One of the scariest things about going freelance is knowing that you no longer have a regular pay check at the end of each month. But it’s not all doom and gloom. Whilst your income probably won’t be exactly the same every month, it is totally possible to earn a stable freelance income.
With some careful planning, client selection and money management, you can make sure you’re earning enough each month to cover your bills – and then some.
Work out your minimum rates
Start by working out how much you want (or need) to earn per year. Be realistic – base this on your previous salary from your last full time job, or the average salary for your industry, plus a little bit extra to help you cover things like holiday pay, sick pay, maternity leave, pension etc.
Once you know approximately how much you want to earn in a year, break this down per month, and then by day and hour. Working out your daily/hourly rate will give you an indication of how much you should be charging. Never accept projects which pay less than this. Many of your projects will probably be charged at a higher rate than this, but knowing your minimum rate will make sure you don’t waste time doing work that won’t even pay your bills.
Keep clients on retainer
A great way to make sure you get a monthly pay check, even if you’re a freelancer, is to keep clients on retainer. After you’ve worked with them on a project, don’t just say goodbye and move on to the next client. Instead, ask if there’s anything they need further help with.
If they keep you on retainer, they’ll pay you a monthly fee to keep on top of the work you’ve already done. For example, if you’re a web developer you might have built a website for a client. After it’s done, they may want to keep you on retainer to do small updates to the website or add new features. This is beneficial for them as you already know their business and they know your standard of work is great, and it’s good for you as it allows you to get paid a regular amount every month.
Take on ongoing projects
The vast majority of my freelance clients are ones which I work with on ongoing projects. As a social media manager, many of my clients require my services for months or even years, as my job is to continuously monitor their channels and create content. This means I know how much each of them will be paying me each month, and any one-off projects I do on top of this is a nice bonus to help increase my salary.
In some industries, it’s much harder to take on ongoing projects (for example if you’re a graphic designer helping to create a logo for a brand’s launch), but it’s still possible. Having a mixture of short term and long term projects is a good way to help create a more stable freelance income for yourself, without being tied down too much.
Book clients in advance
Another good way to create a stable freelance income is to book clients in advance. Make sure you know what you’re going to be doing in 3-6 months time. This will make sure you don’t a) overbook yourself or b) have several months with no client work.
Obviously plans change last minute sometimes (a lucrative project might pop up out of nowhere, or a client might have to cancel just before starting a project), but by booking clients in advance you’ll be able to anticipate how much you’re likely to earn. If you can, send out your contract as early as possible to avoid any last minute cancellations.
Diversify your income
It’s really important to diversify your freelance income to make sure you’re earning a steady pay check. That way, if one project or line of work comes to an end, you’ll have plenty of others to fall back on.
At the moment, I have four regular social media clients, two regular blogging clients, one regular writing client, plus I also earn money from my blog, my Etsy shop and various one-off projects. If any of my regular clients wanted to end my contract, it wouldn’t cause too much of a problem as I have other income streams to rely on while I sourced a new client to fill their place.
If you’re a service-based freelancer, you may also want to create a product to help you earn a “passive income”. Things like e-courses, books or downloadable products require time and effort to create, but once they’re done you can more or less leave them alone to bring in extra money while you’re busy doing other client work.
Pay yourself a salary
I don’t actually do this myself (as the majority of my clients are ongoing, so my freelance income is relatively stable), but I’ve seen it recommended a few times and it seems like a great idea. Paying yourself a salary would be particularly useful if you tend to take on a few high paying one-off projects throughout the year, rather than having clients on retainer every month.
Keep your freelance income in a separate bank account, then at the end of every month pay yourself a regular salary. In months when you earn more, there will be money left over in the account, and in months when you earn less, you can use this to make up the difference – so you’ll always get paid the same amount every month.
Set clear payment terms
Chasing up invoices is something that all freelancers are familiar with. I’ve been pretty lucky as most of my clients have been prompt payers, but there are always a few you need to chase up again and again!
To make your income as stable as possible, make sure you set out clear payment terms for your clients. Include this in your contract, as well as on the invoice, so they don’t forget. Don’t be afraid to include late fees if your client doesn’t pay within your payment terms (just make sure to include this in your contract so they know late fees are applicable).
Hope this post has been helpful, and don’t forget to check out the rest of my Freelance Diaries series for more tips. Have you got any tips on how to earn a stable freelance income?