7 Common Business Mistakes Made by Freelancers

Posted on October 15, 2015 by in Tips & Tricks | 21 comments

7 Common Business Mistakes Made by Freelancers

It seems like there are a lot of talented WordPress freelancers out there who aren’t making half the money they deserve.

For many of these freelancers, it isn’t a lack of skills or talent that’s the problem. Rather, their weakness is handling the business side of things – something many freelancers don’t give much thought to.

Today, I hope to put this right, as I take a closer look at the business side of freelancing. If your income isn’t at the level you want it to be, read on! In this post, I’ll be helping you avoid seven common business mistakes made by freelancers.

1. Undervaluing Yourself

This one is arguably the perennial freelancer mistake, especially among newer freelancers – although it’s all too commonly experienced by established freelancers, too.

Many misguided freelancers think that the only way to stand out in a competitive marketplace is to offer bargain basement prices. They assume that a potential client will baulk at the thought of spending $5,000 on a website, especially when there are so many competitors significantly undercutting their prices.

The online marketplace is truly global these days, however, and there will always be developers/writers/designers in countries with a lower cost of living who can afford to charge less than you.

Accept this and realize that the majority of clients – well, the good ones, anyway – aren’t primarily concerned with a project’s cost. A good client will be looking at value and what you can do for their business.

With this in mind, never undervalue yourself just to land business. Consider your education, skills, experience, portfolio, the value you provide, and the years’ of hard work you’ve put in to get where you are. This is what the client is paying for, this is how you should be marketing yourself, and this is how you justify your higher prices.

You might think that you can raise your rates after impressing a client, but a client looking for the cheapest service possible will rarely budge.

2. Failing to Raise Prices

Another common problem experienced by freelancers: most don’t know when to raise their prices. Of course, this problem is exacerbated if you’ve put yourself in an awkward position by undervaluing your services to begin with.

In my opinion, when it comes to pricing your services, you need to listen to the market forces at play. You might think that $75/hour is too much for your time, but if several clients are prepared to pay it, then it evidently is not.

As a general rule of thumb, if there is excessive demand for something, prices will inevitably rise. If you’re already booked solid next month, then you should be asking yourself, “are my prices high enough?

Increasing prices weeds out less interested clients and also maximizes revenues – and the latter is, of course, one of the keys to a thriving freelance business.

My tip to you: experiment with your prices. Try quoting new prospective clients a higher price than usual – especially if you’re already swamped with work. It’s the only way to find out whether the market will bear your new rates, and it potentially puts more money in your back pocket.

This is especially important in the early days of your freelancing career – you should be gradually-yet-consistently raising your prices until you find your equilibrium rate. And don’t forget: this equilibrium rate should also increase over time!

3. Offering Too Many Discounts

This point is linked to undervaluing your worth but is predominantly motivated by fear – fear of losing a potential client’s custom.

During the negotiation phase with a new client, many freelancers are too quick to offer a discount on their standard rate. When you jump the gun too quickly, you’re clearly leaving money on the table.

Your rates are your rates, and if the client can’t see the value in hiring you, then they’re probably not a client you want to be working with anyway.

Of course, there is a time and a place for offering discounts to prospective clients, but you should determine this on a project-by-project basis. If you’re prepared to offer 20% off to any client who asks, well, you clearly don’t value your time at your existing rates.

4. Working with Bad Clients

I guess that most of you already know about the Pareto “80/20” Principle – that 80% of your effects are created by 20% of your causes.

Many of you will also know that the Pareto Principle holds for a wide variety of scenarios. From personal experience, this includes “problem clients” – 20% of your clients will cause you 80% of your problems.

If you want your freelancing business to operate smoothly, you need a strategy in place to screen for problem clients. If a client seems to be rude or too demanding during your first communications, you’re probably better off politely declining their work, stating that you’re too busy. If a client is too pushy or haggles too aggressively, that’s another warning sign that this client probably isn’t worth the bother.

