Comment by jayshahtx | Hacker News Reader

Comment by jayshahtx | Hacker News Reader

> pass on the cheap, low-value projects. Hold out for the clients that have budgets and value your time. Every second you spend with clients that don’t have money and don’t value your time is another second you have wasted.

I just finished my first 8 months of consulting work and while this is true, it is so difficult to actualize. When we had zero projects, I would take any meetings I could get. A part of me would hope that during the meeting, the client would realize where I could add value and increase their willingness to pay. In reality, however, it was the client who tried to push down our rate time after time. A hard lesson for a novice, but I lost hundreds of hours to clients that I knew, deep down, didn't have the budget.

With that being said, this is dangerous advice to internalize pre-maturely. Without underpricing yourself in the beginning, it's difficult to derive self-worth (IE: confidence) and increase your rate later on. And the last thing you want is an early freelancer to turn down work because they think they are worth more.

TLDR; Underpaid work might just be a rite of passage in freelancing. It was for me.

Shopping malls have this thing called "anchor tenants" - usually a big-box retailer who pays for massive square footage, which in turn stabilizes the mall's cash flow.

Looking back, all freelancers should probably wait to start until they can secure an "anchor client". A company or individual with a solid business who can provide consistent cash flow to the freelancer. One anchor tenant won't pay for a whole shopping mall, and neither will one anchor client meet all the freelancer's needs and goals. But it definitely helps stabilize the situation, and empowers freelancers to be more selective about their other clientele.

Aside from that - having enough savings on hand to pay for 6-12 months of all expenses (business and personal) is also a necessity. Otherwise you'll start taking on poor clients (and I mean "poor" literally, as in they don't have additional budget to spend, even if they wanted to), which in turn will make you more desperate, taking increasingly shittier jobs. The freelancer death spiral is brutal but can be avoided with careful planning.

It's not just freelancers, agencies need them too. Most agencies exist and die on a relatively small handful of anchor clients, if for no other reason than stable cash flow so they can make payroll.

By-the-way, these anchor clients usually aren't exciting or fun. In fact, they're usually creatively boring and predictable.

Agencies need to be careful though - when your relationship with your "80% of the billings" client sours, you've got a _big_ problem.

https://insolvencynotices.asic.gov.au/browsesearch-notices/n...

I can attest to this. Thing is, once you have an anchor client, you need to be reaching for the next one. You never know what might happen to their business...I can attest to that, too.

The other problem with not taking undervalued work is that your runway is not infinite, while the market's is. So you might just run out of money before you land that client you're holding out for.

And when the end of runway is approaching, you will become desperate, and you will take on a terrible project. Then it will take a really long time before you build up your runway again to the point where you can hold out for better projects.

Basically, hold out, but don't wait too long.

This is why the word "underpriced" always seems wrong to me in this context. Your price at the beginning has to be lower because your profile is lower, which means you have a weaker negotiating position. "Underpriced" only becomes the right word if your rates aren't rising in conjunction with your profile, which does happen for sure, but isn't the case right at the beginning.

"Your price at the beginning has to be lower because your profile is lower"

This is the sentiment that makes you justify charging too little.

So what is the alternative? If you don't have any cheap clients (cheap labour) or portfolio (free labour), how do you convince clients what you're worth?

Arguably, you can invest some of your time in your own portfolio projects that demonstrate the particular skills and value you want to promote. It's not an exact science, and harder in some industries than others, but not impossible, and it's something that too many folks (me included) tend to gloss over or ignore.

Keeping a relevant industry-related blog won't necessarily convince every single client, but it's one of those things that can swing someone's mind to committing to you when there's not a lot of other obvious signals.

Why is it better to do free work to build a portfolio of non-professional work, rather than building it by starting with lower-paying engagements?

It's not that it's better, but it can be done independently of anything else. i.e., the only thing stopping you from starting to build a "non-professional" portfolio this very minute is time availability.

But you need a history of engagements to build a client portfolio.

