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I sent out a mailing to my wonderful subscribers over the weekend asking them for their freelancing questions and problems. Here I am answering them! The first question comes from Dustin in Ohio:
I’ve been freelancing for about 6 months now as a programmer (PHP and web stuff). I’ve picked up a couple of jobs on oDesk but the rates are terrible. I’m going for anything I can do to try and build up more projects. I average about $23 an hour, when I was getting $25 an hour in a full time job ($50,000). I’ve lost my company health insurance, job benefits, stability and $2 an hour. What can I do to increase my rates and get better clients?
Great question Dustin – you’re definitely not the only one struggling with this. You’ve made a great start, don’t negate that! You have your own business, you’re earning close to what you were in your job and you’ve got your own Clients. We do need to do something about those rates though.
What are your specific programming skills? If you’re advertising yourself as a “PHP and web programmer” then you’re competing against a million others. $23 per hour is a pretty good average rate for a US based freelance junior web programmer.
Here’s my advice:
It’s possible to build a profitable business on oDesk, but I think it’s difficult to do from scratch without a significant edge or an insane amount of hustling.
- There’s an abundance of low paying work and rock bottom freelancers on oDesk
- Your project history is published on your profile. If you’re winning jobs at $23/hr now, it’s going to be very difficult to increase your rates significantly in future.
- Clients on oDesk can be really bad. Take on the wrong project and a client can trash your profile with a 1/5 star review and really negative feedback. It then becomes that much harder to win future projects. You can hide a specific feedback entry, but it shows up as “hidden” which usually raises more questions and suspicion from future clients.
I actually got on oDesk about 6 months ago to see if it had improved at all. I won two long term projects at $90/hr in a very specific niche – embedded systems programming and security. I had absolutely no profile or history on oDesk, but I was a specialist with the experience and skillset to back it up. I got on Skype with the clients, understood their problems, and gave them the confidence that I could deliver the solution.
If I’d advertised myself as a generic programmer, I would also struggle to beat $25/hr on oDesk without a massive profile and hours (1000+) of lower paying work, and even then the pay-ceiling would be pretty low.
Here’s how I see your options:
1. Keep taking on projects on oDesk, slowly increase your rates from $23/hr to $30/hr. Start to take on more work and then interview and hire other freelancers at $15-$20/hr. Any work that you deliver is ultimately your responsibility, so you need to make sure you’re reviewing what your own freelancers are doing, and giving them feedback. Make sure the work gets to your client working and bug free first time. If you have two freelancers on $15/hr and you bring in 100 hours per week at $30, you’re making $1,500 per week just on your QA, management and delivery. This is the same strategy I used to build my business.
2. Start to specialize. You’ll earn far more as an “experienced solutions provider specializing in web inventory management systems” than as a “php and web programmer”. It could well be that the technical skillset is exactly the same for you and you’re already there, but when you market yourself as an expert in a focused niche, and you understand the customers and issues in that niche, it becomes much easier to charge significantly more.
3. Start building up a portfolio outside of oDesk. You’ve got loads of options out there for finding clients with problems you can solve – Quora, Reddit, LinkedIn, Twitter, Forums and Job Boards (e.g. http://www.weworkremotely.com). As a programmer, you’ve also got angel.co, hackernews and StackOverflow to name a few.
Which direction should you take? Whichever one best aligns with the lifestyle you want to build and type of work you want to be doing.