How This Freelancer Hacked His Hourly Rate

http://www.fastcolabs.com/3021904/open-company/how-this-freelancer-hacked-his-hourly-rate

by endtwist • 13 years ago

67 53 13 years ago

fastcolabs.com

k__• 13 years ago

Won't a linear increase function prevent anyone from hiring him in the future?

flavor8• 13 years ago

Right, but by the time he makes $3000/hr he can retire.

kfk2• 13 years ago

Which means USD 4.5M

(sorry, I OCD on numbers)

eterm2• 13 years ago

The article seemed to suggest that he reset it every 2 weeks. Or at least they implied it by saying that by the price staying at $76 he had as many in the following fortnight. (Rather than none, if it didn't reset.)

akinder• 13 years ago

Does everything have to be "hacked" these days? Pardon me while I go "hack" my bathroom break.

dhrona• 13 years ago

Your correct. One of those terms which is overused way too much to make click-baits.

mildtrepidation• 13 years ago

Hack your life, hack your rate, hack the planet. At this point I can imagine some people be confused if you actually used hack in reference to a tree, thinking you were talking about conservation.

Many people used to assume "hacker" meant "blackhat." Now, if they're paying attention but not part of the tech community, they likely think "hacker" means "janitor" or perhaps "blogspammer."

hderms• 13 years ago

I agree wholeheartedly. The internet has a way of repeating things over and over again until they're almost meaningless.

davidw• 13 years ago

I just read it as "smurf" and think of whoever is writing it as Brainy Smurf.

Yeah, I have small kids.

sheetjs• 13 years ago

Remember the cloud to butt chrome extension? Sounds like we need a new one for hack

mcguire2• 13 years ago

Personally, I picture an axe and whoever is writing as a crazed lumberjack.

Yeah, I probably need help.

ebbv• 13 years ago

This trend of over using the word is really hacking me off.

eliot_sykes• 13 years ago

This is the freelancer's site mentioned in the article https://onehour.me/

The hourly rate is $91 at time of writing.

ProblemFactory• 13 years ago

It's certainly a fun experiment, and could be a great way to introduce yourself to 91 potential long-term clients.

However, it's still too early to call it "hourly rate hacking" as the original blog post does.

There's no evidence that the method will work after the rate increases above the standard market rates. A few hourly slots per day, plus travel is very inefficient use of his time. He seems to be a competent developer with good business & design skills, and could probably book projects at $100-200/hour for full weeks at a time, instead of a few hours now and then for an average of $45.

NKCSS2• 13 years ago

And now it's $124... HN will do that for ya ;)

zipfle• 13 years ago

I really like this idea. I'm planning on starting to freelance in a few months, and one of the things that really worried me was setting rates. I know how much runway I have to make it a success, and I'm confident I can get work pricing myself below market rates (anyone can sell $5 for $4 forever). But I've heard a lot of people say you shouldn't try to be the lowest-priced option, because then you end up with clients who don't respect your time. I was worried that I might have to choose between market rates and be outcompeted by people with better portfolios, and low rates and clients I didn't like. This seems like a great third way. Start out below market, and raise my hourly rate by $1 for every 100 hours. I'll have plenty of time for portfolio building, even if I have to hustle for people who aren't my ideal clients (which actually sounds like a necessary experience anyway). Then when my rate goes up, if those customers don't think my time is that valuable, we can just part ways.

lnanek2• 13 years ago

Yep, this is the typical way it is done. Low rate if you don't have clients, then raise the rates constantly to keep your amount of work down to something you can complete.

SilkRoadie• 13 years ago

With freelancing I started out below market rate and suffered for about a year. The problem is that the majority of people looking for a "deal" are not fun to work with. They often care more about a good price than a quality end result.. it is often a battle to prevent scope creep..

Realistically success as a freelancer is down to how well you sell. You may have the best portfolio but if you cannot connect with clients you are going to lose out on work.

In the end I focused on improving the way I sold myself to clients and things improved drastically. My portfolio was fairly average but I did well by simply instilling confidence in clients that they were in the right hands and a project would run smoothly with me charge.

a-priori• 13 years ago

Instead of aiming for a 'market rate', aim for a target utilization rate (# of billable hours / # of working hours) of something like 70%. The remaining time should be spent pursuing new work. If your utilization rate is higher than that, raise your rates.

Edit: If it's less than your target, you'll automatically be spending more time finding new work. Use the extra time to figure out how to make yourself more valuable to your customers to bring in more work. As a last resort, lower your rates (maybe the market has changed?).

thatthatis• 13 years ago

I'd suggest something like: pitching new clients at last_rate * 1.2 if you're starting more than three weeks out, last_rate * 1.1 if you're starting more than 1 week out, last_rate if you can start immediately, and last_rate * ( .95 ^ num_weeks_since_last_project) if it has been a while since you had work.

