I’m writing this post in response to a couple of recent conversations I had with friends who, like me, work freelance.
From experience, I know that when you have a corporate job, your earnings are on a pretty predictable ladder. You negotiate your salary on entry and thereafter come the delightful wee annual raises. After exemplary displays of workplace acumen, you can of course get merit raises, but even they tend to be based on a ladder- you might get a raise that pays you like an employee of four years, for instance, even though you’ve only been at the company for two years. It’s all scaled, and it’s pretty easy to make sense of where you should fit in the pecking order.
Plus, in an office environment, it’s easy to guess what your coworkers make (or snoop it out, you naughty naughty admin assistant). Besides, you know what to ask for because you can actually observe others on the job and gauge your value to the team relative to theirs. Once I worked with a team member who, during a workday, updated his Facebook status to “….is drunk at work!” At any rate, in a structured workplace, because you know the raises are coming, it’s easy to relax and wait for the ten-year Timex to come ticking your way.
Freelance work is not like that at all. Sure, there are union scale rates, but outside of that, a lot of freelancers make money from teaching, consulting, and guest appearances, and it’s really hard to know what to charge. I do a lot of gigs like this. Because there’s nobody else to compare myself to, I never really know how I measure up. What is my contribution as a consultant or guest artist worth? How on earth do I quantify it? And am I supposed to raise it 3.5% every year? Or add 10% to my invoices forever after I do a show that kills? It’s a blobby little jellyfish, the freelance salary, and not easy to grab a hold of.
I know what some of my friends charge for their freelance creative services, and I think they tragically lowball themselves. They provide entertainment or insight in exchange for what amounts to a sparkly pebble or two, even though wouldn’t lose clientele by asking more. Yet they agonize over raising their rates, gazing into the distance over dinner and worrying that they just aren’t worth it, after all, they only have Grade 12 piano, 10 years’ teaching experience, two university degrees, a sparkling personality, and good hygiene. (I know that sounded really specific, but that specific list of qualifications actually applies to SIX of my acquaintances.) And off goes the hoodie-clad freelance army, hustling all over town to make gigs and rustle up contracts, working harder than most to bank inconsistent amounts of cash. Why?
I thought this article by personal development writer Steve Pavlina had some interesting insights into what causes people to lowball themselves, and how to address the problem. Here’s an excerpt:
…. I watched a poker tournament on TV where Daniel Negreanu (one of the “winningest” players on earth) got knocked out of the final table. His prize money was $60,000. The top prize for first place was probably around $1 million. In the exit interview, he was asked what he was going to do with all the money he won. He chuckled with surprise, as if to say, “Money? What money? I lost the tournament.” Then he said something like, “I dunno. $60,000? What can I do with that? Buy a car maybe? [sigh].” He clearly had the attitude that $60,000 was a small, almost negligible amount of money. It wasn’t a serious sum.
It was as if the interviewer had said, “Daniel, you just won a dollar! What are you going to do with it?” And Daniel replied jokingly, “I dunno… buy a soda maybe? [sigh].”
While some people might see Negreanu’s attitude as haughty, arrogant, or elitist, I think it’s a reflection of a wealthy mindset. This may help explain why his tournament poker winnings exceed $10 million to date. Since $60K represents a small amount to him, he’s a vibrational match for earning and holding much larger sums. If $60K was a lot of money to him, he probably wouldn’t be able to win even that much, and even if he did win it, he’d have a hard time holding onto it.
Worth a read if you’re wondering whether or not you should raise your rates.