When you build your client base and you start off by charging a low price, any referral work you get (and it gets to be a large portion of your work as the base grows) will have a harder time with raised rates.

The underlying psychology shows us that we undervalue ourselves whereas other people tend not to since they view us as experts. They are generally willing to pay a lot more to have a solved problem than we would want to charge.

Start high and go higher until you meet resistance.

> any referral work you get … will have a harder time with raised rates.

This does not seem to mesh with the posted article where they interviewed lots of successful people who started out charging on the low side and were able to aggressively increase over time.

I get what you're saying in this thread, that people tend to not charge enough. Sure, I'm right there with you. What bugs me is this meme that seems to suggest that there's something wrong with doing whatever you can (like charging less) to get your foot in the door. It's intimidating.

I agree with your sentiment, my point is that people too often believe that low rates will get their foot in the door.

Many times what would happen is someone would get two or three bids and avoid the lowballer because quality is associated with higher pricing. So you're shooting yourself in the foot.

Now this doesn't always happen but I would suggest to stick on the side of trying to charge more than you're comfortable with. You'll be surprised what you can get your foot in the door with.

HeyLaughingBoy nailed it, but there's another couple of points that got missed in the replies/discussion.

1. It's not "free work", it's just ... stuff you do. Maybe you release it out and other people benefit from it, maybe you just do it to demonstrate skills.

2. Per #1, you get to demonstrate whatever you want to learn. Do you want to learn how to use Twilio APIs? You could wait for a client engagement that might need Twilio, or you could try to force Twilio in to a client project where it's not needed, or you could... just play with Twilio, produce something demonstrable, and use that to show what you know about using Twilio. It's great when you can show your skills having real value to real past client projects, but absent that demonstration and experience, you'll be experimenting on your new clients to a degree. Learning on your own dime (and time) can also inspire a degree of confidence that you actually know XYZ before you're engaged to do XYZ.

Notice some say they started out at less than $25 an hour. Others started out at $50 or more. The difference isn't in profile, it's in what they were asking when they got that first client.

Definitely true, but also note that none of them started at anything we would consider to be "a lot".

So, to relate this back to the original article – all these people interviewed started with low prices at the beginning and built up their profile, raising their rates along the way. I look at that and think, well that's a good and clearly proven model, and it makes sense why it works that way. I don't look at it and think, well they should have started out with higher prices right from the start, since clearly they were worth it all along!

"I don't look at it and think, well they should have started out with higher prices right from the start, since clearly they were worth it all along!"

Emphasis on "too little" in my comment leading up to your reply.

And it's not about what they are worth it's about what the solution is worth to the person buying. Almost always more than the developer/worker thinks their time is worth.

I agree with you, but when we are discussing "price", we are not discussing it as a function of profile. We are discussing it as a function of raw skill. If two people (one experienced and one in-experienced) were asked for a proposal on the same specs, the experienced one would demand a much higher rate, even if the final output would be the exact same. Using the word "underpriced" from the lens of competency makes sense. Your ability to gain trust/respect from a client? Different story..

I guess I just don't think that's a very realistic view of "price". Nothing is priced based on innate value, but rather a complex interaction between value and the ability to market that value.

To play devil's advocate: hiring a less-experienced freelancer is a riskier investment than hiring an experienced freelancer with a big portfolio and many references. Even if the two candidates are of equal skill, the hiring party can't know that. Thus, price is a function of what you can reasonably expect to get from a candidate.

Being an inexperienced freelancer is akin to being a borrower with an under-established credit rating. Regardless of whether the borrower is sitting on a mattress full of millions, he or she will still pay higher interest rates until his or her credit is better established.

It has to be lower, but you don't know how much lower. It's probably not as much lower as you think. If they would have paid more, you didn't charge enough. Obviously it's hard to know that at the beginning.

Spot on. Perhaps best to try starting higher than you think and slowly lower until you start getting gigs.

However, by pricing yourself high you opened the table to negotiation. Better that than enter low and they accept on the first try, in which case you know you've undersold yourself.

Reply on news.ycombinator.com