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

Ask Me Anything: Getting Started and Copyright

Mike Dougherty asks,

How does one get started?

Meredith Eaton asks,

How do you get established as a freelancer? Do you start by contacting publications or writing articles?

I’m answering Meredith and Mike’s questions together — I hope you two don’t mind!

The first thing you should do if you’re considering becoming a freelance writer is to determine what kind of writing projects you want to take on. Until you know the type of writing services you want to offer, it’s tough to market yourself, making it the most important first step. Furthermore, you need to know what kind of writing projects you want in order to decide what sorts of samples to include in your portfolio. Do you want to write articles? Blog for companies? Write marketing copy?

It’s worth noting that while marketing yourself as a freelance writer taking on a specific type of projects can help you land clients, it doesn’t mean that other sorts of projects won’t come your way. It just happens to simplify the marketing process. And, yes, some freelance writers recommend that you diversify your services and try to offer your clients as much as possible. I disagree. It’s very hard to build an excellent reputation among high-paying clients of any kind if you’re constantly taking on projects that have nothing to do with the type of work they want to recommend you for.

Once you have that idea, the next step is to put yourself in a position to land clients. That means setting up a website, putting together your portfolio and starting to tell people that you’re available for work. That’s the point when you would start querying publications or cold calling prospective clients. I’d recommend not writing articles or other projects until you actually have a publication or client lined up — the exception is if your portfolio is a little bare and you need to fill it out.

Christiana Aretta says,

Would love to read some stuff about copyright, especially alternative models that aren’t Creative Commons.

As far as copyright goes, most freelance writers in the past would never have considered anything other than traditional copyright. That’s because selling reprints were a crucial part of a writer’s income. But I’m going to let you in on the secret to why so many older freelancers hate the web — it’s almost destroyed the market for reprints. Most of the clients you’ll work with online want content that does not appear anywhere else online, because Google penalizes duplicate content. You can still sell reprints to magazines that are primarily print products, but there are fewer publications that don’t also publish their content online every day. With reprints off the table, traditional copyright becomes a lot less important.

Creative Commons has become a popular alternative, especially for online-only publishers, who may ask writers to allow their work to be distributed under a Creative Commons license. There are both benefits and drawbacks to the Creative Commons system.

Personally, I like the idea of Founder’s Copyright. Personally, I think that copyright law has become bloated — it protects big corporations, but doesn’t encourage writers sufficiently. When the Constitution was written, the framers believed that creators should have a monopoly over their works for 14 years, after which, those works would pass into the public domain. I’m of the opinion that if you don’t keep making use of a particular piece of work (writing sequels, adding on to it and so forth) in 14 years, it’s okay to let it go.

There are a lot of arguments about copyright these days. No matter what side you’re on, it’s hard to argue that we aren’t due for some reforms of the copyright law.

Got a question about the business side of freelance writing? Send it my way and I’ll answer it on next week’s ‘Ask Me Anything.’