Is it possible to make six figures per year as a freelancer or consultant? Of course.
Will it be easy? Well, that depends.
Here’s one place where freelancers—often creative, left-brain types—need to get comfortable crunching the numbers. $100,000 per year works out to $50 an hour, 40 hours per week with two weeks of (unpaid) vacation each year. But trust most freelancers when they tell you that it’s just not that simple:
- There’s plenty of work—i.e. responding to emails, putting out fires and securing new work—that isn’t billable.
- You’ll need a higher billable rate to make up for project delays and slow-paying clients.
- You will need pay taxes, which will eat up a nice chunk of that $100k.
- It can be hard to stop working when productivity = income. If you want to make six figures and have a life, you need to know the math.
Hoping you can work enough to earn a great living is one strategy that is sure to fail. The most successful freelancers set income goals with a plan to achieve them. This limits the 60-hour workweeks and makes it easy to analyze whether or not the plan is actually working.
So here are a few strategies trusted by some of the most successful freelancers out there.
Keep Your Full-Time Job
Here’s the least sexy advice anyone’s ever given about freelancing. But for many people, it’s the best way to test the water without walking away from a stable career. Benefits, especially health insurance and retirement accounts, are easy to take for granted when they’re provided by an employer.
If you want to make a $100,000 per year, consider using your salary to pad the numbers. Let’s look at some math.
Let’s say you make $60,000 per year at a full-time job. Adding $40,000 in freelance income gets you to six figures. It’s easier in that you have only have to cover 40% of it, but it’s harder since you’ll have less time to do it.
$40,000 works out to $3,333 per month. If you bill at $100/hour, that’s 33 hours per month, or just over eight hours per week.
It won’t be easy to fit those hours into your week. It won’t be easy to gain the expertise necessary to find clients willing to pay you $100/hour. And it won’t be easy to guarantee yourself 33 hours of billable work per month. But it’s certainly possible.
Even if you fall far short of earning that extra $40,000, you’ll have some extra money in your pocket and valuable experience finding and working with new clients.
$60,000/year income from full-time job
$40,000/year income from freelancing
33 hours of work per month at $100/hour
8.33 hours of work per week at $100/hour
Productize Your Services
One reason that many freelancers burn out is because they offer services, but not products. Services tend to be customized to the client’s need and billed by the hour. Products are customized by you and sold for a flat rate. Products also create the opportunity to create a repeatable process that can be streamlined as you sell more. This means your margins can increase as you are able to work more efficiently and eliminate or automate some of the administrative work that typically goes into services.
Copywriter Joel Klettke took this idea and ran with it. “I first got the idea to turn case studies into a productized service when I was hired to write one myself,” Joel says. “I realized: here was a specialized deliverable that followed a very specific formula that I could build processes around. I also realized that case studies are a high-value, high-ROI asset for businesses, so I could charge a reasonable price and still make margins.”
Joel took on several case studies himself, documented the process, hired other writers, then launched a product called Case Study Buddy. Now, Joel is able to oversee the production without writing every word himself. By standardizing the input—i.e. clients who are seeking a specific outcome—Joel can standardize the output as well—high quality case studies that help his clients get more business.
It’s easier to sell products because the result is easier for the client to visualize. Instead of offering freelance writing services, consider creating a menu of products that clients that can choose from. And be sure to check out Joel’s process to see how its done.
Imagine that you create three products and charge $5,000 each. You also outsource some of the work to another freelancer at a rate of $1,000 per project.
Product A: 15 units x $5,000 = $75,000
Product B: 10 units x $5,000 = $50,000
Product C: 5 Units x $5,000 = $25,000
25 outsourced units x $1,000 = $25,000
Diversify Your Income
Billable hours aren’t the only way to make extra money.
Did you know that the average millionaire has at least seven sources of income? This is how entrepreneurs build stable wealth, but many freelancers initially choose to diversify their income to buffer against the uncertainties of being self-employed.
Here’s Paul Jarvis, a freelancer turned one-man business on why he chooses to write, design, teach and build software products instead of just billing by the hour:
As a freelancer, you’re in charge of how and where you make money. There’s nothing stopping you from looking for multiple sources of income. I currently make money in a number of ways: doing design work for clients, consulting, podcasting, running a course and writing books.
That way if one income stream isn’t going well or making money, I can lean on other sources. I like to have a mix of products and services, so the products can make some money even when I’m not working (if they’re set up well and I continually work at them). Just like your investment portfolio, diversity is key to growth.
If you’ve never considered trying to diversify your income, here are a few ideas.
- Charge high hourly rates: This is table stakes for any freelancer, but worth reiterating. If you choose to go the route of billable hours, make sure the pay accounts for administrative work that is necessary and not billable.
- Try flat rate projects: Just like Joel turned a service into a product, you can identify work that you repeat for several clients and package it into a flat rate product. This way you get to choose the scope of the project and you can use good processes to make sure it’s always profitable.
- Offer retainers: If you’re nearing the end of a project, consider offering your client a retainer they can’t refuse. If, for example, you’ve designed a website, you could charge a monthly retainer to be on call for bug fixes, questions from their developers or small fixes. Not only do retainers earn you extra money, they keep client relationships fresh. When it comes time for another project, you’ll be top-of-mind.
- Monetize content: Paul Jarvis sells sponsorships spots in his podcast. Other freelancers have sponsors for their blogs or newsletters. If you are able to build an audience that advertisers wants to reach, you can charge to reach them. Building an audience is easier said than done, but nearly every freelancer has expert knowledge that could be shared on a podcast, website or newsletter.
- Create software products: This is serious deviation from what we typically call freelancing, but it’s a step that can change your self-employed career. There are so many ways to go about doing this. You could, for example, create (or hire a developer to create) a WordPress plug-in that simplifies a tedious task.
500 hours of work at $100/hour = $50,000
5 flat rate projects at $5,000 each = $25,000
3 retainers at $500 per month = $18,000
10 newsletter sponsorships at $800 per issue = $8,000
Six figures is within reach. Do the math, set goals and get to work. It won’t be easy, but it will be worth it.