If you’re brand new to the freelancing world, it can be very difficult to say “no” – especially if you need the clients. However, you’ll quickly learn that some clients just aren’t worth it, and it’s best to move on and find a client that you’re more aligned with.

Learn from the experience of other freelancers before you: I’ve worked with problem clients several times before; never, ever again!

5. Taking on Too Much Work

The life of a freelancer is pretty good; you can pick your hours, set your rates, and choose which projects you want to take on.

Unfortunately, you lose one of the main benefits of freelancing when you take on too much work – you end up working around the clock, you heap pressure on yourself, you miss deadlines, and the quality of your work suffers.

Again, this is linked to the power of saying “no.” You aren’t superhuman, and there are only so many projects you can take on at once.

I know, I know; it’s scary turning clients away – after all, you can never guarantee where that next paycheck will come from. For the sake of your sanity, however, it’s something you’ll just have to learn to get used to.

And if you are taking on too much work, that’s probably a sign that you aren’t screening your clients thoroughly enough or that your rates are too low.

6. Accepting Scope Creep

So you’ve just accepted a new project, you’ve agreed to the terms, and you’ve negotiated the fee you wanted – happy days!

Well, for now at least.

Sometimes the scope of a project grows little by little, with the client asking for one more seemingly small task from you, and then another – hence the name “scope creep.” Each task on its own seems reasonable enough, but when all is said and done, you’ve put a considerable amount of extra hours in – hours that you won’t be paid for.

This happens when the expectations of the client and the freelancer are not in harmony, usually because the project wasn’t clearly defined by both parties when setting out.

That’s the key to avoiding scope creep: define the project. Simple.

Use straightforward, unambiguous language when outlining the project, and put it in a contract. Make sure the client has signed the contract before commencing work, too.

Of course, most clients aren’t evil and deliberately trying to con you out of time and money – most of the time, scope creep is a simple misunderstanding. However, it’s a misunderstanding that can really hurt your business if you’re not careful, so it pays to get on top of it.

7. Not Specializing

“A Jack of all trades is a master of none.” Wise words, and advice that all freelancers should heed.

When you try to be everything to everyone, you deny yourself the opportunity to market yourself as a specialist.

As always, this stems from being afraid to turn down paid client work – and I get that, I really do. If you want to better serve your long-term career, however, it really does pay to carve a name for yourself in a smaller sub-niche.

Why? Lots of reasons!

  • You’ll face less direct competition.
  • When you undertake similar projects, you’ll inevitably become more efficient with the processes, speeding jobs up and effectively raising your hourly rate.
  • Specialists command top dollar.
  • You’ll master projects in your niche, ensuring that you always deliver top, top quality.
  • Clients would rather trust specialists than generalists.

From a business perspective, the benefits of specializing are clear. Unless you want to compete with the big, established names, I recommend freelancers take the specialist path – at least at first. After all, there’s no reason you can’t tackle the general market once you’ve built a name and reputation for yourself.

Final Thoughts

Although continuing to develop your skills in your chosen field will inevitably open doors for you as a freelancer, beyond a certain point, the business side of things kicks in. Run your freelancing like a business – and run it well – and you’re likely to earn far more. Even the best WordPress developers in the world face seriously limited earning potentials if they can’t hand the business side of their operations.

The seven points we’ve examined in today’s post are good places to start for anyone siphoning money away, and as we’ve seen thoughout, the seven mistakes are rooted in two main causes:

  • Undervaluing your time.
  • Being afraid to lose clients.

In other words, these problems are a result of an ineffective mindset. Not to worry, though, as these are common freelancing mistakes that we’ve all made at some point (or will make!). If you’re consciously aware of them, however, you can make deliberate improvements in these areas. Correct the mistakes, and your business will thrive.

I don’t want the discussion to end there, however, as I want to hear your take on the subject. Feel free to share your experiences and advice in the comments section below!

Image by Bplanet / shutterstock.com

21 Comments

  1. Most of my worries was to go further with a client who does not know what he wants.

    • In my case, its the opposite giving me headaches. They know TOO WELL what they want. Esp. if they know neither jack nor shit about usability, web design and so on.

