This post will help you with Phase 1 of the Black Freelance Foundations Workbook…if you haven’t started yours yet, download it now!
There’s multiple reasons you’ll hear me say online entrepreneurs should start with freelancing, but one of the biggest, is that it’s the easiest on your wallet. (If you want to know the other reasons, check out this post.)
Take it from somebody who’s poured thousands into online businesses — freelancing is the cheapest way to make money online (even with sites like Upwork pushing costs up.) Between time, money, and effort, online business always costs something. One thing that’s still kind of murky though, is how much people who’re already out here freelancing are spending on their businesses.
I want to give you a feel for what I spend on mine (and why), so this isn’t going to be a traditional list or something that’s going to be true for everybody. I’m breaking it out into stages/phases, so you’ll see how I managed risk, invested gradually (I started freelancing after a layoff), and only paid out more once I saw some return.
This stage was all about the basics. None of these are necessary at all (bidding sites take care of a lot of the concerns these purchases address for you), but if you really want to push your income and start taking on bigger, higher-paying clients, these are all really helpful.
The cost of an LLC varies by state, but is a yearly investment that can protect you from a lot of liability. It’s definitely not a requirement, and most freelancing is pretty low risk, but you never know. Since personally I was used to having that protection, I went ahead and put my business under one.
Website Stuff: $110
This didn’t hit all at one time (my hosting plan runs monthly at $4), but between that, $11 domain registration, and a $50 template for my site design, that’s what it cost me for a year of getting and keeping my web presence up and running.
My Freelancing Contract: $50
It was important for me to have a contract, so I invested in this early on.
There were free resources but I wanted something custom that had been reviewed by a lawyer. You’re probably thinking that you don’t know of any lawyers in the U.S. who’d review a contract for $50, let alone create one, and you’re right. To get started, I found someone in the Philippines (via Upwork) who’d been trained in U.S. law to cobble one together.
Add all that up and you’ll see that I got my freelance business up and running for less than $300. Without the LLC (again, helpful, but not required) and when you break the website hosting down monthly, my launch cost less than $100.
After I’d found my rhythm and saw that my niche had some earning potential, I knew it was time to invest a bit more to step up my skills.
Since I was selling my services as a content marketer (and coming from a blogging background) I knew I’d have to up my skills to make myself marketable and get results for any clients I signed. That meant a certification that, at the time, seemed really expensive. (It was Copyblogger’s Authority certification btw.)
I learned though, that courses like these that seem expensive can pay off quickly, because they tend to open your mind, encourage you to shoot for bigger projects, and give you the confidence to charge more.
I made that $400 back (plus some) one month after I got certified.
After I got my basics set up, I worked for a while not really investing in anything new. You can see how, after some of those initial payouts, my monthly expenses were SUPER low (averaging under $50 when you include some productivity stuff that I’ll talk about in a bit).
Since I was already seeing return on the initial investments in my business (in the form of better clients and higher rates) I decided to connect to a long-term resource.
Ongoing Skills and Community Development: $30/month
This is something we spend two months a year on in the Academy and that’s because as a freelancer, your skills development is COMPLETELY in your hands.
Thankfully there are a bunch of options out there for most skillsets, and I was able to find a community that kept me pushing every month to improve my business. The skills I picked up helped me add a service that paid off double a year’s investment almost immediately.
After that maintenance period, I hit another phase of active investment in developing my freelance business and started paying for things that aren’t in any way required, but really helped me push my earning.
Business Insurance: $500/yr
This is one of those “extras” that I don’t have to pay for, but since I focus on medium to large corporate clients, it can be a bonus. It’s also an important part of my developing brand, since it sends a signal that I’m serious and professional.
The price of business insurance varies by location, provider, and level of coverage, but can be valuable. (I ended up getting it because a client who wanted me to do multiple case studies required it. At over $700 per page, that was an easy call.)
Commercial Client Training: $500
I’m focused on pushing my income again (just my income, not hours worked), so right now I’m in another period where I need to refine my skills. This time, I’m not so much focused on getting better as I am picking up the kind of skills people who pay more (commercial clients) need.
I JUST started two programs—one very specific and the other that gives me access to materials that teach how to attract commercial clients, but I know that I can make that $500 up easily with half a day’s work for this kind of client.
Could I have developed these skills on my own? Probably, but time really is money in freelancing, and a lot of the folks who’ve been out here for 5, 10, 20 years and more are willing to teach you what they know and save you the struggle of reinventing the wheel. These courses came recommended by someone I trust, so I jumped on them.
OK, so productivity tools are something I didn’t want to lump in with the other expenses since I’ve bounced around through quite a few and the prices varied so much. For now, I’ve settled on a mix of free and paid solutions.
I started with Basecamp for project management, but at $20/month, found it didn’t fit well with the work I do and clients I have (they just refused to use it). After a trip through Zoho and a couple others, I now use MeisterTask’s free version with the app.
For CRM, I keep an Insightly account ($20/month) and pay the $5/month for G Suite through Google. I also use a $20/month email list-management service, but that’s shared across other projects too so I can’t attribute the entire cost to my freelance work.
What I Don’t Pay For
Alright…so these are things I didn’t include and are going to be really specific to my skillset and choice of client.
Since I’m a writer, I don’t really pay for any sophisticated software, equipment or services that I wouldn’t otherwise have as a regular person who just owns a computer. I do pay $30/month for Grammarly, but again, that’s minor compared to what, say, designers and voice over artists pay out.
I also pay exactly nothing for transportation. I don’t work with local clients (completely by choice) and I don’t travel (again, by choice). Maybe I will one day, but that’s what I want and it’s working for my business, so I’m rolling with it.
I’m honestly not taking full advantage of my location independent-ness, so pretty soon I’m going to jump on a new laptop so I can move around more (and hopefully get back into travelling for fun again.) Since I’m taking on more corporate clients, I might start investing in project management again, (but I’m really finding most want me to learn their systems…that’s not going to be true for every skillset at all).
It’s also about that time for me to start investing in brand development. You’ve probably seen me say before that it’s hard to really shape a personal brand when you first start freelancing because you don’t really know what problems you solve or who you solve them for. Well, I’m getting to that point where I do know, so I might even finally pay to get a logo made!
And that’s it!
It’s totally possible I forgot something or wasn’t clear, so if you’ve got any questions, drop ‘em in the comments!
Stephanie Woodruff says
Great post and very realistic figures to get started.