There are millions of designers and developers participating in some form of freelance work. And of those who are currently freelancing part-time (moonlighting), one in three are seriously considering going full-time in the near future.

It seems that economic conditions are right for an increased freelance workforce. The question, though, is whether your conditions are right for you to make the transition. Here are five questions to ask yourself before jumping into the full-time freelance lifestyle.

1. How Much Savings Do I Have?

Before venturing out on your own, evaluate your cash situation. Your on-hand cash situation. Chances are there is going to be a ramp-up period between working part-time freelance and working full-time freelance.

You won’t immediately be at maximum capacity, so you won’t be at your full earning potential either. You’re probably going to bleed a little cash at first.

Most financial advisors would recommend you have enough in your savings account to cover about six months of living expenses. But we’ve seen people venture off with as little as two months’ worth in the bank.

If you have less than enough to cover two months of living expenses socked away in savings, you’re not ready to make the transition.

2. How Much Do I Need to Earn?

It’s time to get realistic. If you’ve been earning a salary up until now, it’s easy to go on autopilot and stop thinking about what exactly you’re bringing in and what exactly you’re spending.

Venturing out on your own will not only mean that your income is more sporadic, but it also means you’ll need to earn more. Your income taxes will be higher. You’ll need to pay for your own healthcare, dental care, and vision expenses.

Plus, you will be running your own business — you’ll need money for business expenses: marketing, equipment, supplies, maybe even office space.

Figure out at least a ballpark amount for the actual dollars you need to bring in.

3. Am I Getting Referrals?

One of the best indicators I’ve seen for whether or not someone is ready to go full-time with their freelance work is whether or not they’re getting work through referrals.

Drumming up new clients takes an incredible amount of time, effort, energy and money. It’s work you’re not getting paid for. This is why most full-time freelancers get a significant amount of their work through referrals.

Their clients find them more clients because these freelancers are good at their jobs, and they know how to make their clients happy. If you aren’t getting consistent referral work, you might not be ready to make the leap.

4. Am I Getting Long-Term/Repeat Clients?

Similar to that last question, you should ask yourself, are my clients coming back for more? Are they offering me long-term projects that will keep me busy for a few weeks or a few months?

In an ideal situation, you could jump to full-time freelance with at least one long-term project waiting for you — that’s income you won’t have to pull out of thin air.

But getting recurring clients is important for another reason: It means you’re doing a good job. You’re communicating well. Your prices are good.

If your clients aren’t coming back, you need to figure out why before you’ll be ready to venture out on your own.

5. Do I Have My Business Organized?

You don’t have to be a business expert to make it as a freelancer, but you do need to be organized. More than ever, your time is money. Nobody will pay you to send out invoices, track expenses, follow up on payments.

So for your own sake, get a system. Keep things organized. Be extremely efficient when doing unbillable tasks. There are a lot of great tools out there to help freelancers with this type of stuff.

Whatever tools you decide to use, getting a system in place ahead of time will save you a lot of stress later on.

So let’s regroup. How are you feeling? What’s your confidence level? If you answered yes to most of the questions above, chances are you’re in a good position to make the transition into full-time freelancing.

Or at least you’re as ready as you’ll ever be. If you answered no to most of these question, don’t be discouraged. You might need a bit more time to hone your craft, build up your client list, or refine your business skills.

Even so, you could be just a few months away from the freedom, exhilaration and absolute terror that is the freelance lifestyle.

The post The Five Questions to Ask Yourself Before Going Full-Time Freelance appeared first on Speckyboy Design Magazine.

For a freelancer, time is money, so what do you say we get right to it?

1. Know Your Numbers

If we assume 8-hour days and only 5 days in a workweek, then there are 2,080 potential work-hours in a year. But unless you plan to work on Christmas, never take a vacation, and never get sick, you’ll want to cut that number down to about 1,920. Still, of those 1,920 hours, most likely 30 percent of them will be spent doing nonbillable work: admin tasks, invoicing, client negotiations, etc.

Now you’re looking at 1,344 hours a year — or just 26 hours a week. So as you calculate your rate, keep in mind how many hours you’re actually going to be paid for.

2. Know Your Lowest Price

There are two rates you should always have in mind: your absolute lowest rate, and the rate you’re going to charge for a particular job. Knowing your Minimum Acceptable Rate (MAR) will give you the confidence that you aren’t pricing yourself out of business.

There are a couple of formulas you can use to calculate your MAR:

1. (Personal Expenses + Business Expenses)/Hours Worked + Taxes
2. Divide your on-staff yearly salary by the number of hours worked

Both of these results will land you juuuust above the break-even line and should only be used as a basic guideline. These are the rates you should never go below.

3. Work Backwards from a Goal

Before you can make a good decision about your hourly rate, you need to decide how much you want to earn this year. It sounds obvious, but most freelancers work the other way around. And then they’re surprised at the end of the year by how much they did (or did not) earn. Make the call right now: How much are you going to earn in 2015?

Using the above 26 billable hours per week average, here is the hourly rate you’d need to charge to make your desired amount of annual income:

• $50K/year: $37.20/hour
• $75K/year: $55.80/hour
• $100K/year: $74.40/hour

4. Time Is Your Most Valuable Asset

Selling yourself short costs you money. As tempting as it might be to undersell a project when a client balks, it’s in your best interest to stick to your rates. Your time would be better spent improving your skills, taking a class, or learning a new coding language than stooping to charge a rate beneath your MAR.

5. Know Why You’re Worth What You’re Worth

Why do you deserve $75 an hour when your competitor charges only $50? As nice as it would be to pull a salary from thin air, even in the freelance world you have to earn what you’re worth. Have you won awards? Been published in respectable publications? Made measurable improvements for your clients?

When you quote a price to your client, know why you are quoting it. Your client doesn’t care how many hours it takes you to do your work. They care about results. Price for the results you know you can provide, and then as your skills improve, raise your rates accordingly.

6. Sometimes a Lowered Rate Is Worthwhile

There are instances when it’s worth it to you to reduce your rate:

• If your client has clout and will improve your portfolio
• If your client is doing a good deed and your work is philanthropic
• If your client can send a significant amount of traffic your way
• If the project is such an interesting challenge that you can’t help but accept

In these circumstances, though, it is important to work as if your client is paying premium. The only thing more devastating than underselling yourself is creating bad word of mouth.

7. Your Rate Is Not Set in Stone

Setting your rates is important — but it’s not permanent. Rates are constantly in flux based on your clients’ situations, your situation, and the market’s situation. So don’t panic. It might take you a few tries to dial it in.

Concluding

If you’re going to make a living as a freelancer, being honest about what your time costs is step one. It’s a form of humility to be honest with yourself about what you’re really worth. And when you find the right clients, they will be happy to pay it.

The post 7 Things to Think About Before Setting Your Freelance Rates appeared first on Speckyboy Design Magazine.