Ep 52 - Navigating the World of Freelancing: Business Development and Pricing Strategies
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Ep 52 - Navigating the World of Freelancing: Business Development and Pricing Strategies Podcast and Video Transcript
[Disclaimer: This transcription was written by AI using a tool called Descript, and has not been edited for content.]
Dave Dougherty: All right, and welcome to Enterprise Minds. Today we are going to continue our conversation on freelancing. If you haven't checked out that episode that was coming off of a question from a listener who is. Potentially considering freelancing, and we immediately went into sort of establishing the business and things to watch out for.
Like I. Insurance and all these other things that you might not actually think about but would be important to have. So continuing down that vein to make sure that we give thorough answers to anybody who is courageous enough to actually reach out to human beings and the modern world.
Establishing Your Freelance Business
Dave Dougherty: We are gonna talk about business development and what it actually kind of looks like once you have the business established.
So if you are curious about. Creating an LLC or doing any of that startup stuff. Go to that episode. It's episode 50.
Business Development Strategies
Dave Dougherty: And so I'm gonna kick it off to you, Alex, what was your approach when you were freelancing for business development?
Alex Pokorny: Yeah, I think I mentioned it in the last episode, but just to recap quick so I freelanced for about two and a half years, did a lot of SEO paid search, kind of digital strategy desk kind of consulting work. Mainly through subcontracting through various agencies. I also had a business partner who con, he called himself a virtual agency.
Basically he was a really good sales guy, and then he would bring in specialists to do the thing. So there wasn't really an agency per se, and it was all very, you know, ad hoc kind of project by project. But that was that one. And then I had a number of direct clients and I. As well as a couple business partners doing other side venture stuff that I was hoping would take off and never did.
So quite a lot of investment into some different developers and different projects that never really turned into anything. So wide variety. How did I get to that point? So when I first quit my job, I was assuming that I could do some kind of affiliate based kind of full-time thing. I was single by myself, like cheap apartment, like my costs were really, really low.
So I thought I could make enough with a just straight off affiliate. And I knew enough about SEO that I thought I could make something out of that. Spent the first month or two trying that, but then also starting to really run the numbers and started realizing the payout percentages versus traffic volumes and all the rest.
There's like. This doesn't work. So that all failed.
Challenges and Failures in Freelancing
Alex Pokorny: Big anticipation of what my day-to-day would be was, I mean, be Before that I was with an agency and my whole goal was to have no clients. I was just gonna do my own website. Yeah. You know, no, no dealing with client ridiculous requests or anything like that.
No, I'm just gonna do it myself. You know, I can do, just build a website myself, and that all failed. So had to start actually switching that entire view and then start to find other work. Useful thing was basically is one, is reaching out to people that you know, and people kind of in the industry saying, Hey, I'm looking for freelance work.
If you have anything, let me know. Mm-hmm. Honestly, even a search back then of digital marketing agencies within like a five mile radius of my apartment, there was like 30 or 40 of them. I mean, a lot of them are like PO boxes. They weren't much of a business, but there were a bunch. And there was also a bunch of website development companies.
And since I was doing SEO, which is kind of a tack on to website development I started doing a ton of freelance for one. A particular developer firm that was located in St. Paul that had a office there and a number of clients who were looking for that added bonus, you know, service. And they took a pretty hefty cut and I got the rest and I did a lot of projects for their clients which always ends up being a lot of development work for them because there's a bunch of website changes that have to happen, new pages, a lot of activity, a lot of hours.
So it was very beneficial for them as well. So, just a couple ways to think of it. One.
Pricing Your Freelance Services
Alex Pokorny: Was thinking about what skill sets do I have and what skill sets do I have that people will pay for, right? And those might be two totally different things of, of what I want to do in those skill sets versus what people will pay for.
You know, that's maybe the third, you know, part of that Venn diagram is what I, what you want to do. And it might not be something that's actually someone will pay for. Luckily for me, with that sort of a digital marketing skillset. There are people who would pay for it. And then there was a question of, okay, how do I find those people?
Who would have that interest in doing some subcontract work or something like that. So they either have too much work for their current employees and they're looking for that partial, extra person, or they don't have SEO at all, and they're looking for somebody to fulfill that before they have enough, you know, enough of a book of business for a full-timer in-house person.
