Hourly Rate vs. ROI: A Freelancer's Options
Posted: Sat Feb 01, 2025 5:48 am
Let's take a step back. Ok, the heart of the matter is the calculation of the hourly rate , but are we sure that it is always the best solution?
In my humble opinion , if it's about consulting, training and how much easier it is to usage of our employment database calculate with this parameter, then we're there (and we'll get to the calculations later).
But what if it's a more complex project , perhaps operational, where you have to consider budgets for external "products" such as links or ads? Here it's perhaps better to leave out the hourly rate and consider a Return on Investment - because that's what it's all about, freelance work is an investment, not a cost - for that specific project.
How long will the project last?
What is the starting point?
What are the KPIs to consider and how can they be calculated?
These are just some of the basic questions to ask yourself. All to lead to the simplification of the type:
If a customer invests 10 with me, he must get back at least 11, otherwise he is doing charity.
Many professionals believe that this type of approach is more profitable, since reasoning in hourly cost is a limitation . They have a devil's reason.
This is because, and we often forget, we always have only two hands and very limited time.
You easily reach a ceiling and you don't grow anymore, due to physiological limits. And being an Ebenezer Scrooge who is always and only there pushing is EXTREMELY harmful. Trust those who have transformed themselves into avatars of the Workaholic, imploding. Never again.
According to Robert Kiyosaki, author of "The Cashflow Quadrants," this is the reason why self-employed people fail to move to the next quadrants.
In my humble opinion , if it's about consulting, training and how much easier it is to usage of our employment database calculate with this parameter, then we're there (and we'll get to the calculations later).
But what if it's a more complex project , perhaps operational, where you have to consider budgets for external "products" such as links or ads? Here it's perhaps better to leave out the hourly rate and consider a Return on Investment - because that's what it's all about, freelance work is an investment, not a cost - for that specific project.
How long will the project last?
What is the starting point?
What are the KPIs to consider and how can they be calculated?
These are just some of the basic questions to ask yourself. All to lead to the simplification of the type:
If a customer invests 10 with me, he must get back at least 11, otherwise he is doing charity.
Many professionals believe that this type of approach is more profitable, since reasoning in hourly cost is a limitation . They have a devil's reason.
This is because, and we often forget, we always have only two hands and very limited time.
You easily reach a ceiling and you don't grow anymore, due to physiological limits. And being an Ebenezer Scrooge who is always and only there pushing is EXTREMELY harmful. Trust those who have transformed themselves into avatars of the Workaholic, imploding. Never again.
According to Robert Kiyosaki, author of "The Cashflow Quadrants," this is the reason why self-employed people fail to move to the next quadrants.