Freelancing has become a huge trend lately, and Intuit estimates that by 2020, 40 percent of the workforce will be freelancers. That could certainly be you.
Along with more people switching to freelance work, businesses are hiring fewer traditional employees and more freelance contractors. Of small businesses alone, 22 percent are now more likely to hire independents than employees.
And it sounds great. You’re probably thinking that you’ll sleep in until 10 a.m., work in your pajamas, and sip coffee in front of your computer without anyone to tell you what to do. And then you’ll shut down your computer at 3 p.m., and it won’t matter because you’ll be raking in the cash, right?
Eh, it’s possible, but not probable. While you might find you’re making double or triple your hourly wage from your 9-5 job, you won’t be making as much as you think. Here’s the reality of it and what you need to consider.
Not All Your Hours are Billable
It’s pretty awesome when a client comes to you with a $150 project that might take you only three hours to complete. Holy crap! That’s $50 per hour. Pretty niche, huh?
Except it doesn’t take you three hours. You also have to consider the time it takes to email the client back and forth about the project, the time it takes to write up a contract, and any extra work the client comes back with to polish the project. Pretty soon the three hours it took you to write that article or design that website turns into five or eight hours of work and your hourly rate has gone down drastically.
Your Taxes Don’t Come Out of Your Paycheck
One issue with seeing a huge paycheck hit your bank account is that what you’re seeing isn’t a realistic comparison to your old job. When working as an employer, your taxes get taken out of your paycheck before you see the money, which means that the few extra dollars you’re raking in with your freelance work may simply go back into taxes at the end of the year.
You Provide Your Own Benefits
As a freelancer, no one is going to help contribute to your retirement fund or your health care. That comes out of your own pocket. Obviously I don’t know how much you contributed to your retirement plan before you left your job or how much your health insurance cost, but you do. Now take a good look at how much extra money you weren’t seeing because it was going toward those benefits.
When you start freelancing, you’ll want to add those numbers to your income to make the salary comparable. That means that if you were making $3,500 per month at your 9-5 job and you suddenly start making $4,000 per month freelancing, you might actually be making less money since you’re seeing all your freelance income with your paycheck whereas you only saw what was left over before.
There are Other Business-Related Expenses
A lot of the money you make will go back into your business, so you can’t even count that as your personal income. Here are a few extra expenses you might encounter:
- Office supplies
- Legal fees
- Accounting services
- Software costs
- Paypal fees
- Membership to professional organizations
- Web fees
- Marketing costs
Despite All This, The Answer is Yes
Now that I’ve likely made you feel terrible about your decision to freelance, let’s look at the positive side of things.
The answer is yes, you can make more freelancing than at your day job.
You just have to consider the items I mentioned above. Once you have all that factored in, you can start with the real money-making part of freelancing.
Here’s the good news: As a freelance writer, you get to set your own rates and your own hours. So if you want to make more money, you can raise your rates, work more hours, or both.
Obviously this won’t always mean that you’ll have clients knocking down your door, but having this flexibility is a perk. As an added bonus, there is some job security to freelancing since you’re unlikely to lose all of your clients at once.
Not to be all “I’m avoiding the question” on you, but the truth is that you have the potential to make a lot more money than at your day job, but it’s all up to you on how you run your business, how good your services are, and how confident you are in your services.
Want some personalized advice on how to make more money freelance writing? Leave us a comment and let us know where you need advice.