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Why Do Freelancers Cost More?

Why Do Freelancers Cost More?

When I talk about the hourly rates that we charge at Don’t Panic Management, I get a variety of feedback. Sometimes people say that I don’t charge enough for our services, some people say that I charge too much. No matter what the feedback is, my answer is usually, “Compared to what?” (Seth Godin made a nod to this today, he always gets to everything first!).

My hourly rate might seem low compared to other freelancers’ hourly rates. It might seem high if you start multiplying it by 40 (hours per week) and then again by 50 (working weeks per year if you count 2 weeks vacation). The former is, of course, my own issue, and is an issue to be addressed another day. If you’re concerned about the latter, however, it’s important to understand the fact that freelancers/contractors don’t work like regular salaried employees. Consider this -

1) We pay for our own equipment.

Remember the days of walking into your office and having a desktop computer pre-programmed with all the software you need and a supply closet with a never-ending supply of all the pens and post-its and staples you could ever need? I certainly don’t.

If my computer stops working, I have to take the time (the precious time) to go to the store and get it looked at. If something is really wrong with, I have to pay to get it fixed or get it replaced (which I did earlier this year). If a client needs a project done in Photoshop, for example, I have to purchase that software for myself or someone on my team to use. That stuff is not cheap. Stamps, printer paper, pens, mousepads, external monitors, ink… they all add up and they’re really not optional for most freelancers, even if the majority of their work is digital.

2) We pay for our own insurance.

I can’t even begin to count how many freelancers/contractors I know who don’t have health insurance. Newer systems like the Affordable Care Act and the Freelancers Union may change this, but there’s a general lack of education around health insurance for individuals, plus the fact that many people don’t think about getting health insurance until they NEED it. Insurance is already extremely expensive for individuals, but if we wait until something goes wrong, rates are even more outrageous. This is a totally broken system, but one that needs to be considered.

3) We pay our own taxes.

Take the amount that you pay us per hour. Then divide it in half. That’s about how much we have to send to the IRS each year because the IRS hates self-employed people.

4) We pay for our own marketing.

Established companies have a reputation and a built-in customer-base to keep revenue flowing. They also have marketing budgets to spend each year.

We may be working toward that as freelancers, using our track record of success to gain new business, but many of us don’t have a cushion of cash to guide us if we have a slow month or two. As a result, we need to invest in our own marketing. This may mean designing and developing a website that showcases our services ($1,500 – $5,000 on average). It may also mean upholding an active social media presence (potentially “free”, but a major suck on our valuable time). For products-based businesses, maybe it’s sending free samples or postcards with discount codes to potential customers ($100 – $10,000+ depending on how many people you wish to reach and how steep your discount code). For service-based business, maybe it’s sponsoring an event, providing free consultations, attending conferences, or even offering speaking services for free to boost awareness (I’ll be sponsoring a relaxation lounge at the Social Brand Forum next month).

These marketing services may seem like something freelancers can skimp on, but they’re not. Our entire livelihood is based on servicing clients. If we aren’t able to gain new clients, we aren’t able to make a living.

5) We work by the hour.

Full-time employees are scheduled to work at least 40 hours per week, right? Yes, they are in the office for 40 hours per week. Does this mean that they actually put their blood and sweat into each hour of each day? No. Because it’s impossible. We can’t work 7 or 8 hours straight each day and be completely effective for each minute of each of those hours. Our brains need breaks. Relating this to “billable hours”, freelancers can probably only handle 5 or 6 of those per day unless we “work” 12 hour days. But who wants that? Not me. A higher hourly rate reflects the cash flow that we need to sustain at least a semblance of “normal” working hours. Are some of us crazy-efficient? Yes. Can some of us handle 8 solid working hours without breaks? Maybe. But that’s unrealistic to expect from a freelancer and is harmful to the quality of our work (not to mention our health and our relationships).

6) We are building our own businesses.

Some freelancers have no desire to grow into anything more than a one-man (or woman) show. Others start to see success very quickly, bite off more than they can chew, and realize they need to hire some support. Now there’s a whole other set of battles (read: expenses) that need to be taken care of and the hourly rate that was once reserved for rent, food, and the occasional cocktail needs to be spent on the livelihood, insurance, and equipment for someone else. The tides turn. The cycle continues.

