Drugi jezik na kojem je dostupan ovaj članak: Bosnian
By: Bor Klemenc Mencin
As the brink of summer approached, marking the start of the proverbial low season in our business, I thought it would be a good time to get my finances in check. So I performed an extensive overview of my cash flow for the past year – earnings, expenses, profitability and such – to see if my summer diet will consist mostly of champagne and caviar or stale bread and Cedevita.
I wanted to share some of my findings with you since money matters are kind of important when deciding on whether or not to go into freelancing. Before you continue, please keep in mind that I had to keep some aspects of my financial dealings private. Also, “extensive overview of my cash flow” may be a bit of a hyperbole by someone who never really paid any attention in his microeconomics class…
Let’s start with the bad news: cost-of-living expenses. Now, I’m not exactly what you would call a thrifty person, but I’m a ways off from leading a cash-money-bling type of lifestyle. I rent a small flat in Ljubljana and share those expenses with a beautiful, intelligent and lovely human being I’m proud to call my girlfriend. I go out maybe 2 times a month. It’s rare for me to go for drinks, ever rarer to go a shopping spree, and I generally do my best to not get sucked into any pyramid schemes … I don’t own a car, but I do own a business which means I outsource my accounting, rent an office, and pay (minimal) contributions. Aside from my phone and internet subscription, I do subscribe to a few other services at a minor fee.
Here comes the shocker: my fixed monthly expenses amount to just under 900 euros. And that’s not counting food, the occasional outings/drinks/shopping, and a rainy day fund. By simply adding food to the equation, fixed expenses rise to a whopping 1200 euros. This is the bare minimum I have to earn just to get by on a monthly basis. I don’t know about you, but that struck me as a lot, even by Slovenian standards.
Now that we’ve looked at the leaks, let’s take a look the minimal amount of money that should be flowing in to prevent my ship from sinking – a weird way of putting it, I know. In an ideal setting, I should be working 40 hours per week. Over the course of a year that amounts to an average of 173,33 working hours per month. In those 173,33 hours, I should earn at least 1200 euros, a minimum of 6,92 euros an hour. That seems pretty reasonable, right?
A little caveat: working 40 hours per week is not really feasible for a newbie freelancer to pull off. Maybe veterans with exceptional time management and organisational skills can take on this feat, but that’s just not me. As I told you in some of my earlier entries, there are weeks where I’m working as little as 4 hours per week and there are weeks where I can get over 70. On average, I’d say I manage to pull somewhere around 20-25, but that’s an *extensive* guesstimate.
Instead of wrapping my analytically underdeveloped brain around the question of what my average monthly earnings are (and revealing the whole scope of my finances in the process), I calculated profitability per project. I took the total profit of a single project, divided it by the number of hours it took me to complete it and got some interesting results.
Because I charge per project, not a fixed hourly rate, project profitability varied immensely. My most meagre project came in at around 15 euros an hour. A bit shabby, right? On the other hand, my most profitable project had me raking in just shy of 100 euros an hour. Not nearly enough to support that cash-money-bling lifestyle I was talking about, but not too bad. The funny thing is that out of my top 3 most profitable projects, all of them were small tasks – “favours” for acquaintances and direct commissions from small companies. In terms of profitability, the big campaigns I did with the agencies came in at the bottom rungs. I’ll be sure to remember that the next time I’m negotiating with the ‘big boys’.
That being said, there’s a lot of complex middle ground between these extremes. Projects vary in nature: some are complicated, some are fun, some are completed swiftly, others can take twice as much time as you thought they would. It also depends on the role you played in the project and whether or not you’re seeking a long-term relationship with the client. Since I’m afraid we’re at a point where venturing into statistics any further would run the risk of giving it all away to the more number savvy readership, let’s just leave it at that.
All I can say is I’m able to go through each month without any major fears or anxieties when it comes to the subject. Of course, attempting to command higher fees continues to be one of my top priorities and, slowly but surely, I believe I’m getting there. The most important thing I learned in this regard is that you shouldn’t be afraid to set a price that seems fair to you. That way you’ll feel respected and be motivated to do your job properly and in a meaningful manner.
I think a lot of people are afraid to speak their mind when it comes to this, but the truth is that when you bite your tongue or give a lower-than-reasonable quote, you’re setting yourself up for disappointment. You’ll feel you’re being ripped-off and undervalued, which tends to make your work seem like a chore or an involuntary favour (symptoms include: subpar work, anxiety, resentfulness). In most cases, this leads to a weird downward spiral of having too much work while simultaneously having trouble making ends meet. It diminishes the whole point of freelancing. Just try it now and then and see where it goes. You’ll probably be in for a pleasant surprise.
As for me, the jury is still out on the whole champagne v. Cedevita thing. It looks as though I won’t be in a position to drink Courvoisier on tap, but I’ll definitely try and pause my instant drink intake every now and then to pour myself a dash of the bubbly.
P.S.: Here’s a useful guide to setting your freelance rates.