A few weeks ago I created a survey on freelancing and sent it out. I wanted to put some data behind what I’ve noticed from working with freelancers. I also wanted to get a better picture of who I was writing for on my email list so I could write more relevant material.
A decent amount of people filled out the survey. (I also collected some of this data from my Pricing For Designers Facebook group.)
Here are the results.
The first question was about what type of freelancing they did. As you can see, most freelancers on my email list are designers.
No shocker here since I’m a designer myself and I mostly market to other designers.
Next up, was length of time freelancing.
How long have you been a freelancer?
Here the surprise was how many experienced freelancers are on my list. The majority has been freelancing for 5+ years (with a chunk of people who’ve been at it for 20+ years!)
(It gets really interesting when you start looking at annual revenue vs. the length of time freelancing. More on that in a moment.)
Next up, client inquiries. I wanted to know how many project opportunities and leads the average freelancer gets per month.
How many leads do freelancers get per month?
Looking back now, I think I’d narrow this a bit and make another option. Something like 0-3, 3-6 and 7-10. I really wonder how many of the 80% who answered they receive 0-5 per month, might actually fall closer to 3-6 per month.
That difference could be very significant.
Regardless, it’s still interesting to see that the majority of freelancers can count on one hand the number of inquiries a month they get.
Here’s why that matters.
Let’s say you are in this group that lands 1 out of those 0-5 inquiries you get per month. That’s 20%—a realistic conversion number. So let’s say you work with ~12 clients per year.
If you average out your revenue per client per year, and you are making $10,000 per client, you are doing alright. $120,000/year is a good amount of revenue for a solo freelancer.
However, my assumption (and I am assuming quite a bit with these survey results) is that most of these freelancers are not generating anywhere near $10,000 per client.
If that’s you, it leaves you with two options:
Option 1: Generate more freelance leads
Now, it’s obvious that you’d want more leads coming to you each month.
Having more leads gives you more options. It allows you to pick and choose and be selective and pick the right projects and clients to work with.
It also means that if you are keeping that conversion rate of 20%, and you are getting 5-10 leads per month, now you are landing 2 projects per month instead of 1.
So if you keep your average client revenue the same ($5,000/project), you are gonna make that $100,000-$120,000/year by working with 20-24 clients per year.
But you don’t want too many clients. Not if you want to stay as a solo freelancer. If you want to grow into an agency, that’s fine, but even then, at some point, you end up spreading yourself too thin trying to service so many clients at once.
(My recommendation is actually to work with ~10-12 client per year. I think that IS a healthy and manageable amount of clients to have as a target for a solo freelancer.)
Option 2: Raise your prices
If you are averaging $5,000 per client, you’ve got to find a way to bump that average up.
You could offer more varied services to the same audience and increase the scope of your projects.
Or, you could offer the same services you offer now to a client audience that can pay more for what you offer. That’s my preferred route.
So if you are a web designer, instead of targeting mom and pop businesses, you target companies with between 10-20 employees. Their needs are greater and they can afford to pay you more.
The further up the food chain you go, the less clients you need (right up to the point where you start to have a client concentration problem—where too much of your revenue comes from only 1 or 2 of your clients.)
In reality, however, you need both option 1 and option 2.
You need to raise your prices, AND you need additional opportunities coming to you each month. (Additional opportunities might even give you the confidence you need to raise your prices if you think it is too risky to charge what you’d like.)
Back to the survey…
How do you get your freelance work?
My next question was about the source of leads. Not surprisingly, most leads (80%+) come from referrals.
The problem with referrals is that without a system in place to get them you’ll never know when one is going to come your way.
Don’t get me wrong, good referrals are the best kind of lead. You are much more likely to win the business from a referral than any other type of lead. But you can’t count on them.
So it’s no wonder 80%+ had 0-5 leads per month and 80%+ got most leads from referrals.
If that’s your situation (few leads—mostly from referral), you’ve got to look into another marketing channel to start getting more opportunities coming your way.
Next up was pricing method.
How do you price your freelance services?
The one thing that stood out was the lack of retainer work being represented. And while I’m sure some people included it in as a mix of all the options, I’d bet money on it that most freelancers don’t price using retainers.
The thing about retainer work vs. project work is that it can give you predictable income coming in each month. Instead of starting from zero every month and having to go out and hunt for new projects, you’ve got a known figure coming to you each and every month.
Having that helps to blunt the sharp edge of working your tail off one month and starving the next—that up and down really wears on you.
Next up was business size. No surprises here. Most are solo freelancers.
And finally, we’ve got revenue.
How much do freelancers make?
Again, not too surprised here.
Most freelancers (80%+) are earning between $0-$50,000.
The one surprising thing I alluded to earlier was that a good deal of the freelancers that have been at it for 10, 15, 20 or even 30 years, don’t necessarily make more than some of the people just starting out. Many of these long-time freelancers were making between $0-$25,000.
I’m not sure why that is. It could be that freelancing has always been just a side gig for them, or it could be something completely different. I’d love to know why (shoot me an email if you are in this group and are open to telling me what you feel has held you back—or if you even want to earn more than you do for your work).
One correlation I found was in the group making $75K-100K, in almost every case they had 5+ years under their belt, but another interesting nugget from this group is that they often still only got 0-5 inquiries per month.
So what can we assume about this group? (If you are in the groups making below $75K, but are looking to increase your revenue, here’s where I’d listen up.)
What we can assume about this group is that they are pricing high enough.
Unless they are landing an unusually high amount of those leads, I think we can safely say that they are making good price decisions and are charging their worth.
It seems the length of time you’ve been freelancing only correlates to how much money you earn in a small way: you need to be around long enough to know you need to raise your prices if you want to earn more.
In almost every other case where a freelancer was making over $100,000/year, they were either an agency owner/partner or they were not a designer.
In the case of agencies, they are likely targeting a market higher up the food chain or their income is combined.
Some of this needs to be delved into by doing some 1-on-1 sessions with the survey responders to see if the few patterns that started to emerge hold up under more scrutiny.