Why Can’t a Freelancer Be a Millionaire?

You just don’t hear about millionaire freelancers. The big thing these days — the status we tend to aspire to — is the six-figure freelancer. There’s a big difference between earning six figures and hitting that seventh figure, but is it enough of a difference to keep freelancers out?

The short answer, at least as far as my own anecdotal experiences and annoying questions to creatives with especially lucrative practices seem to show, is that freelancers just don’t break that sort of barrier. Few enough can hit six figures, let alone keep going up.

Running the Numbers

The problem is the number of billable hours in a year, along with a ceiling for rates that freelancers hit.

Assuming that you take off two weeks a year for time off, you’ve got fifty weeks left in which you can earn a million dollars. That means you have to earn $20,000 every week without fail. (If you’re not going to take any vacation or sick leave or anything, you only need to earn $19,230.77 each week.)

Going with an expectation that you’re earning $20,000 a week simply because the math is easier, you’ve got to earn $4,000 a day, five days a week. That means an hourly rate of $500.

Oh, and I’ve very generously assumed that all the hours we work are billable — that some how we’ve created a magical marketing machine that brings us clients immediately as we’re finishing up with each project.

Who Can Charge $500 per Hour?

The simple truth is that while I know many freelancers who have broken the $300 per hour mark, I can’t think of anyone I know that actually charges $500 per hour. I’ve seen a couple of websites for freelancers who charge that much, but based on their clientele, I’m not sure that they’re really getting that rate on anything resembling a consistent basis. That fact, combined that when I ran the numbers, I was really optimistic — basically assuming 2,000 billable hours when most freelancers actually bill closer to 1,500 hours in a given year — puts that millionaire mark out of reach for us.

There just aren’t that many clients who value freelance work enough to pay $500 per hour. You might be able to make that number work if you bill per project and work both fast and well. But a lot of the clients I work with would laugh in my face if I quoted that high a rate. It takes a celebrity level of branding (or at least some internet fame) to get that number.

Just How Out of Reach is the Million Dollar Mark, Really?

There are some ways to bring it back into reach, though. But they require straying from pure freelancing: you can’t just offer your personal services on an hourly basis. You may even need to change your title from freelancer to something a little fancier.

When you can subcontract out parts of projects, you can add up more billable hours without working them yourself. When you can sell products that don’t require you to spend time with every customer, you can earn money beyond your services. It’s only when you’re limited to the number of hours in the day that you can’t make the math work.

Of course, reaching that seven figure mark will require a hell of a lot of work. But it’s not something that I believe is out of reach any more. And I’d like to think that a lot of the problems that go along with working for yourself — like figuring out health insurance — get a lot easier when you’re making that kind of bank. I’m going for it.

Image by Flickr user Michael Lehet

14 Comments

  1. Mike   •  

    Really thoughtful post Thursday.

    I can definitely see what you’re saying about the freelancer being a millionaire. It definitely requires you to step outside of being a freelancer and putting on your “entrepreneur” hat.

    Pure freelancing can get you into low six figures, but beyond that, you’ve got to get creative with other revenue sources.

    As for going for it (the six figure income), I’m in that race with you. First to the finish line wins :)

    Ready, set, go!

    • thursday   •     Author

      Mike, I think we’ll both make it. Just by the mere fact that we’ve got other irons in the fire, things get a lot easier.

  2. James Dabbagian   •  

    Ultimately, to be a millionaire, you need to stop thinking like a worker, and start thinking like a business owner. What you said is true: Subcontracting, products, etc, all different ways to earn income while doing minimal work.

    • thursday   •     Author

      Absolutely. If we stick to the role a traditional freelancer would follow, we might as well be running in place.

  3. Peter Bowerman   •  

    Interesting post… But yes, it’d be difficult. Even someone like Bob Bly, THE freelance writing guru out there, makes (and he’s not shy about discussing publicly; not to brag – he’s not that way – but to show what’s possible), at last report, ~650-700K.

    Not at all shabby (understatement of the century), but I know a good chunk of that comes from sales of info-products (it’s mind-boggling what kind of revenue they can make for him).

