Are we getting knocked down by starters?

Hey guys!

It's been a long time since I posted here.
I always have thoughts that go back and forth in my head until I decide to put them out to the world, per se.

So now, my most current thought was about how mid-skilled developers and freelancers are charging so little for work.

Why I think this is bad? (This is my opinion of course )

We, freelancers who have been around for some time, are sometimes lost against this low quote. Maybe we charge 3000$ dollars to develop some sort of system for someone, and then, (no offense to Indian people), Indian people charge 400$, and the people who's trying to get the job done and don't know much about what involves in the correct development of an idea, they decide to go with the lowest quote.

This makes us look bad, and people goes "OOOH NO; you charge TOO MUCH! TOO MUCH!", believe me, this has happened to me and I'm pretty sure a lot of you have gone through something similar.

And also, a lot of those people hand out terribly bad projects, I have had to fix two sites that were badly developed, and believe me, they were really really bad, I would feel bad about myself if I ever hand out something like that.

And now, I see new users from TF (more than welcome, I hope there were more!) getting into this trend of "charging little, doing much"..

For those who do that, YOU'RE GIVING YOURSELF OUT.

Think about the time you invested to learn and polish this skills.
I've been working since I was 15, I'm 21 now and it's a non-stop learning curve. You can never know enough, there's always something new and exciting to learn. Some of us, aside of time, we invest a lot of money into our knowledge. Me for example, I spend around 300-400$ monthly dollars on books and different courses I find to like for myself.

That's my two cents for now.


I'd like to hear from other users.

Mauro

As you know, I'm not a programmer or developer, but I have run independent professional service businesses for 3 decades.

The two problems you cite--others undercutting your price and pressure from clients to drop your pricing are common in every industry, and have always existed.

Some of the problem can be linked to a basic aspect of capitalism as practiced in the 20th & 21st centuries--there is always a struggle between the buyer (who wants the highest quality at the lowest price) and the seller (who wants the highest price possible for the level or quality of work s/he offers).

And some of the problem can be linked to client education: if the person you're working for doesn't understand why s/he needs you to do the work you do, it's that much harder to convince her or him to hire you at the rate that you need to be paid.

Yes, you can blame the global marketplace, which permits competition between you and people with (and yes, sometimes without) training who live in developing countries or even in regions of your own country where the cost of living is lower. And you can fret because the ultimate end of this globalized race to the lowest price may be lower prices for everyone.

But not necessarily. Here are some of the things I recommend to my clients to consider.

1. Recognize where you sit on the spectrum of all people offering your services in the world. There will always be people who charge less, just as there will always be people who charge more.
2. Make sure that the pricing structure you use for the work you is solid. I like to point out that there is no such thing as a "going rate" for any work. What does exist is a number that represents what you need to be paid for your time and your skill. There is no point to agreeing to do a job for $25/hour if, in order to stay in business, you need to earn $75/hour. I don't care what they promise you in terms of future work.
3. Practice saying "Maybe I'm not the right person to do this job for you." In a truly successful business you will walk away from something between 30 and 60% of the jobs offered you. I don't mean bidding situations where you lose, either.

Most people do a lot of client exploration in the early days of their business, and then forget to analyze what they learn in those first years. For example, you might discover that you:

• dislike working with established small businesses because there's always too much scope creep.
• like working with startup businesses because it's exciting.
• dislike working with startups because there's never enough money and you're always asked to delay payments
• love working with schools because you can teach 12-year-olds how to design.
• love working with schools because the government always pays and once the work has been done once it doesn't take that much to do again
• enjoy non-profit work, but they routinely demand a 15% discount which I can't afford.
• hate freelancing, period. The minute I find a real job I'm outta here

(This is a made up list, of course)

In the rush to stay busy at any price, it's easy to forget that you need to act on what you know.

I feel that the online programming market has been lost and is at this point beyond recovery. The issue is that all the clients who are willing to pay a fair price just hire a local consultant. The ones who go online are looking for a bargain and will immediately spring for the lowest bid. The only reason I'm even offering services online is because I'm a fulltime student and don't have time to get a real job. At this point I'm just selling a very niche script I wrote over the summer.

If, after college, I decide to do consulting again, I won't even be wasting my time advertising online. There's enough jobs in the Chicago area that it won't be worth my while to mess with the bargain hunters that come to the online market.

I am glad to have discovered that I am not the only person that feels this way. I have been thinking about these issues for the same reason as you, Mauro. I also agree with comments the rest of you guys made. I am also a full-time student as a result online jobs makes things a whole lot easier for me to work while studying and going to school. However, it is frustrating to deal with the issues mentioned above. I personally find that I sometimes have to keep my prices relatively low for many other reasons as well: maintain a customer base to ensure future work and etc. I know I am giving myself out this way but most of the time I can't see how I can do otherwise. For instance, I am a developer and am good at it but I cannot design...well, I'm good but no pro Picasso or pro either so it is hard to get work when I don't have anything to show. I can prove my work with the code and results but clients usually don't see all of that. If it is not something they can see it's no bueno for them! This applies to me at least. Am I the only one with this issue, I think not. Therefore, I adjust my prices unbelievably low to make up for my inabilities to design fantastically. It works and I get a gig here and there and even then the work I get doesn't always fit the description of portfolio material (because they are mostly programming gigs). Because I don't get enough gigs or get them often I can't turn them down either. So, really what can we do about it?!!

Doesn't then the question also become "can you afford to work at this work"?

Here's what I'm thinking.
Consider:
1. How much time do you have to devote to work, per year?

A. In the US, the standard calculation is a working year is 1400 hours. (It's probably about 1300 in Europe, but I'm not sure). Looking per year is a good idea because there are always slow and busy periods.

2. How much money do you want or need to earn in that time.?

Divide answer 1 by answer 2 to get a rough idea of what you need to be billing per hour.

But now...remember that
1. You need to pay taxes on your income.
2. You need to cover the times you work that has to be done but for which you aren't paid. An example would be the time you spend acquiring clients, but that's not the only one.
3. Whether or not you believe Moore's Law can be applied to programming and designing, you need a way to keep up with with changes to the type of work you do. You might need to beef up the amount of money you need to earn to reflect taking a course or two. Or you might add the length of time it will take you to learn new skills on your own to the "work for which you aren't paid" figure. Or both.

Recalculate what you need to earn and how much time you have to do it.

You could do this as:

all the money you need/(all the time you have available-all the time you will be working but not paid

Now, compare this number to the kinds of per-hour rates you've been earning. Look at the numbers over a year (or as much of a year as you have been working.)

Can you afford to be in business at the rates you're charging?
Can you afford to be in business at the rates people are willing to pay you?
Would you earn more money working at the local coffee bar (consider that unless you screw up you only need to go through the job search once, not every time you go looking for clients)


Not willing to do think about these things? Welcome to The Amateurs Club, friend.