So fortunate in this situation as well, because there was one major agency out there that did SEO and they, they were a full-time larger. Agency who had a really, really high hourly rate and there was like nobody else, I mean a couple of random freelancers, me being one of 'em. So great situation for me then to have direct relationships with a whole lot of different agencies doing a whole lot of different projects with them.
And as I mentioned in the last episode, one of the main failures that I had. Was, I was doing ad hoc project work and I was making estimates and I got better at doing estimates for projects. But I would work the project and then I would have nothing. Right? 'cause I was not on a retainer model. I was on a project model.
And that is one thing that I think was my main failure that I looked at that development company. I was like, you guys know it. Like you guys get 40 hours of this, you know, developing agency's time and your clients pay for it every month, 40 hours. And they use like two. Mm-hmm. So you're mm-hmm. You know, laughing your way back to the bank every single month, and you have a consistent amount of money that you can pay salaries, you can have that office space, you can, you know, grow, have business development full-time people for you, you know, helping to grow your business.
You know, pay your accountants and everything else that you have to, you know, all your other expenses. And that, that was one thing that I, I realized that towards the end that I was like, I, I really should, should have found a way to basically create a retainer model. And I attempted it with a couple which basically just turned projects into multi-month small bill projects versus a large bill short term project.
So didn't really work.
Dave Dougherty: I know a number of people who still, I mean, that's their primary thing is they, they have one client that is an agency and they do all of. You know, that particular skill pillar or however you want to call it. Yep. Yeah, for that agency. So I can understand the appeal of that because then you get to do the work that you like to do and you don't have to do the business development side kind of thing.
But I mean, even as I say it, I can feel myself getting anxious like that just wouldn't work for me. I'd wanna spread that risk around, you know, quite a bit.
Building Client Relationships
Alex Pokorny: Yeah, I still had to, you know, contact people on LinkedIn, meet them for a beer, ask them about, have any work coming up, you know, stuff like that. It was very awkward for me, much more of an introvert for that.
So getting to that stage was pretty uncomfortable. Mm-hmm. Reaching out to people on LinkedIn was a lot easier or just, you know, finding companies around and then reaching out to them directly saying like, Hey, if you have this kind of work, or if it's coming up, like, let me know. Mm-hmm. That was more comfortable to me, but it's also a lot easier to delete a spam email or a spam call than it is to, you know, meet someone in person.
That's a way different experience. Right. And, you know, sales method wise, one is gonna work a lot better than the other and it's the one that you have to spend more time on. Mm-hmm.
Ruthi Corcoran: I think one of the surprising things that I've learned from you over. Oh, over the last few years, as we've talked about this topic on and off, Alex, is just how much when you are self-employed or you are taking a freelance approach, how much you are wearing the hats of all the things that perhaps I might've taken for granted.
Right? You're your own sales salesperson, you're your own bookkeeper. You're, you're your own tech. You know, it's the, you're your own hr, right? It's all of the things. And how much. How much capacity that takes away from your ability to do your job when in fact that is part of your job. And you know, one of the things that I think about is, okay, so if, if I were to go down this freelancer route, or if I, if I had decided, hey, I've got this idea, or maybe I already had something in the works and I wanna just.
Goal a hundred percent on, on that particular idea. Probably my number one goal at the gate would be, how can I reduce the amount of time I have to spend on that, those overhead activities, and get those down as small as possible. How does that sit well with you? Like is that, how does that resonate?
Alex Pokorny: I mean, a lot of it is you learn as you go.
Mm-hmm. Like my initial rate was way, way too low. And then I started pitching a higher rate and a higher rate. I was amazed when people didn't flinch finally found the number where they finally did flinch at before that they didn't. And I was, it was like double or. Tripled to quadruple what Iation that was billing myself for.
Ruthi Corcoran: Hang again. So I'm gonna pause on that one 'cause it's fascinating. Like I've got my little economist hat on going, oh, this is price discovery. Tell more.
Alex Pokorny: But like what
Ruthi Corcoran: you just said is you were priced too low. Did you, how did you find that out? And did you, like you just kept raising your prices and people were just like, okay, I'll pay this.
Or did somebody tell you what happened there?
