.
It's worked really well. People love the free course, and those who want a more tactics and accountability buy the full course.
People may love the free course, but does it actually make previously unsuccessful people successful? I think the implication here is that the free course is essentially just there to get you pumped up for the paid course, and is not actually useful.
It does. My business goal with my email course is to generate qualified leads for my course. My personal goal is to make people better off than they were before they started the course.
If the free course is nothing but the "sizzle" and a giant pitch for something paid, that's a problem. You're probably not going to get many sales for your paid course, and no one's going to refer others to the free course.
But if it's valuable independently of the premium course, and allows the reader to determine if it makes sense to go pro, then it's a win-win for all involved. At the end of my course, I ask people to reply back with what they got out of the free course and what they plan on changing as a result of it — I get a fair amount of awesome responses (which turn out to be great testimonials) from this last email: http://i.glui.me/1A3VNtx
I can vouch for this. Not with the emails, but came across bdunn's free blog and podcast 2 months ago. They earned me an extra $8,000 last month, and a better end product for my client. Spending a fraction of this to get more advice (the paid course) was a no brainer.
(Brennan, feel free to use as testimonial / ask me to elaborate.)
I am the founder of SendOwl and this is not a project by us. It's clearly ripped off our brand though. Will be getting in touch with them to discuss the matter immediately.
This is very confusing - you might want to think about another name or at least changing your design.
The name, logo and theme/color-scheme are all very similar to sendowl. So much so that I assumed that this was another project by the sendowl team until I saw this comment.
Justifying your costs by basing what you charge against the costs of a similar employee is a good start, and in my experience it's how most of us start (the old "divide by 2000" trick). I like that Andy makes note that you need to include overhead (prospecting, writing proposals, ...), which a lot of new freelancers tend to miss.
However, I think the big takeaway is realizing that the formula presented establishes a minimum threshold. It shouldn't be used to figure out what you charge. My rates are way north of what the a developer/marketer would command on the open market, but I don't contextualize my costs against the equivalent costs of an employee; instead, I anchor my costs against the upside that a successful delivery of a project would yield for my client.
The single best way to substantially make more money consulting is to stop selling commodity services (web design, Ruby programming, whatever), and to truly consult. Provide your clients with a way to bridge the problem they face with the solution they desire, and charge accordingly.
Bingo. Thanks, Brennan. Part of the epiphany I had was "wow, I did a lot more than programming on that project". I managed it, taught other developers, and "consulted" quite a bit. I also read your book right before I had this moment. I hadn't quite bought into it yet, but this was the first step.
Sure. So I had a client who wanted us to rewrite their 10 year old MS Access app as a web app.
The engineer in me would have immediately jumped into "OK, how do I migrate this database into Rails and recreate the functionality and UI of this app?" I would have priced the going rate for web development, and tried to gauge how long it would take to complete.
The business owner in me realized that this app is critical to their business. It's the tool they use to manage and close sales, and about 20ish people use it all day, every day. I also knew that the CEO was currently the maintainer of the app, as it was started when the company was a home business and the owner picked up a "Learn MS Access in 21 Days" book.
Knowing this, I went to work learning how I could not only modernize the product by making it web based, but I wanted to leverage my experience in usability to optimize how their team uses the app. How can we not just rewrite the app, but also optimize it? Is there a clear path to adding an hour or so a day of additional productivity per employee, and what would 100 hours of combined additional productivity a week mean (financially) for the business? And how much better would it be if the CEO of this small company wasn't needing to maintain the app himself, but could focus on what he does best — growing his company?
What I sold wasn't software or a rewrite. I ended up selling a better tomorrow for his business, and a more profitable tomorrow. This "decommoditized" what I was doing, and while he paid me a premium, he received a much better product at the end of the day.
> While he paid me a premium, he received a much better prodcut
n.b. That's how good business owners will look at this transaction: in terms of ROI. Sure this client paid a lot of money, but it was an investment in his company. It paid off. When you start framing offers like this, you don't have to feel bad about the price you'd like to charge because both parties come out further ahead.
Edit: Of interest to HN, I had a conversation with a business-owner friend of mine earlier this week. In trying to come up with a business ideas, I'd asked her if there was any software she hated using. This sparked an interesting conversation. When we got to the discussion about pricing, I asked:
"How much would you pay for something like this? $500 a year?" Her response was, and I quote: "I would do it on a monthly basis. Anything between 20-49/month is easy to sell. People <I think she means business owners here> don't even notice it."
tl;dr When you save a company money or time, they will hand you money accordingly.
