Income goals are one of the very first things people set when they start freelancing. You know you’ve gotta make that money to survive, after all.
But the problem is that a lot of freelancers—especially newbie freelancers—go about their income goals the wrong way. That leads to income goals that don’t work out, which leads to disheartened (and broke) freelancers, which sometimes leads to going back to a job you hate to get by. No bueno.
Let’s walk through the two biggest mistakes and how to fix ‘em, so that you don’t get stuck in that cycle.
Mistake #1: The math just doesn’t add up
I see this scenario play out a lot:
- Person starts freelancing
- Person picks an income goal at random, one that sounds vaguely sustainable
- Without doing much math as to how that breaks down, they try and meet the income goal
- …and fail
- Which leads to drowning of sorrows at the local pub.
If you consistently don’t meet your income goals, it could be a problem with what you’re doing—but it could just as easily be that the income goal is actual-fax unattainable. Here are a few things to remember:
- As a freelancer, you don’t have 40 billable hours a week.
If your business is service based, you should probably plan for having 15–20 billable hours a week. Setting your income goals/hourly rates based off of a 40 hour work week is a super common, and very big, mistake. You will not get 40 hours of billable work done in one week without neglecting your business, period.
As a side note, you should also not set your rates as a direct conversion from an employee’s salary. Not only do freelancers not have 40 billable hours a week, as mentioned, but we also have to pay our taxes, healthcare, etc. out of pocket. If you must try to convert from a salary, take whatever employee hourly rate and double it (at least) before turning it into a freelance hourly rate.
- If your business is more consulting oriented, and you only bill for time spent at appointments and getting to/from appointments, you should base your hourly rate off of having 10–15 billable hours a week, unless you are an extreme extrovert.
- If you base your rates off some other metric, then you still need to make sure it’s reasonable by doing some cold hard math.
For example, for my freelance writing services, I charge per word, not by the hour. I know that 2,500 words per day is pretty much my absolute max output.
The math that many freelancers would do here looks like this:
- My current per-word rate is .25 so 2,500 words/day at that rate = $625
- $625/day x 22 workdays this month = Holy crap, that’s $13,750! I’m gonna be rich!
But the actual hours don’t break down that way, because I have to do more than write to run a business. If I write that many words in a day, my brain is pretty much kaput. I have maaaaybe an hour of good work left in me.
If I was writing 2,500 words every workday, in that leftover hour, to keep my business running, I would need to:
- keep my client funnel filled by following up with previous clients and potential clients, and pitching new potential clients
- work on my marketing by writing blog posts & scheduling social media shares of said blog posts or of other useful content
- create this week’s newsletter and schedule it
- edit any pieces (for me or for my clients) that need edited
- work on other projects that keep me feeling creatively fueled, like my Kickstarter or my novel
- answer emails from readers and potential/current clients/customers
- send invoices and log income/expenses
- work on the content for any products and/or courses I’m currently creating/running (and for courses, answer participant questions, etc.)
In theory, I could make that large sum of money every month if I did nothing but worked on client work all day, every day.
But if I did that, the following would happen:
- I wouldn’t have any product income coming in
- I wouldn’t have any class or course income coming in
- I’d be at the mercy of my current clients and when/if our work together came to a close, I’d be left without any interested parties to help fill that income gap (because I hadn’t been pitching or marketing)
- I’d be burning out because I wouldn’t be working on anything that wasn’t just for me or my creativity
In my case, I can plan at writing that many billable words three days a week, tops, which puts my current freelance income cap at $7,500/month. That’s gross, not net, so it doesn’t take taxes or other expenses into account. And remember, that’s based on my absolute maximum workload, which doesn’t leave as much time for my creative side projects as I’d like.
If you take all of these factors into account when creating your income goals, I’m willing to bet the number you wind up with will look differently than if you just pick one out of the air based on what sounds good. Make sure that your rates, your income goals, and the amount of work you can actually do all line up.
Mistake #2: You’re not focusing on what you control
When you set a goal related to your freelancing income, you probably think something like, “I want to get X new clients this month!”
That’s good in theory, but the thing is…when it comes down to it, you don’t have any control at all whether people decide to be clients or not. You can do your 110% best and still not meet that quota, because it’s out of your control.
What happens then?
You get discouraged and go into the next month frustrated, which makes you less productive, which makes you even less likely to get paying clients.
Instead, you need to put your goal setting focus on the part of the process you can control. Rather than thinking about clients (or subscribers), focus on how many pitches you send per day or per week.
This might sound a little more airy-fairy than doing the hard math, but it’s just as important.
By focusing on what you’re in control of, you avoid the disappointing sense of failure if the expected amount of clients doesn’t come through. James Clear discussed a similar idea on his blog, talking about schedules vs. goals, and credits it as one of the tactics that’s helped him to succeed.
This is also why, when it comes to income, I measure the amount of billable work I’ve done each day and use that as a way to see if I’m on track to meet this month’s income goals.
I noticed that when I tracked the amount of money that came in on any given day, vs. the amount of work I did, I was much more likely to stay complacent or get discouraged if a payment came through a day or two later than expected.
When I track the amount of work I’m actually doing per day, it’s far more motivating. I can look at it and say, “Dang, I totally rocked it out today!,” ending my workday with a sense of accomplishment.
Those are the two biggest mistakes I’ve seen freelancers making (and made myself!) when it comes to income goals.
Wondering what to do next?
- First, double check your rates. Here’s one of the better freelance rates calculators out there. Once you’ve checked your rates against it, revisit your income goals and make sure they’re realistic.
- Make sure you’re basing your rates off an accurate amount of billable hours per week. Remember: you need to do “the work around the work” (marketing, pitching, administrative work, etc.) for your business to succeed, so you have to leave time for that.
- Revisit your income-related goals, and see if you can flip them around so that you’re in control of the outcome.
Have you fallen into one of those traps? What did you do to make sure it didn’t happen again?
(image credit: The Freelance Planner)