PART 4 of 5
The Not-so-Sexy but Actually-Effective Strategy to Making Bank as a Freelancer
Enough build up…
In this part, let’s talk about the not-so-sexy strategy that will actually get you to where you want to go.
And I need you to stick with me on this page because I know it will sound too simple.
(P.S. The best advice in life is often simple yet the least implemented advice you’ll find.)
First, here’s an analogy:
Let’s pretend you run a bakery and you have one cupcake machine (and in no way am I suggesting you are a machine – it’s just an analogy.)
This cupcake machine is incredible, spectacular — it’s everything.
This one machine generates ALL the money for the business. It is your ‘Golden Goose’ if you will.
And now let’s say you want to earn more money using this precious cupcake machine.
What would you pick?
- Path 1 – Make the exact same cupcakes and just keep increasing prices for your customers.
- Path 2 – Look for more and more customers and overwork the machine past its capabilities.
- Path 3 – Get upgrades for the machine. Get new recipes to make better cupcakes. Get add-on’s to make better frosting. Then increase your prices accordingly.
Here’s where each path leads to (from someone who’s learned the hard way WAY too many times):
Path 1 –
Eventually when your same cupcakes are so much more expensive than your competitors’ cupcakes, your customers will begin switching to their cupcakes.
Because your cupcakes are the same as everyone else’s so why should they pay 2x, 3x, or 4x the prices of your competitors.
Path 2 –
Eventually, your machine begins billowing smoke, it begins to make weird noises because you’re working it so far past its capability. Some days, you can’t even start your machine – it just doesn’t want to work.
The machine is burnt out.
Path 3 –
Your machine begins making better cupcakes, tastier & softer cupcakes, the frosting is creamier, it can even do personalizations for each cupcake.
Your raise your prices. Customers are happy to pay the prices because your cupcakes are just better than your competitors’.
Shocking revelations incoming:
- You are the cupcake machine in your business.
- You are the Biggest Asset in your business.
- You are the sole revenue generator.
- You are your own Golden Goose.
So back in 2018, my inner economics major came out to play (as she dorkily does sometimes) and said, “Deya. It’s just supply and demand; it’s basic market economics in a capitalistic society.”
- The higher the demand, the lower the supply = the higher the price
- The lower the demand, the higher the supply = the lower the price
And as it stood, supply was going up as more and more people wanted to work online and were offering the services that I was offering (aka services that had very low barrier to entry).
Again, I had no work experience so as a Virtual Assistant, I was doing basic admin work, data entry, super light design work in Canva, formatting work, and other random small tasks.
These services all had super low barrier to entry because they were relatively ‘easy’ tasks to learn and offer.
So if the barrier to entry for a service is low, it means everyone rushes to offer that service, which then means the supply of that service is extremely high.
If the supply is very high, it drives pricing down.
If the supply is very high, offering that service becomes extremely competitive, extremely ruthless.
And that is why you feel like you’re fighting a thousand other freelancers for a $12/hour gig with a semi-toxic client.
Doing more of the same and “hustling” aren’t the solution to scaling – working more hours, signing more clients, offering the same services and running faster on the hamster wheel won’t get you to where you want to go.
You have to zoom out and play smart instead of playing hard.
In order to turn the tables, to be in-demand, and to charge what I wanted to charge: I had to find the most in-demand and low-supply services and move towards those instead.
This would make me indispensable to the right digital business owners and play by market economics.
P.S. This is also why I do not understand pricing approaches that only factor in your expenses when figuring out what to charge for your service aka “figure out how much you + your business spend and then charge to cover those expenses”.
That does not play by market economics; the market does not care about your expenses.
If I have $16,000/m in expenses, does that mean I should just randomly charge $100/hr no matter what service I’m offering?
No. It means I need to figure out what would allow me to charge $100/hr and what clients would happily pay $100/hr for.
Pricing shouldn’t be based on “what you’re worth”, or on a random number someone tells you, or purely off your business expenses.
Pricing should be based on demand, supply and how much value you generate for a business.
Those are the pillars to solid pricing foundations that feel good to you, that your clients are happy to pay AND that play by market economics.
This is how you create a win-win for you and your client.
And I honestly believe the best way to build financial security, make great money and allow that money to do whatever you want it to do is to…
Obsess over making your freelance package so valuable & so indispensable that clients bend over backwards to work with you & keep you.
(Caveat: if I ever accidentally say make ‘you’ or ‘yourself’ more valuable, I mean the freelance package of your skillset, your experience, and your soft skills, obviously. Your personal value has nothing to do with productivity; your personal value is infinite exactly the way you are.)