      Maybe we should exchange clients – I take a bunch of your clueless folks and you take a bunch of my overclued folks 😉

      cu, w0lf.

      • My sentiments exactly and btw, I’m going to steal your “if they know neither Jack nor Shit” because I think it’s awesome.

  2. Excellent article! One of your best guys thank you 🙂

  3. Great post, Shaun. I’m presenting on a related topic for a group of WordPressers next week in Saratoga Springs, NY.

    Perhaps #8 would be not having a written agreement laying out the details of the project, including payment details.

    • Cliff, it’s in the no.6!

      • Son of a gun, I did! My fault for missing it, but I do think that having a written agreement that defines expectations is a big enough deal to merit its own call out number. Handshake deals are ripe for misinterpretation as Shaun suggests.

  4. One very important lesson I have learned is to teach the client what the process of building a website looks like, specifically their involvement. A lot of clients, no fault of their own, think they just have to hand over some money, sit back, and enjoy the finished project when the time comes. They don’t realize it’s a team effort and that they also have the responsibility to write content, send over images they want, and provide any necessary resources that are required to complete the website. Before any contract has been signed, I’ve found it’s very important to make sure the client understands they also have required responsibilities.

    • Good point. I specialize in very websites for very small businesses, and most of the business owners are distinctly non-tech. At the end of our first meeting I provide a contract containing: what I am offering, what they need to provide, and when they need to provide it in order to meet the planned delivery date. And – if they want to pay for it, I’ll do the content and the images and hand over a completed site.

  5. It is fast becoming a tech jungle out there, competition has gathered steam from places like ELance, Thumbtack and others with clients expecting discount services for complex work. The big takeaway ? Never undervalue yourself. Think of your time, your education, your experience. It is tough but we have ti hang in there and think about what we can do to stand out and get clients who believe in what we can do. Great article. Truth! Thank you !!

  6. Yes I am new to the game and have made a few of these mistakes, great article. I am now going into my second year of business and learning to say no and not taking on too much work.

    Great article

  7. The first bit of advice is great for freelancers who have been freelancing for a while. It’s no good for inexperienced freelancers who haven’t worked in the industry long enough to know how to provide value and be able to charge what they are worth. Therefore the only way to build experience and knowledge enough to be able to provide a decent ROI (and start charging what you’re worth) is to start off with the usual ways of billing i.e. hourly and fixed project fees.

  8. I think I have experienced all of them during these years. Fortunately I solved some. Specializing is the key to solving all the rest.

  9. Checkout the video Fu*k you pay me by Mike montero from Mule.

  10. In the last 8 years I have made all these mistakes, and now the first to make the plan work, I take a little time to outline the profile of the customer, this way I can avoid some of these errors.

    Thanks for your sharing

    ps . Sorry for my English, I’m still learning

  11. Not only does this apply to freelances, but also PROFESSIONAL SERVICES firm. Rejecting any risk of 80/20 and firing troublesome clients is how we grow in the web design industry! “Out of scope” is not a phrase to ignore! Great article!!

  12. It’s not surprising that the majority of the topics apply in almost every business. I have recently transitioned from 25 years in the insurance business and dealt with the same headaches. Now I doing web design and not kissing near as much ass that I did over the last 25 years. Great article.

  13. Most of the freelancers give up their freelancing career by doing these mistakes. Useful post indeed.

  14. Great post. I am learning as I go and struggle with all these same things!

  15. Great article! Reflects on every freelance job… I already made some of those mistakes with two of my clients this year… Trying to avoid them while transmitting to web designer freelancer!

  16. Hey Shaun,
    I’ve read your article twice. It’s written with passion, experience and have great advices. Every freelancer (person) do mistakes, but the key is what you learn from them. Pareto’s 80/20 principle and Parkinson’s Law are also very usefull in how to work with clients and manage your time for performance. Cheers!

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