As we seek to improve our freelance businesses, a terrific starting point is to increase our revenue per working hour.
For me, it’s a pragmatic thing: I don’t want to work an obscene number of hours, so it’s vital to maximize every working hour. Revenue per hour is a good measure of how I’m doing.
Revenue per hour, as we’ll be using it today, is your total revenue divided by your total working hours (both billable and non-billable). Knowing this number helps you make all kinds of other decisions.
There are five levers you can pull to increase revenue per hour. In general, you’ll improve as you become:
- More efficient
- More effective
- More connected
- More in demand
- More expensive
Let’s dig into each.
Efficiency alone won’t make you a successful soloist. But it’s hard to find a successful soloist who’s inefficient.
Efficiency is largely a function of self-management. Some tactical examples:
- Block your most productive time of day for your most important tasks. (It’s nearly impossible to schedule a meeting with me in the morning.)
- Minimize task-switching.
- Turn off any alerts that aren’t truly necessary.
- Banish your phone to another room if you must.
- Outsource, minimize, automate or eliminate administrative work.
- Batch menial tasks.
- Analyze your time regularly to plug leaks. In particular, keep an eye on your ratio of productive time to non-productive time.
Effectiveness breaks into two conceptual silos:
Doing the work – Creating positive change, improving the client’s condition, and constantly bettering our work product.
Doing the work that brings in the work – Marketing and sales activities that deliver more of the clients we’d love to have.
If you’re effective at those two things (and increasingly so), you can do this freelancing thing forever.
Some questions to ask yourself:
- Is my work remarkable enough that I’m earning frequent referrals and repeat business?
- How can I measure the impact of my work? How can I communicate this value to my clients?
- Which marketing activities deliver the best leads? What’s stopping me from doubling down on these and cutting everything else?
- Since I have finite time to dedicate to my marketing, which activities have the highest ROTI (return on time investment)?
Leads that flow from first-degree connections take less time to close than cold-calls or open-pitching. Some freelancers do very well by focusing on networking alone.
Your goal here is to widen your circle by making new connections, and to deepen your circle by building real relationships. This is a weekly (or daily) practice.
There are plenty of people you can connect and re-connect with:
- Past clients.
- Past co-workers.
- People whose work you admire.
- Influential and well-connected people in your area or field.
- People you just vibe with.
- People on similar paths. Trade notes and help each other out.
- People with complementary skill sets. If you can’t help a prospect yourself, everyone wins when you can say, “Let me refer you to someone I trust.”
Networking for social purposes is fine and dandy, but a more deliberate approach can drive huge results.
More In Demand
When you’re in demand, good prospects come to you (and often want to work only with you). So you spend less time selling or bidding, and more time doing work that matters – and that pays well.
Becoming more in demand is often a matter of elevating your authority – of being known as someone at the top of their craft.
Again, the best way to do that is to do work that’s exceptional enough that people want to hire you again (and tell others about you).
But you can also send signals of authority. Examples:
- Proof Points. Brands you’ve worked with, case studies you’ve built, awards you’ve won, testimonials you’ve received – when deployed well, all signal authority.
- Niching. Authority is relative. If the prospect needs marketing services for B2B manufacturing, and you’ve got a deep well of experience there, you’ll have the edge over a generalist.
- Sampling. I am not suggesting that you work for free. But you can give prospects a taste of your expertise before they buy. How? Give a presentation at a local Chamber lunch-n-learn. Write for a respected industry journal. Publish a series of videos that de-mystify your field. The list of options is long, but the goal is to show that you know your space.
“Raise your rates!” is well-meaning advice, but it’s too broad to be useful.
Certainly, if your rates are well below your delivered value, you’re leaving money on the table. If you’re a Mercedes, don’t price yourself like a Honda Fit.
But if you raise your rates willy-nilly, you run the risk of selling a Honda Fit at a Mercedes price. And that’s not a legit long-term play.
So I prefer this approach: “Deliver more value – then raise your rates accordingly.”
How can we deliver more value?
- Create Higher-Value Offers. Where can you add depth to your processes and impact to your outcomes? If you’re a designer, how can you move from “logos only” to top-to-bottom visual identity? If you’re a content creator, can you also build the underlying strategy? In some cases, you may need to take a course or earn a certification, but that’s an investment that can pay off.
- Engage Higher on the Org Chart. The higher up you go, the greater the impact (and the better the pay).
- Be Strategic in Your Targeting. Large companies tend to have large budgets, and the impact of your work has more value. But small companies may have a greater ongoing need for your skillset. There’s no one right answer here, but you should base your strategic choice, at least in part, on the value you can deliver.
Remember: Your pricing sends a signal. If you’re truly delivering value and improving the client’s condition, a higher price is not only justified, it’s expected.
If you’re already tracking your revenue per hour, lean on the above five focus areas to increase it. (I’ll go as far as to say that if your strategic plan doesn’t address at least one of these areas, there’s room for improvement.)
If you’re not tracking your revenue per hour, start immediately. When you drive it upward, you’re making more money in the same amount of time. (Or less!)
And that makes your freelance business more sustainable.
Your time is valuable, and I hope I’ve rewarded it. If so, your shares are greatly appreciated, as I try to spread the gospel to as many freelancers as possible.
I have a limited number of slots available for 1-1 coaching. I’m not some guy who’s been freelancing for a minute – I’ve been doing it since 1997, with brands you’ve actually heard of. Click here to find out more about how my customized coaching can help you level up.
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