As much as I enjoy building my business and working to please my clients, I sometimes feel that there is a general lack of understanding for how the hourly pay model really works. To me, it all seemed obvious when I first started. I had to charge more per hour than I thought I did, and it wasn’t because I was trying to be rich, it’s because I was trying to survive.

What’s your experience as a freelancer OR as someone who has worked with freelancers? 

Saying Goodbye

I have a pretty healthy family. A small, but healthy bunch. We have had a few run-ins with some major diseases, but we have mostly always recovered. We have slow metabolisms, but we work on keeping our calorie counts low, our exercise levels high. Sometimes we let ourselves gain a few pounds here and there. Sometimes we struggle and sometimes we don’t know how to ask for help. Sometimes we deal with things that even we don’t know we’re dealing with. Sometimes we make it through. Sometimes we don’t.

I never know how to handle my emotions. I usually keep them inside. I don’t want to burden those who love me and I don’t want to dwell on negative energy. I feel differently this time. I feel like it’s important to pay attention and embrace these feelings of loss and anger and frustration and sadness.

I am writing to say goodbye to aunt Laurie. I think you knew how happy you made us with your positive spirit and warm smile. I think you knew how much we respected you for dealing with and taking care of our grandmother, your mother. Even when you got frustrated with her, you didn’t let us kids see it. In fact, the only time we ever saw you upset was when we were very young and even then, we heard you raise your voice but didn’t actually see your frustration. You never seemed unhappy with what you had, even when it wasn’t much. The little joys that made you happy made us happy, and we knew that you embodied the hopeful positivity we always wished we could. You were gracious, kind, thoughtful, and most importantly, you made us know that we were loved by you. Did you know how much we loved you?

I am writing to say thank you. I never once questioned your intention, and I always knew that I could count on you. You didn’t have your own kids, but you had all of the cousins as surrogate children, all of us loved you without boundaries. Thank you for showing us that trust and support.

We know we didn’t spend enough time with you. There’s never enough time. But all the time we did spend was good. We never resented you or felt like you weren’t appreciative of every moment. That’s a rare and beautiful quality. We strive to embody your spirit.

Your heart was strong, even in the end. I know you would have kept fighting if you could, and I know you’re with grandma and Jessie now and are smiling, as always. I’m so glad you didn’t suffer too much, and I know that you would want us to know that you’re okay now. Our memories will always be the best.

I miss you and I love you, Laurie. When we celebrate, we will be celebrating you.

See you in the next life.



Does Anyone Want to Be Led?

does anyone want to be led

As I think about the trajectory my business has been taking (upward! faster! farther!), I have had to wrangle with my own lack of experience when it comes to human resources. Having never (officially) been trained in management aside from my NYU Stern business classes, which were really more about tactics than they were about strategy, I only have my own experiences to pull from as I attempt to manage others. I’ve tried to take the best and the worst, analyze why certain things work on some people but not on others, and stitch together a management “style”, but I will admit that I’m still at a loss when it comes to the intricacies of making my colleagues feel valued and respected so that they give me (and more importantly, our clients) their best.

Letting go of one person and hiring two more over the course of 3 weeks has been challenging, to say the least. With the “hire slow and fire fast” anthem imprinted in my mind, I’ve weeded through resumes, LinkedIn/Twitter/Facebook profiles, and spent several hours conducting video interviews. I know what I’m looking for. I’m looking a Mini-Me, a jack of all trades (of course), but this Mini-Me should not have the desire to start their own business.

Aside from finding people who can prove their success and their attention to detail, it’s been difficult to find people who legitimately want to work for someone else. Freelancing is hard, I know that just as well as anyone. But finding a great client or company to work with part-time on a freelance basis can be the perfect arrangement for someone who has other passions, like kids or a cooking business or a heavy metal band or a sky-diving habit. Making your own hours, working directly with clients in your pajamas, and getting paid on time could be more than enough for some people. But something about this whole “find your passion”, “make a difference” thing has turned a lot of innocent people into wild entrepreneurs. They want the flexibility and ownership of starting their own thing, and they’ll find any kind of part-time whatever to fill their time (and their bank accounts) until they get their own venture off the ground.