This makes sense, but unfortunately not all clients are inclined into accepting propositions like these. Some clients do the research and design internally and then they hire a "consultant" to do the development part of the project.
I consider that the term "consultant" is used to freely and most of the time clients advertise that they are looking to hire a consultant when they actually want to hire a freelance developer.
If you want to work with them as "life support" for your practice while you figure out how to find the (innumerable) real clients that pay for business value, fine. But don't kid yourself. Call them "life support", not "clients". And just like a ventilator, staying engaged with life support is going to screw you up.
You cannot, cannot, cannot earn true market rates if your default position on incoming prospective business is "yes". You're going to say "no" a lot, and you're going to hear "no" a lot.
Fear of "no" costs more tech consultants more money than DOTA2 and Imgur ever will.
> I consider that the term "consultant" is used to freely and most of the time clients advertise that they are looking to hire a consultant when they actually want to hire a freelance developer.
For some bizarre reason, "consultant" has taken on in common use a meaning approximately equivalent to "contractor", which has nothing to do with whether the work being contracted for is consulting or not.
I really think the idea that "consulting" is some special thing that "contractors" and "freelancers" can't do is harmful. In the sense we all mean it, "consulting" just means "being smart about what services you provide and at what price". It's the equivalent of product management in a product company. If you're serious about being independent, you have to do it. Now.
> I really think the idea that "consulting" is some special thing that "contractors" and "freelancers" can't do is harmful.
Most consultants are contractors (whether they are also freelancers or not depends on whether they are individual contractors or are contracted firms), though there are some cases where internal employees job function includes consulting for some other internal group than the one to which they directly report.
But not all contractors (freelance or otherwise) are contracted to consult, and those that aren't contracted to consult shouldn't be called "consultants", in the same way that people that are contracted exclusively for tasks (including consulting) that don't include developing software shouldn't be called "software developers".
See, now I think you're using the term in a subtly different way than Brennan is. Brennan couldn't have sold that Access to Web conversion deal as a pure consulting project, in the Arthur Anderson "split up implementation and consulting" sense of the term.
Everyone working independent needs to think of the business value they're creating; they need to think about their services the way product managers think about Feature/Function/Benefit charts. We call the people who are good at this "consultants", even when most of what they actually do is (say) Rails apps.
Those aren't the only two options. In fact: they are both bad options!
Here's a much better option than either. I'm sure it's not the best way either, but the fact that "what came off the top of my business partner's head" is so much better than hourly or fixed is a good indication of how bad hourly and fixed are.
Charging by the day is better than charging by the hour, and week is better than day.
Better than each is to stop valuing your time as "just" time. You'll never have those moments again.
Value your work product. Don't value your work effort, and definitely not your time.
Actually, don't value your work product. Figure out how your customer values your work product and charge that price.
Once you start to realize that your time is the most valuable thing you'll ever have and simultaneously completely worthless as a unit of currency, you'll begin to trade with what you have that is truly of value to the person actually paying the bill: that thing you haven't created yet.
I was going to bookmark the linked comment, and found that I had in fact already done so. It is a very useful, actionable piece of advice. Thanks for writing it.
I bill by the week. At the time, my agency rate on this project was $10k a week, which included the full time attention of a senior developer (~4 full days), plus part time Q&A and PM oversight.
Also, I think there is a lot of focus on pricing (fair, it was the point of the article). But you simply need to back it up with what is your differentiator. It's just like any product: you need to be articulate as to why you cost your rate, and also have an idea of the value of your work to customers (different customers value the same work differently).
So, know what makes you different, find the customers that value that work more, and set your price according to that.
In my experience, differentiating from competition wasn't really a factor in how much I charged or how much I made. For a lot of businesses that would hire a solo consultant, there is no consideration of the competition.
Most of the businesses that I've dealt with are intimately familiar with the problem/objective, but really don't have much knowledge of what is required to get there. This is where the consulting part comes into play. Many times it's been as simple as "let's talk about what you're trying to accomplish here" and from that I am able to formulate a solution in my mind of how that can be solved with custom software (or in some cases, an out of the box tool). I make the recommendation, and boom, a sale is made.
This is where making the business case for what the client stands to make comes into play and why what another developer might charge is highly irrelevant. If you can convince a business owner that he'll make $100,000 with your solution, convincing him to pay you $30,000 is not too difficult, regardless of whether he could technically find a high-school student who would do it for $15/hour.