Also, avoid round numbers: $110 says "this is my market rate" $100 says "I am rounding up, let's negotiate"

The two keys to making this work are: 1) always be over delivering and learning and 2) keep utilization up, when your time is scarce you have real credible negotiating power on rates.

kfk2• 13 years ago

I am thinking of stealing this idea to offer finance advise (mainly advise on: cash flow planning/forecasting, financial planning, how to read statements, setting up controls and reports). I like it because I would start cheap with little experience in consulting (while I do work in controlling in a multi co) and get more expensive the more experience I gain. Also, 1 to 3 hours buckets might actually work very well for this type of freelancing.

noptic• 13 years ago

How This Freelancer Hacked His Hourly Rate with one weird trick

thesimon• 13 years ago

Top Freelancers hate him.

laxatives• 13 years ago

Next up, how this young entrepreneur hacked his breakfast.

namenotrequired• 13 years ago

Do you work for Upworthy? :)

njonsson• 13 years ago

It strikes me that an hourly rate that increases over the life of a project might be a way for a freelancer to skew his billable hours toward new development and away from maintenance. It also reflects the fact that the freelancer’s knowledge of a particular client becomes more valuable over time. On the other hand, an increasing hourly rate is a tougher sell to potential clients.

NKCSS2• 13 years ago

He should just couple it to his backlog.

Set a Reserve ($A), and for every reserved hour, ad $B.

So, with a reserve of $50, and 40 backlogged hours (at $1 each), the rate gets $90. Once you have less work on the roster, the price drops. When more gets booked in advance, the price rises.

jasonkester• 13 years ago

Ah, the seldom used 3rd definition of "Hacked": "To abruptly remove large portions of".

This freelancer seems to have contrived a way to work the equivilant of two billable weeks (spread out over a presumably longer amount of calendar time) at a tiny fraction of his market rate.

Hopefully the marketing effect of articles like this one will result in a significant uptick in his workload. If not, he's not only put in a bunch of work at a terrible bill rate. But he's signaled to the world that the correct price for his work going forward is $76/hour.

Not the best place to be. Here's hoping another hundred-odd people buy time from him so at least the final number looks respectable.

adwf2• 13 years ago

Yeah, I'm surprised he hasn't gone with some sort of exponential or logarithmic scale (eg. hit $10/hr then start increasing by $5 each hour booked).

He might accidentally zip past the optimum price point, but he'll get there a lot quicker.

MilesTeg• 13 years ago

Technically he should have used a binary search.

$1, $2, $4,...$64, $128. $128 is too much then do a binary search between $64 and $128.

nimblegorilla• 13 years ago

I think it's too early to say if this is a successful experiment or not. His current rate is up to 107 (average about $53/hr so far). I imagine at least a few people were interesting to work with along the way.

GrinningFool• 13 years ago

The point of this isn't to pay his bills, I suspect - it's marketing, and apparently effective: he's made over 100 new business contacts at this point.

vcherubini• 13 years ago

Exactly the point. Chances are, these people have long term projects for him and now he has become a trusted consultant. I absolutely love everything about this.

jstalin• 13 years ago

His "market rate" is what people will pay him. Seems like he discovered what his ideal market rate is... $76 an hour.

philliphaydon• 13 years ago

He's up to $123/hr now...

That's currently $7503, with a current average of $61.

leknarf• 13 years ago

The key insight here is that it's complelety acceptable for freelancers to charge different rates for different clients. Many new freelancers, even if they accept that premise in theory, are uncomfortable asking one client to pay 300/hr if another is paying 100/hr.

That's only possible if you can infer a client's ability to pay and match your quote to their expectations. You can earn much more if you're able to adjust your rates on the fly, which is one of the reasons most freelancers do not list a rate on their public website.

rwhitman• 13 years ago

Thats a great PR move, I'm jealous.

I had unofficially been doing "startup therapy" for years, but I always treated it as a loss-leader for new business. Probably should have been charging for those meetings, oh well.

canistr• 13 years ago

I think this would be a great pricing model if applied to tutoring for students. If you find a tutor useful, you'll go back to them. Conversely if you find they weren't helpful, you leave early. So it's up to the tutor to entice you to come back by providing value up-front.

However, the primary difference is that you do this logarithmic scaling per student rather than as a set price for everybody.

lifeisstillgood• 13 years ago

but will it work for anything other than startups?

I do like the idea though - there is a lot of value in getting an audience to a critical mass

drewblaisdell• 13 years ago

I had an idea to do something frustratingly similar to this. Not the $wage++ aspect, but to offer discounted rates for 1-2 hours in order to build up interesting business contacts. "Micro-consulting".

Well done. 10% of these business contacts will likely want to hire this guy back at some three-figure number, and he will be able to choose the ones he wants to work with in the future.

ricardobeat• 13 years ago

(and made $120 in total)

This clever PR stunt might cost him a month of free work, or bring him a load of clients. I'd be curious to read a follow-up a couple months from now.

mcguire2• 13 years ago

"started selling his time for $1 per hour, increasing the price by another dollar each time an hour was sold."

So I'm very confused by the methodology. That description (which seems to be taken from onehour.me) seems to indicate that the price is unbounded and monotonic.

aantix• 13 years ago

Letting others tell you your price is the weakest negotiation position to be in. No wonder it's been holding steady at 76.

Does this guy show up to a job interview and when they ask for salary does he respond "you tell me?"

Your worth is a constant projection. Learn how to convince people of it, and he'll increase his rate three fold.

How This Freelancer Hacked His Hourly Rate

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