This sucks if you’re someone like me right now, because what these “go-getters” don’t realize is that running a business is not the same as having freedom and ownership and flexibility. You often become a slave to your business, to taking it to the next level, to ensuring that you can eat and pay rent (and eventually, buy the Anthropologie dresses you’ve been eyeing for years). If you don’t have a product or service that people are paying for on a consistent basis and your “passion” starts to fizzle, you’re screwed.

That’s why I built my business around servicing a need that already existed, not trying to create a new one.

Now that things are steadily growing, I’ve realized that in theory, I didn’t have to start this business to feel comfortable, flexible, and free. I could have totally gotten all of that from working as an independent contractor with another business. Of course, my penetrating desire to develop something bigger has prevailed, and I don’t intend on giving up anything that I’ve built anytime soon. But this life is not for everyone, and I think the fact that starting a business is easier than ever is not necessarily a good thing. It keeps perfectly capable people from making a difference with their skills by forcing them to do the things that running a business requires, including bookkeeping, organizing, project management, and eventually, HR. New business owners don’t always realize that these trains need to run on time in order to be successful, they often learn the hard way. Maybe after they’ve tried it, they’ll realize, but in the meantime, I am finding myself wondering why a job needs to be so much more than that for the people for my generation. If you want to give back, can’t you do that volunteer work on the side? If you want to make music, can’t that be your hobby? Why does your job also need to 100% fulfill your passion?

I am left asking the question – Does anyone really want to be led anymore? Or is finding a freelance contractor position merely a stepping stone on the road to business ownership?

It Doesn’t Always Work Out

black heart

If there’s one thing I’ve learned over the last 18 months of entrepreneurship, it’s that I have a head of steel and a heart of mush. I have no problem making important decisions when it comes to business, and can handle conflict like a champ. But when it comes to the more personal side of things, including relationship issues, family matters, and healthy criticism, I find that my head stops working and my heart takes control. That soft spot that I don’t like to reveal comes out. I get defensive, sad, frustrated. It sucks.

Last year, I won the business of a client I had only read about, but never thought would hire someone like me. I was excited, nervous, and unsure about the decision to take this client on because they had negotiated a retainer that was less than my normal rates. It was clear that this client was a workaholic, someone who was up before dawn type-type-typing away until midnight, getting a few hours of shut-eye, and then starting it all over again. Are the warning bells going off in your head? They went off in mine, but I chose to ignore them, hoping the prestige of the client’s name would help me get more clients in the future. Assuming it all worked out, of course.

Well, it didn’t. The constant flow of convoluted information, misunderstanding of expectations, and most importantly, a lack of perceived value in the services I was attempting to provide left us both with a sour taste in our mouths and a cutting of ties just 6 weeks into the relationship.

I learned a lot from the initial shock of this experience. Most importantly:

Don’t have important business conversations at a conference. You might cry in front of strangers.


But back to the point: This isn’t a story about failure. I recognize that my company offers something that’s not for everyone. It takes a certain type of leader, a certain communication style, and a mutual understanding that both parties need to invest some serious time and energy into finding a flow that works before you truly start to see the value, and that that value can be extremely important in the growth of your business. But when things weren’t working out and I was being forced to track every minute of my time, even down to details like email responses, I felt personally attacked. Why wasn’t this working? What was I doing wrong? Why does this client hate me so much?

I had never experienced such a neurotic, always-on, micro-managerial client before, and I didn’t know how to handle it. I beat myself up for days, even weeks after our relationship ended, trying to figure out what I could have done to change the outcome.

One day, after talking to a close friend about the situation and trying to keep a steady voice and a level head throughout the conversation (even though I felt like sobbing in her ear), she made me realize that it doesn’t matter if I was right or the client was right. We both thought the other was the issue. We both thought we did all we could. And that was okay. It can’t always work out. Flying high on the waves of success for so long made me forget this important reminder. And an opportunity for personal growth was on the rise, some lessons that I could apply to my business procedures (or lack thereof) that would have great importance in the success of my reputation, my business, and my fragile heart:

  1. Don’t let email be the place to have important and sensitive conversations – Tone is not clear in emails. Don’t let important decisions be made in an email trail, and don’t let clients get away with never wanting to get on the phone. I hate the phone just as much as anyone, but sometimes it’s impossible to explain expectations and goals in an email. That vocal layer of communication is important.
  2. Ask for feedback after the first 30 days – In this case, feedback can be in the form of an email or a phone call. I know that for me, email can be easier because it allows me to organize my thoughts and think about how to deliver them more effectively. It also leaves a paper trail of information in case you need to reference back to it in the future. This goes for personal relationships too, not just business relationships. You can subtly take the temperature of a personal situation without calling it “gathering feedback”. 
  3. Schedule standing calls, even if you don’t actually stick to having them every time – For new clients especially, I always try to schedule weekly calls. We don’t always have them as long as things are on track, but it’s good to touch base via phone in a virtual business at least once a month, if for no other reason than to shoot the shit and remember why you love working together.
  4. Request ongoing feedback – I know I’m not the best at this, since I usually get and give feedback on the fly, but I’m working on putting together a quarterly client survey so we can make sure we’re always growing and adjusting to our clients’ expectations. 
  5. Make your love for your clients clear – I sent some Don’t Panic swag to clients around the holidays. It was somewhat silly, but well-received. I also try to thank clients via email, Twitter, and Facebook whenever I can, send them birthday presents, and am working on writing LinkedIn recommendations. Small thoughtful acts of love go a long way, especially in a virtual business relationship. 
  6. Listen to your gut (or my case, your mushy heart) – I know we’ve all heard this before, but it’s really important and is worth saying again. I knew in my heart that working with this client wasn’t a good idea, but I didn’t spend enough listening to myself to really understand it. I often have this problem, and am working on getting better at it. Pro/con lists help in this case, as they often reveal the standpoint of the heart in a more practical and tactical way.

It sucks when things don’t work out, and I’ll admit that I still get disappointed on a pretty regular basis (man, does my heart need to do some pushups, what a softie). But putting some new benchmarks and processes in place has helped me feel more confident that I really did do everything I could and that if it doesn’t work, then it just wasn’t meant to be. And there’s no use crying over spilled client guts. I mean, milk! Spilled milk! ;)

The Art of the Comment

If you’ve ever written something on the internet, you know the feeling. You just poured your heart out onto the digital page, re-read, edited, and clicked “Publish”. Then, you try to go on doing whatever else it is that you do, but find yourself refreshing the page, waiting and waiting for someone to leave a comment.

Hyperconnectivity and The Power of Habit


I’ve always had trouble sleeping. Ever since I was little, the thought of falling asleep made me anxious. Once I was asleep, however, I’d sleep like a rock. Nothing could wake me. It was just the falling asleep part that I could never master.

When I was small, I’m sure a lot of it had to do with seeing too many scary things on TV or letting my brain get one step deeper into my irrational fear that everyone I love will die suddenly right before my eyes.

Now, it has a lot to do with the equally irrational fear of missing out (now affectionately referred to as FOMO) plus the compulsive need to check my phone/iPad/Macbook. I hadn’t analyzed the feeling before until last night when I finally noticed my hand reaching for my phone even when I hadn’t told it to. After finishing The Power of Habit by Charles Duhigg last week, I learned how routines provide rewards and the urge to have those rewards turn simple routines into habits. And habits can be dangerous.

Some people talk about my generation being addicted to technology, to social media specifically. I would argue that it’s not the technology and it’s not an addiction, but rather an exploration of our innate need to feel connected to the people around us. Social media has made this possible, and mobile phones (and other technology) have made it accessible at all times.

Before I fall asleep, I must make my rounds – checking email in case anything is happening (not that it matters because something is always happening and I’m not going to get to it until the morning anyway), refreshing Facebook to see who got engaged (not that I care), logging on to Foursquare in case anyone is nearby (not that I would go meet them anyway), and most importantly, scrolling through Instagram to see what beautiful food is being photographed and filtered (not that I’m going to remember).

Obviously, these things are all VERY important, and I absolutely cannot sleep without them.

So, I tried a little experiment last night. I focused very hard on not picking up my phone. I laid still with my eyes closed and didn’t check the interwebz no matter how much I wanted to.

Guess what happened?

I fell asleep.

I know this is all really ridiculous and I might be the only one admitting that I have a problem here, but I know I’m not alone. The small reward of seeing something interesting or funny or personal on these social network has caused me to form a habit of needing to see and know everything all the time, even when I don’t actually care to see or know. It’s a deeper level of need that surpasses any level of want. It’s the difference between a good night’s sleep and the tortured (albeit temporary) toss and turn.