I know you’ve been promised this more times than you can count already – but this is truly the only way, the only path to where you want to go.
You still with me?
“Yes, but how do I do that? What does that mean for me? How do I increase demand and lower supply so I can charge more money? How do I create more value for clients?”
Let’s get into it.
First, we need to define what “value“ even is.
So, what is value to a business owner?
Value to a business owner is solving their problems.
The bigger the problem you can solve for a business owner, the more value you generate for them and the more money you can charge.
Because here’s the messy behind-the-scenes:
Behind-the-Scenes of a Business Owner’s Life
A day in the life for most business owners is chaotic.
At any point in time, a business owner has way too much going on.
They may have:
- 39 unread notifications in Slack from their team members sending questions and updates
- 492 unread emails piling up in their inbox from customers and clients requesting and demanding things
- 12 ongoing projects in their project management tool with a litter of red overdue statuses and unread comments
- No systems in place aka they can never take a break or a vacation to recharge
- And to top it off… a jam-packed schedule packed to the brim with back-to-back calls
A CEO’s energy is pulled into a million directions all the time.
They are “needed” in too many places at once to achieve their mission.
Even if/as they hire people to help, they still deal with limitations and bottlenecks around their time, their teams’ time and capabilities, or their systems.
- Their to-do list is never-ending.
- They need to put out unexpected fires and problems nonstop.
- They work 25/8, yet the work they do somehow never ends.
Like I said, chaos.
And as they scale, the chaos only compounds.
So value to a business owner is solving any problem off their mega-list of problems.
The more problems you can solve for them and take off their plate, the better.
The bigger the problems you can solve and take off their plate, the better.
And one particular form of problem that business owners are focused on day-in-and-day-out is solving for bottlenecks in the business.
Bottlenecks are problems in a business that prevent the business from making money.
And I’m sure even as you read this, you probably have bottlenecks in your freelancing business, too.
Business owners pay to relieve bottlenecks because bottlenecks are urgent problems that inhibit the growth and progress they so desperately want.
The bigger the bottleneck you fix in their business, the more value you generate for them by deleting it, and the more money you can charge.
When a business owner first starts a business, Small Bottlenecks like:
- not knowing how to upload something to Wordpress
- not having time to write a blog post
- not being skilled enough to create attractive graphics
- not knowing how to best set up a project management tool
As the business grows, those Small Bottlenecks start to change, evolve, pile up and become larger, more intimidating and more dangerous.
Bigger Bottlenecks include things like:
- Not having time to respond to your team questions or review items → the team is stalled → they’re paying for team members that have no work → no progress is made → the business makes no money
- Not knowing or not having time to hire people → not able to sign new clients nor projects because they don’t have team capacity → losing money
- Not having the time or energy to manage projects → nothing gets done → the business makes no money
- No systems → they can never take time off → they burn out → business makes no money
When I was a virtual assistant, I was solving small bottlenecks like a business owner’s lack of time to make graphics for a podcast episode or lack of time to format a blog post.
That’s why I could only charge $15/hr. That’s why I felt resistance and a ‘ceiling’ trying to go past a certain hourly rate.
Because the problems I was solving were small problems. The bottlenecks I was solving were small bottlenecks.
And the problem is a lot of freelancers are only solving the small, early-stage bottle necks for a business owner. There’s a limit to how much a business owner will pay for those bottlenecks.
These weren’t painful, agitating, big-money-on-the-line, keeping-them-up-till-3am, Big Bottlenecks.
The bigger the bottle neck, the more directly tied to the business’s income and the business owner’s freedom, the more a business is willing to pay to solve it.
And to take that line of logic further:
Business owners are actually excited to pay you money when they’re getting strategic, organized, unique, and effective fixes for their bottlenecks.
When I came to this realization, that’s when I began carefully looking at what the Big Bottlenecks for my clients were.
There are many ways to find and solve Big Bottlenecks for clients…
Up Next: I’ll share the 7-step framework I used to create a sustainable career for myself and find bigger bottlenecks to become more valuable to my clients.
Quick Takeaways:
- The reason you feel like you’re fighting 4903 people for a $12/hour job is because your services are probably high in supply which is driving down prices.
- To charge more $, you need to generate more value for your clients.
- Value to a business owner is solving their problems, specifically solving for revenue-hurting bottlenecks in the business.
- The bigger the bottleneck you solve for a client, the more money you can charge.
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