To me, the key word is trust. Once you prove that you have good ideas and know how to execute on them, making sales is really more about just repeating the process than undercutting the competition. It goes without saying that you must deliver, though.
I am currently struggling with a method to raise my rate with a current client and your comment has crystallized the problem I've been having in writing the email, but not the way you think.
Another way of differentiation is to take stock of what you provide over and above basic work. That is, not to differentiate from any perceived competitors, but from what the client thinks you're doing (their perception of your role to them). If they think you're just doing web development, but also rely on or defer to you for system administration, UX/design, content, and/or hosting decisions, et al, those are all things that comprise your value. This is a roundabout of repeating tptacek's elements-of-value lists linked elsewhere in these threads.
Sounds like, "Actually I take the idea of a 'rate' off the table, by becoming an equity cofounder with a cliff, and leveraging my connections at fortune 500 companies to sell the entire company for $60 million. This nets me about $20M based on the way I structure my contract, and takes approximately 800 days of work, so that works out to about $25,000 per day or something like $3125 per hour. Really, if the business is in a big market with good growth and good margins and some kind of proprietary lock-in or moat, $60M is quite a reasonable figure for many Fortune 500 companies to acquire for. Then I just make whatever needs to happen for that to happen, happen."
Well, good for you - but I don't think it has much to do with freelance web development! (the 'commodity' you mention).
In particular, what makes you think OP could do the same?
It has everything to do with freelance web development, because I (a 1099'd freelancer) am still doing web development. I've just come to realize that clients don't pay me for lines of code, therefore I don't sell lines of code :-)
Figure out WHY a project's being commissioned and then propose what your clients actually care about (hint: not code), vs. doing the usual "here's a proposal with a bunch of technical line items, a quote, timeline, and a signature field"
In my fictitious example if you're still personally coding the things that need to happen, then by your argument you're still a "programmer", just one who is earning $3000 per hour. (Which certainly stretches the meaning of the term.)
What I'm saying is that it is not quite fair to assume that every 'freelance programmer' (OP or your readers) can do that to the extent that you can. Business requirements analysis is simply a different skill from programming.
Consider the example where the person buying your services is on to your pricing strategy, and misrepresents the value of the business downward (or hides it from you), so that you are left only with the process but no good idea of the value of it.
Can you still do your business analysis, and price it as you suggest? Not nearly as well. Even though as far as code goes, you could still write all of it.
So I would say that what you advocate goes well beyond the idea of a freelance programmer, to include aspects of a business consultant. (Finally, really good proof of this is that in some cases you may well be able to hand off the actual coding to someone who will follow your instructions at a low hourly rate. The fact that this is even a possibility suggests that the value you're describing and capturing may not be in the specific programming at all, but a different layer entirely.)
Real clients don't do this, but it wouldn't matter if it did. When a prospect values your services too low, you simply say "no" to them. It's called "deal qualification", and it's a Sales 101 skill. Your job is to find the clients who value what you're doing enough to be worth working for.
This isn't theoretical. Lots of people on HN execute this strategy successfully.
Thomas, and do you think "freelancer" is how they should title themselves? It's not so much about increasing your negotiating skills and rate 'as a freelancer' but expanding what you're doing so that it's quite a poor title at that point.
A great comparison is the patio11 story about the expensive engagement ring vs extended honeymoon. If you can see what your clients care about, you can provide much greater value to those client (and have them write what seems like a ridiculously large cheque without even thinking about it) vs just delivering what they say they want without considering the larger picture.
I have an email course (autoresponder) -> course sales funnel setup for Double Your Freelancing Rate which nets about $1-1.5k a day in sales, mostly on autopilot. This is by far the most successful funnel I've created for any of my products, and is performing really stinkin' well.
I have to add that your free material is full of value. I am not affiliated with bdunn in any way, but I have gotten a lot of use just from some of the ideas in his free email stuff. Most recently it was regarding writing proposals, help me up my game in that arena.
So if anyone else is thinking of setting up this kind of autoresponder email course, make it valuable. I've been through a bunch of these kind of deals and there is a lot of crap out there.
That's awesome, congrats. How did you create your sales path? Did you use another model. Also, do you still work a salaried job? I assume this is your main source of income.
Haven't had a salaried job in more than 6 years, so no. All of my income is through the course I referenced, my SaaS (https://planscope.io), and a few other courses/books I offer.
Does the end of your sales funnel have some sort of scarcity built into it? Or are you basically just linking out to the sales page, to an always available book/course?