Alex Pokorny: I mean, on both sides of it, when you're too low or too high, there's always comments. Hmm. So it's like, wow, okay, yeah, that sounds great. It's like it went too low. Or why would it be like, oh, is it really gonna take that long, that many hours? You know, on the other side of it, you know, you start getting hesitation on the other side.
So it's like, you know, there there is a, a middle ground where it's just like, yep, that seems reasonable. And the funny thing is like. I say the same thing with ROI. There is no true thing as ROI because most things are intangible. If you're not having straight, you know, physical product, e-commerce kind of thing, you know, what's a website visitor worth?
Honestly, I have no idea. Nobody else does either, but there's a number that feels right. I. And that's the funny thing is that's always like, what is, you know, having a plumber come over to my house and do something. What's the hourly rate of that? That feels right? Like I don't, you know, there's a number that feels right.
There's a number that doesn't. Yes. Underpricing yourself, I think is always a main mistake that a lot of freelancers do, especially because then you overextend yourself like crazy. When the, and then
Dave Dougherty: the, I'm always fascinated by the psychology of that as well because of like, what is it about confidence, not only your confidence, but also how much do you value yourself?
Are you a $50 an hour person or are you a $500 an hour person? Like that's,
Ruthi Corcoran: well, the other thing I'm thinking about why you might fall into that trap is to think, well, early on I wanna build my customer base, so I wanna keep my prices low so that I can have a wide customer base. And when I'm hearing from you, Alex, is perhaps the price isn't so much the dictator of that so much as the effort you're putting into building your customer base.
And to some extent yeah. Whether you get lucky.
Alex Pokorny: Yeah. And the reputation as well. Plus the, I had a lot of learnings kind of over time too, because I honestly was probably looking online and trying to pick a number basically like what other people kind of picked. Mm-hmm. And reasonable trying to start with can be real awkward to try to like boost that number up too.
Especially if it's the same client like saying, well now it's gonna be double. Cause reasons you know, that that's a tougher conversation to have too. So it's also like you start to realize, you know, now set myself at this level and sure, I can do a 10% increase or 20% increase on an annual basis maybe, but definitely not on a monthly or quarterly basis.
Like you kinda have to like rationalize with yourself too, of where does this go? And part of it was also is me then learning more about these businesses and who my competitor was. Mm-hmm. And I found out that basically that one big agency that was doing SEO services, they were the one reaching out to other people and doing prospecting work, and they had a really high price.
Everybody else then learned that this particular activity is worth that price. I. So they set the market price really, really high because there was enough to pay for a large agency full time. You know me, on the other hand, freelancing outta my apartment. I had a, a laptop. My like single asset was a laptop.
Like that was, that was my list of assets, laptop, few pieces of software. That was it. Like literally that's the end of all of my assets. So then I was able to basically work below that and as long as I didn't approach that number too high, I found the people that basically weren't willing to pay for that amount had been pitched to set before and I'm now coming in less than that, which gives it a great opportunity for me.
The other piece of it was looking at various agencies and I did have different prices depending on agencies and clients and all the rest of that kind of stuff because certain agencies you talk to them and basically realize what their bill over rate was. And they're looking to make, you know, a cut off of your hours.
So if they can, they charge, let's say 200 and they can pay you 1 25. They're pretty happy with that, and they're willing to basically put a lot of effort towards selling that. If you're all the way up to, you know, one 90 and they're selling it at 200, it's not worth it for them to pitch it. Mm-hmm. Like, there's a point there where it's like, whoa, I can make, you know, 75 bucks an hour if I can get Alex to show up for 10 hours, or I can make 200 bucks an hour, or, you know, whatever else.
Also then incentivizes them to pitch it towards their clients to kind of push extra business kind of towards your direction too. So there's always like a kinda a push and pull between, you know, what, what do you think it should be worth and what, where do you wanna put that kind of price floor in where it's.
You know, not worth it, or you feel kind of disgruntled or unhappy with that hourly rate, well then you, you need to change something about that. Either present your services in a more higher, you know, luxury, complete, well serviced, you know, better handholding kind of thing. Then you can go higher. I mean, there's other kind of intangibles that you can always apply to that as well of saying like, you know, SEO standard thing, you get audits, 40 pages.