    And the writing he does almost exclusively is direct response copy (the long-letter, multi-page, uber-hype-y type of writing common to solicitations of nutritional supplements, real estate investing opportunities, etc.). Used to be that writers of those letters would get paid every time the company mailed that letter, and often to the tune of $10-15K+ a pop. No kidding.

    Apparently, those types of arrangements are rare these days, but Bob’s been at it so long, and is pretty darn good at what he does, so he might very well still command such a setup.

    But the key is to move beyond just by-the-job work and start writing books or other info-products that you create once and sell again and again. I’ve had a sweet taste of that with my books, and I can tell you passive income totally rocks.

    My two cents!

    PB

    • thursday   •     Author

      Thanks for chiming in about Bob Bly, Peter. I think he’s a really great example of someone who has gone far beyond ‘just a writer!’

      From what I understand, the days of direct response copy royalties are pretty much past, as nice as it would be to get that kind of payout long after the work is done. But it brings up a thought I’ve had: it seems like every writing guru suggests using our backlogs of old articles and other writing to sell reprints and the like — but I know only a handful of writers who actually do so regularly. I think a lot of us are just that focused on finding new work that even a source of passive income from pieces we’ve already written gets looked over.

  4. Elise Connors   •  

    The bottom line is – billable hours suck. For some reason, many freelancers are still stuck in the mentality that an hourly rate is necessary. As Peter mentioned, passive income is a great way to bridge the gap to higher income. Also, getting paid a “share” of profits is a good way to earn your money as well. Can you be a freelance business owner? Not really…

    • thursday   •     Author

      I’m not sure why freelancers seem to focus so much on an hourly rate. It feels too much like working for someone else to me!

      I only quote on a per project basis. I have a general idea of what I make per hour based on my rates, but I think it’s incredibly bad business to tell that number to a client. At the very least, a freelancer’s hourly rate makes a lot of clients choke because it’s so different from an employee’s hourly rate.

      • Mike   •  

        Same here. I quote per project at a price that I know makes the job worth it to me, which is still below market value from the agencies and other places that have a staff and overhead to charge for.

        I’d love to never have to charge per project again though – 100% passive income lifestyle, making money off of projects I build for myself.

      • Peter Bowerman   •  

        Well, an hourly rate IS necessary, but only for calculation purposes – so you know what flat rate you should be charging. I try never to quote hourly rates, mainly because without the context of an actual project to estimate on, an hourly rate has no meaning to a client, except, in all likelihood, to scare them off, if it’s high.

        But, whether hourly or flat, it’s still writing by the job, which, if you’re really good at what you do, and are paid really well, and have steady work/repeat biz/referrals, can be okay. But, as we’ve all agreed, if you can build that passive income thing, it takes the pressure off to have to constantly keep the pipeline full.

        You’ve got to figure out what you’re really good at, what knowledge/expertise you have that others don’t, and which they’d be willing to pay for. A particular industry niche, a specific project type, a finely honed skill that can be explained and taught. All can form the basis of an info-product.

        In my case, way back when (2000), I decided to write only the second book on the market about commercial freelancing, and made it more fun, lively, and in many ways, more detailed than the other. AND got the author of the other one (Bly) to blurb mine, which he happily did. :)

        And then just built it from there. It’s worth spending some time pondering what yours might be…

        PB

  5. Pingback: Where To Invest » Blog Archive » When to Invest In Your Writing

  6. Jaclyn   •  

    Thursday, this is an amazing post!! I appreciate the way you broke things down, and you’re 100% on the money 😉
    I think a big struggle a lot of freelancers face is separating themselves from the work. A lot of people who freelance get a huge amount of satisfaction from actually doing the work on their own terms. Making the sort of income you’re talking about means, as you point out, that you NEED to hire other people or subcontract and as James notes, you have to think of yourself and act like a business owner. But I think getting into that business mode is a huge challenge for a lot of people who identify as freelancers. But I’m right there with you! Look forward to keep following your journey :)

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