Yeah, so there's a coupon offered that expires in a week. I'm applying an "Eligible for discount" tag in my marketing automation tool when I announce the discount, and retract it when the sale window ends. And my sales site checks for the presence of that tag before applying the discount. This effectively allows me to create a sale-for-one type system.
Thanks so much for this. I've been trying to figure out how to create some sort of automated discount like this for a while now without success. Your sales funnel is actually very sophisticated. Do you think infusionsoft is the best automation tool to implement something like this?
I think he's mainly trying to weed out people with one-off transactional sales, like online stores. Josh has mentioned a few times that occasionally they'll sign up and end up churning out because the model just doesn't work for them. But yeah, it could definitely work if you ran like a membership site off of Stripe. Not exactly a SaaS, but same sorta rules apply.
Really any "recurring subscription" business will work just fine as long as you're using subscriptions/plans within Stripe. "SaaS" is indeed infinitely easier to market to and in reality is the lions share of "recurring billing businesses that actually make money" :)
Like many others have said in this thread, it's hard to make any meaningful dent in your profit from being a middle-man between your clients and who's hosting their sites.
I'm a fan of bundling — which sounds a bit like what luckyisgood was getting at.
Every consultant wants diversified and/or recurring revenue. This is why just about all of us inevitably create (or try to create) products of our own. Eventually, many consultants get wind of the idea of retainers, which can have the predictability of SaaS but without needing to build and market software first.
The issue arises with how most consultants put together retainers. It's usually something like "I'll sell you in advance 20 hours a month of my time for $2000."
Here's the problem:
Any first grader can figure out that you're effective hourly rate is $100, which is probably less than your real rate — but hey, it's a retainer and it'll relieve your need to always be selling, so that's OK for most.
Since you'll be making $100 an hour on this retainer, your income potential becomes constrained (you're now on the hook for 20 hours a month @ $100/hr) and the client knows what your hourly rate is. "Brennan, I need more this month. I'll pay you $2500 for 25 hours" or "Can I just pay you $100 an hour when I need you?"
And this is where the retainers of a lot of the consultants I've talked with go south, and the relationships sour.
A better approach (which is something patio11 and I talked about during an event we hosted last year) is to instead sell bundles — which could include your time, and hosting — and make these bundles really tricky to divide.
I could sell a client on:
- Hosting
- Backup management
- Framework / security updates
- A/B test experiments and management
- Up to 20 hours of upgrades and modifications
Now it's not so easy to divide the invoices I'm sending my clients monthly by X.
And I could charge... $5000 a month for that. Or whatever would make it so that my client gets both the peace of mind they're looking for (smart guy managing hosting, backups, security issues, etc), a product that's becoming more valuable (running a/b tests, analyzing their funnels, etc), AND a pool of time for me to do whatever random updates they need.
I've done, and know quite a few people, who are currently selling framework updates (https://railslts.com), a/b testing as a service (https://draft.nu/revise/), and not to mention selling blocks of time upfront — e.g. the retainer model a lot of agencies employ.
(Re)selling hosting, webapps, etc. situates you as a middleman; The margins are much better if you not not only sell them on an Optimizely account, but run it for them also.
Optimizely takes minutes to sign up for - and they're always looking to make that easier, and to make more people aware of the value they provide. In contrast, the expertise to conduct tests that alter revenue outlook takes somewhat longer to develop.
Sure, people could go out and spend the time to learn just about anything. In practice, they won't, because that's competing with all the other anythings they could be doing.
Sell the thing that actually has significant barrier to entry.
You take care of the easy thing too, because making the client spend meaningful attention on something that would take you five minutes is just silly, and you're there so they don't have to worry about that stuff. But sell the hard thing.
Imagine what it's like to walk into your Podunk suburban bank every two weeks with a $50K+ check in your hands from a company with a .com in their name. Yeah, that was fun.
But Patrick's absolutely right re: checks. If cash flow is tight, my favorite trick is to FedEx a prepaid overnight envelope to your client. Ask them to place the check inside. This elimates the "check is in the mail" song and dance, and it's only marginally more expensive than a wire fee.
It actually really shocks me that a lot of invoicing tools that support time tracking still only allow for $rate * $hours invoice creation. I invoice weekly, and end up needing to piece together invoices by hand.
(I run a product, Planscope, which supports daily/weekly billing for budget tracking, but we don't have invoicing... yet.)
There's nothing at all wrong with this formula, and IMO it's much "safer" for the buyer.