The Simple Math of Freelancing – and Why We Complicate It: Part 1

This is the first of a two-part post.

I’m a creative freelancer. So is my wife Simone. Or are we?

We own and operate an incorporated business. It pays our full salaries and on occasion a little extra, but not as much as some would think. We do all the tax stuff an incorporated should do ­– Ok, Simone does and God bless her for that. We hire and pay other freelancers when needed in order to win and execute projects for clients. We work from our home offices, and we pay the bills. Doesn’t that make us more than simply freelancers? Nope. Still just freelancers, albeit very organized, responsible, by-the-book, and, in our own right, successful ones.

My point is this: No matter how big or ‘shiny’ the project, no matter how sophisticated or well-known the client, or even how impressive the project, we are essentially paid by the hour. We offer a variety of services to multiple clients at varying rates, but in the end our revenue – or should I say, the revenue of our company – relies on an economy that pays for our talent and skills based on the time it takes us to do it or, in many cases, the time it needs to take us to do it.

It’s a pretty standard model for most self-employed creatives, whether we see it as a business model or not, and is the foundation of how we make money. If this is indeed how you charge for your work then you need to understand that although the math is simple, it can and often does get complicated, illogical, and sadly exploitative, which can lead to a variety of bad behaviours, on both sides, paving the way for negative outcomes. Not the least of which is feeling taken advantage of, questioning our own value, and ultimately depleting the joy we once had doing what we love. Somebody get me a tissue.

I know, this narrative has gotten a tad depressing, but from this point on I promise to turn it around. It only gets better from here. Cue the unicorns…

Let’s start with the math: Basic algebra, and like it or not, it’s how we basically price ourselves and hopefully make money.

  • X times Y = our income
  • X being your hourly rate
  • Y being the amount of effort
    • yes, time, but I have issues with being transparent with that

Noted, there are countless ways to play with the above – especially to your own advantage – but this equation is pretty much the foundation of the freelance economy. Trust me, simple math is good and the right place to start.

Like any self-respecting User Experience (UX) expert, I’ll start with what I see as being a pretty typical scenario.

Meet Kapil, a freelance graphic designer.

After two years of freelancing, he’s gotten to a good place with his business – on the books at least. He’s done a good job of networking and through doing high-quality work, has done well through referrals and organic client growth.

Since he started freelancing full-time two years ago, Kapil has maintained his hourly rate of $40/hr. He acknowledges this rate is a bit low based on what he’s observed among his cohort and as a former employee at a design firm that hired a variety of creative freelancers. But considering his limited experience and portfolio at this early stage, this reasonable rate gives him competitive advantage, while making a respectable $40K annually achievable two years in a row.

Sounds pretty sweet, and good for Kapil, right? Well…

Kapil will tell you that through some revisionist history on his part and on paper, it indeed all looks great. In reality he’s feeling less than optimistic of late. He feels exhausted, frustrated, terrified and, as a result, he’s questioning his decision of going freelance and whether he has what it takes to succeed. How come, you ask? Here are the facts:

  • He hasn’t slept more than five hours in one stretch in the last six weeks
  • Although he just got paid for completing a sizeable project (key reason for the aforementioned lack of sleep) he doesn’t have nearly enough work happening in the foreseeable future to hit his monthly minimum for the next three months
    • Even though it looked like lots of work was coming a couple months back when he booked a week’s vacation in Costa Rica with his friends… Gulp.
  • The Costa Rica trip will be his first week off since he started two years ago.

What. The Fuck. Happened?

Kapil is asking himself exactly that question right now. Ask any freelancer you know, and they will likely be able to speculate, fill in the gaps, or relate to Kapil’s dilemma. No matter the particulars, the theme is a common one and unfortunately, the price we pay in exchange for having the freedom to do what we love. Am I correct? Shit, I hope not.

Stop The Rhetoric

First, what if I told you that the WTF question Kapil is asking himself is NOT a rhetorical one. In fact, if it needs to be answered or things will not change, they very likely could get worse. See, rhetoric is intended to produce an effect rather than to elicit a response. Asking “WTF happened?” enables empathy from others without anyone feeling the need to answer it. Instead, as his fellow self-employed creatives, we will likely immediately relate then commiserate:

“Man that sucks.” And it does.

“Clients are evil.” On occasion, they can be. But how is this helpful?

“You don’t deserve this bullshit. You’re a really good designer.” Fair, but isn’t there a part of Kapil that, deserved or not, made this happen? Some particular behaviour that Kapil needs to be accountable for? Again, and for Kapil’s sake, not rhetorical questions.

Let’s go back to the math: Based on the initial numbers from the past two years, the math seems straightforward:

  • Annual ‘Design’ Revenue: $40K
  • Sideline income: $10K

Kapil has worked an average of 20 hours every week for 50 weeks, allowing him ample time to sideline as a bartender a couple of weeknights per week, as well as block two solid weeks of vacation time. How civilized for someone starting off on their own just four years out of design school. Plus, he pays less taxes than he would as full-time employee. Wow, lucky guy. Kapil is livin’ LARGE! Or is he… well, since we know he’s not, let’s dig deeper, shall we?

Where the math begins to fall apart:

“20 hours every week for 50 weeks” Actually played out as 80 hrs for several consecutive weeks, and 0 hrs for several others, with little to no notice either way.

“Ample time to sideline as a bartender” didn’t work out for him either.

  • On the weeks where he was able to ‘maintain’ his 20-hr goal, he often only got the work at the end of the business day, with it being due before 9am next day.
    • Remember that bar job? His shift was 7pm to close.
  • Let’s not forget – cuz we sometimes do – that a business doesn’t run itself:
    • Marketing:, profile/portfolio on Behance, LinkedIn, Instagram…
    • Hour tracking, invoicing and reconciling: Who here loves Excel as much as I do?! Anyone? Bueller?
    • Networking: Coffees, interview meetings, industry meet-ups, evening or online courses, fun and more fun!
  • Being the ‘good partner’ he is, and at the request of some of his more regular clients, Kapil worked far more hours than he charged for. But hey, he ain’t cheap.
    • OR IS HE?

Ok, so we get that Kapil works his butt off to succeed, and all of the above can take its toll, but hey, he’s made a conscious decision to do this because he loves what he does and has taken the ‘freedom’ road. This IS how freelance life typically works, and we take it all in with the expectation that as we get better and better at our craft we will be worth more – and we will. And if you ask Kapil about all of the above, he’ll tell you he has ZERO regrets. It’s all for the greater good… so if none of the above is a problem – where did it go wrong? Yep – The math.

To be continued…

Check back next week for Part 2 of this post, Where I provide three key things Kapil (and you) and do to make things right.

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