Profit and bottom line are two very different things. Your business can bring in gross profits but it not make it into your business savings after considering all overhead expenses.
Overhead costs, profits, and bottom line aren’t usually concepts that a freelance person thinks about. Since they’re their own boss, as long as bills are paid their gig is going well.
But there are far more things you can do to make your freelancing successful. Consider these 5 ways to improve your bottom line making your business more profitable.
1. Inflate with Inflation
When was the last time you raised your rates? It’s common for freelancers, especially new ones, to be fearful of raising their rates on an annual basis.
But raising your rate is your right as an entrepreneur. The company you work for is probably charging its customers more each year if they’re doing business the right way.
The reason is that every business participating in our economy has to account for inflation. With inflation at a rate of around 3 percent each year, you’re actually charging less each year if you don’t raise your prices.
Don’t pay more of your client’s bills as a trade off for keeping a gig. If you’re professional about your approach to setting rates, clients will understand that your rates are just the cost of doing business.
If they squirm when presented with your new rate, it’s possible they are racing to the bottom anyway.
2. Fire Expensive Clients
Another way to make more money on freelance gigs is to fire expensive clients. If a client consistently tells you about other bids they’ve gotten for projects at rates lower than yours, they’re too expensive to keep.
Why? Because this client is looking for the best lowball offer, not quality. At any given moment a freelancer whose desperate for work could swoop in and take your gig.
These clients provide a lack of security which is distracting to your craft. Skip these clients and the energy suck that is their projects.
Another example of an expensive client is one who has an endless stream of issues with your deliverables. If you’re going way beyond with revisions or redos on projects, it’s possible you’re just not a fit for the company.
Professionally part ways to spend more time on projects where you notice the clients are happy with your work. These are the clients most likely to refer you to other companies who need your services.
Guard against trying to change the mind of a client who can’t seem to be pleased.
3. Partner Up
Sometimes freelancing isn’t about how much you can slay on your own. Get out of the mindset that going it solo is the easiest route.
If you want to earn more when you freelance, sometimes its a good idea to partner with other quality freelancers. Similar to how an ad agency makes more than individual freelancers, you can ask more on a contract if you have a team attacking a project instead of one person or single member LLC.
Who should you call to partner? Therein lies the work.
Networking is an ongoing must for freelancers. You eat what you kill. But together, you eat what the group kills.
Look for like minded freelancers who want to expand their portfolios and seem to have a similar work ethic. You’ll multiply your offerings as a freelance worker and learn more best practices from your new partners.
4. Sell More
One of the simplest ways to increase profits as a business owner isn’t to sell more to new customers. The biggest profits come from selling more to existing customers.
You get the sales from what they already buy and more sales from what they begin buying after your promotion. This is why fostering relationships with customers and clients is key.
You want consistent one on one communication in order to make upsells a win win. This method could backfire if you force a sale on a customer for something he or she doesn’t need.
It’ll paint you as interested more in your needs than theirs. Maintain solid trust by upselling with purpose.
Offer solutions on products the customer can by to meet specific needs as you see them. Clue customers in on which products are your best sellers and let them naturally explore their options.
Keep communications, sharing resources, and even freebies when the situation calls for it. Remember, a good salesperson is a partner and a consultant, not a bully.
5. Offer More Value
Most freelancers think of their work in terms of time, usually hours. For this reason, they have an hourly rate that applies to client projects.
But what happens when you get faster at your job? Or begin to acquire new skills that make your deliverables exponentially better?
Hourly won’t cut it.
Use a value-based approach when you bid on new business. This is the key to earning more of what you’re worth when you freelance.
A value-based pricing model says that you charge customers based on the value the service creates in their business. For example, if you’re building a new website for a client so they can boost sales by 30 percent, then price your services at around 10 percent of their projected profit.
This means that if your client expects to bring in an additional $1 million in sales with this new website, you’d charge $100,000 to account for how much value you’re bringing to the situation.
An increase of 30 percent to $1 million is based on your expertise and contributions to the team. Your talents are worth being compensated at a rate comparable to the value you create.
Freelance Finance and You
You don’t have to be an expert at freelance pricing strategies to know that more clients mean more money. But more clients also means more time spent working.
For freelancers, time is their hottest commodity. Make your time work for you by working smarter and not harder to increase your profits in the long run.
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