The human habit of always checking, always on is a product of the technology behind the very foundation of how our phones work. It’s a beautiful thing when we can fix a website, solve a problem, or send a gift with the touch of a 4 inch screen. It becomes ugly when we cannot tear ourselves away, even for sleep, which to me is the most important thing when it comes to happiness and productivity.

The “always on” thing doesn’t work. What works is being 110% ON 100% of the time that you’re available, turning yourself 110% OFF 100% of the time that you’re unavailable, and being completely clear with yourself and those around you about when those times occur.

Letting It Slide

Most people don’t notice when you start to let things slide.

You go about your routines, cutting corners here and there, and you don’t think about who’s watching. Or how your habits are changing.

Soon, someone starts to notice, and they start the cutting of the corners as well.

“If she can, so can I,” they think.

Before long, people everywhere are finding ways for things to slip through cracks and holes of organizational structure.

The structure starts to crumble, slowly but deliberately.

Your customers see you slipping, and realize that they can get away with more as a result of your laziness.

It’s not a matter of deception, it’s a matter of making things easier. It’s a matter of cheating the rules and manipulating the broken system.

When you awake one day to find chaos, you pull back, desperately clawing to figure out how this happened, calling meetings and sending memos and hoping that you can ignore the damage that’s already been done and focus on a future of success.

People are angry. They’re not able to get away with the same things they could before. It’s not that they hate change, it’s that you were not clear with them. You weren’t consistent. You said they could fly to Dallas with 3 carry-on bags, but now you’re saying they can’t fly back home with the same 3 carry-on bags. You say they have to check one of them.

Small examples like this, when the rules essentially depend on the mood of the flight attendant, are the reason why certain customer experiences are horrible and others are great. Everyone hates flying because they never know what they’re going to get. The experience is completely out of their control. Creating a culture of consistency is just as important as a culture of care. Your employees may not need to wear a smile every day, but they should at the very least preach the same values and guidelines that the organization supports.

Of course, these may change over time, but they should change deliberately, not because someone decided to start letting things slide.

The Slump

photo by harold.lloyd on Flickr

The times you fall and feel panicked by the encompassing weight of never being able to get up.

The paralyzing thoughts of “no” that create a tangible wall in front of you.

The putrid stinging realization that maybe you’re just not as good as you thought you were.

The bloodless color that fills your face when you’ve made an irreparable mistake.

The notion that you’ve failed. For good this time.

The fear that devours the hope alive.

The gaping unbandaged wound that oozes disappointment.

Then, the awakening.

The moment where you have a choice:

Seize the Change


Embrace the Slump

The pain of digging deeper into a dark corner of enthusiasm to find the glimmer of ambition that you kept on reserve.

The exercise of finding a shred of willpower to strengthen the mind, to overcome the pounding defeat.

The endless repetition of tired quotes and proverbs, the only constant things worth clinging to.

The only things that won’t dig their jaws into you as you get close to them.

Finally, the smile.

The smile that quells the deafening can’ts and won’ts.

The smile that delicately lifts the pressing weight on the heart.

The smile that whispers with showering relief:

If you’re not going to help me, get out of my life.

The slump that drifts from the spine and down the shadows, unveiling a taller, sturdier, more composed being. One who is a hair more resilient, a tinge less afraid.

A persistent human woven with webs of resolution.

A warrior.

The Battle of New York

This post was originally written for and appears on PoopingRainbows.com where I am a monthly contributor.

by Jess Ostroff

I hate New York. I really do.

I hate that when you walk outside on a summer day, the humidity slaps you like a ton of bricks. You can’t walk on the sidewalk without accumulating massive droplets of nasty air conditioner water in your hair and the entire city reeks like a cesspool. Like, an actual cesspool because people do their business in the middle of the street on a regular basis. And no one even thinks twice about it.

I hate that being outside of your building means being constantly touched by strangers. They rub up against you as you’re entering the subway, brush your shoulder as they try to get in front of you in the crosswalk, kick you in the shins like you need the extra bruises. Getting flat-tired is a daily occurrence. It’s like the construction zone on the highway that never gets finished, except this one has sweat and germs and halitosis instead of air conditioning and Katy Perry on the radio and personal space.

I hate that I’m slowly but surely going completely deaf because everything is so goddamn loud all the time. Even when you’re sleeping, it’s loud. The lingering ringing of my iPod, which is turned up to the maximum volume so I can drown out the bustling cars, trains, and cell phone conversations, never really stops. It just carries over into the next day when the cycle repeats itself.

I hate that 30 minutes after the snow falls, it turns brown with dirt and cooties. And then it takes 5 freaking months to finally melt.

I hate that you can’t get a decent meal for under $10 no matter how hard you try. Come to think of it, you can’t even get a shitty meal for under $10. That day-old salad bar says it’s $7.99, but with the gajillion percent tax rate plus a bottle of water you’re up to $12.25 already.

I hate that if you decide you want to get any kind of fresh air, you have to go to Central Park where everyone else and their dog and kid are polluting the environment with their cigarettes and poop. And believe you me, this is not the rainbow poop.

I hate that you have to have money to not be miserable.

I hate that everyone is trying to be something all the time. Whether it’s bringing back the feather earrings and fanny packs or trying to save world with raw vegan gluten-free sugar-free fat-free whateverthehell cookies, it’s always something. Everyone is in the race to come up with the next big thing, and the competition is insufferable. It’s not “what do you like?” or “what are your interests?” or even “why do I want to know you?” It’s always “what do you do?” and “who do you know?” and “how can I take advantage of that?” Sigh.

Of course, I love New York. I really do.

I love that when you walk outside on a summer day, there are a thousand and one free concerts, beer gardens, fresh oysters, outdoor patios, mimosas, and wild bartenders. I love that it doesn’t matter if you’re dripping sweat from your 45-minute commute and need to change your shirt when you get to the office because everyone else is doing the same thing, too.

I love that being outside of your building means you have the opportunity to meet someone amazing, someone unlike anyone you’ve never met before. Someone who could change your entire perception of the world during the course of a subway ride. I love that even when you’re in the worst mood ever from exhaustion or stress and the last thing you want to do is talk to anyone ever, there’s always some guy there to whistle at you and tell you that you look beautiful today and can you walk by him again so he can get another look at that smile?

I love that city really doesn’t ever sleep, and if you need to work late, party late, eat late (or early, for that matter), you’ll always find others who are out and about, frolicking around under the bright lights and steady hum of the streets.

I love that even the crazy ones are embraced with open arms, because really, we’ve all been there at one point or another.

I love that you can get any type of cuisine in almost any neighborhood at any time, day or night. Many of the chefs in New York have traveled far and wide to master their art, and they refuse to serve anything less than exquisite. And these chefs aren’t always cooking in the fancy 5-star restaurants, they’re serving up the best hot dog you ever had in a hole in the wall in Brooklyn. There are flavors and presentations and combinations of herbs and spices that I never could have imagined, and sometimes they find a way to be perfectly paired with a nice cold can of PBR.

I love how incredibly peaceful the first snowfall is. The time when everyone stays in their apartment, drinking hot chocolate, playing card games, and pretending to be kids again so as not to disrupt the sheets of white on their front steps and windowsills.

I love when the sun starts to set, the light refracts through the clouds and casts beautiful shimmering lines on the skyscrapers and water towers and sidewalks. I love that you can stand on a roof in midtown and see two different bodies of water simply by looking right and left.

I love that everyone who lives in New York is here because they truly want to be here. They are working on building their empire, whatever it is, and the passion, creativity, and devotion to their cause is tangible. I love that there is a sense of community, even among strangers, who when they see you struggling to get on and off the train or up the subway stairs or into the elevator because you’ve been traveling back and forth to your boyfriend’s tiny apartment with way too much shit, they’ll offer a kind hand.

I love that if you need a drink at 11am on a Monday, you’re never alone.

And so here I am. Back in a city I never thought I’d live in again. And I love it.

Pure Bug Beauty

He got in the car as I turned the ignition. I immediately realized that I had left the iPod on for the entire 3 hours that we had been at dinner.

“I can’t believe I left this on the whole time!” I exclaimed as I fumbled to not embarrass myself with the entire catalog of that particular artist I had been playing.

“Well, at least your car got to listen to some good music while you were gone.”