Nope. You get the extra 70 page one, you know, whatever. You know, you could always throw that in or I. You know, this includes X number of things and this includes X number of reports as well, and then here's some templates of those reports, kind of what they look like. It also then gives the agency more confidence that you're gonna basically follow through on it gives the client more confidence of what they're buying.
You know, I got those kind of pieces too. As long as you start building those up, then you can offer then more as a package than just saying, I'll show up. You know? That's kind of like you're learning that over time. And speaking of like all the different. It's something you learn over time, because I have really, really funny story.
One of the first meetings I had with this kind of virtual agency guy was with a, a company was actually a pretty large exercise equipment manufacturer in Minnesota. So we were gonna meet with them one of the first, now we met them before anything like that realized. The morning of like at like 7:00 AM the meetings at like nine that I don't have business cards and I was trying to like walk through the meeting virtually kind of my mind of like shake their hand and like that was also like the time when business cards were big, right? So I quickly got to office. Max found that 3M makes this sheet by Avery also where you can send it through an ink jut printer and you can print it off. So I literally made a website because I didn't have one and a business card by 9:00 AM and it was a one page website.
But you know, the URL was on the card. The card looked cool, people liked it. Plastic kind of thing. And it worked. It was enough to basically hit those kind of reputation points to look professional enough to get the sale of that, you know, that client. So if it was some other clients, I could have just grabbed a beer with them, talked to 'em in person with a notebook, and it would've been good enough.
Dave Dougherty: Yeah, there.
The Importance of Local Networking
Dave Dougherty: So there are three things that come to mind as I was listening to you talk. One is the fact that we're talking specifically in our local market, and I think that is gonna be the one place where you absolutely should try to get a foothold because those are the people you're gonna mingle with at the, you know agency events or the association kind of things.
Be a part of those, go do that type of, you know, I'm a marketer, you're a marketer too. Hey, let's talk kind of things. And, but because of how digital everything is, like it is, you can reach out to companies outside of your sort of normal jurisdiction where your pricing power might be better. Because if you don't have to pay New York or California rents, your overhead is obviously lower, which means you can undercut those performers there, you know, if you're able to get the business right.
Secondly, and this is gonna address Alex shaking his head at me, the. There have been a couple of business model things that have changed since you and I have been doing this, which was very much the hourly rate. Sure. Or here's the $20,000 package you know, buy at once and we're good. You have the freelance things like Fiverr that are now a thing that publish pricing and has a natural downward pressure on.
Pricing. So it takes a little bit more for you to say like, no, I am $150 an hour because I am better quality. I'm actually professional. I'm not just some schmo in the basement that can, that is saying that they do this, but they don't actually. Right. And the other thing is, instead of just the hourly piece.
There's now a lot of agencies that are doing performance-based pricing. So you could potentially have sort of a base rate, and then if you are in charge of the campaign and you have certain metrics that you say you were gonna hit, you can then get bonus money on top of whatever it was. Should you exceed, you know, the.
Initial setting of the campaign, that's something you'd consider? I don't have a whole lot of experience with that, but like anything, there's a lot of resources online to, to look into that. But as I've said those things, what comes to mind? Or how would you respond to those?
Alex Pokorny: Yeah. To the Fiverr, there's legal answer too, at that point.
Mm-hmm. I actually had a outsourced link building team which I had originally tested against, like the, my own properties, and then I. Eventually got them enough of a rules and all the rest to, basically there's like six or seven people. And then I also had developers as well who could develop small pieces, you know, small code pieces basically to extra elements to a website, fix things that basically they couldn't get fixed, the client could get fixed or whatever else.
So those were available and budget wise. That is the problem is it's reputation. Mm-hmm. You can get 500 backlinks for five bucks or whatever it might be, all spam and mess up your site. And that's also the problem that I had with trying to push outside of my local area as well, was that there's a giant trust factor by saying that you are located in the same state or the same city, especially as this person.
Like there's this automatic trust that basically gets set and then. To get that to trusting me with their client who has been, you know, a good source of money for them and not mess things up in front of them. And their reputation didn't take a whole lot more. And being able to meet with them in person, or like any of these agencies, maybe meet with them once for coffee or something.
They kind of suss you out and see if you actually know what you're doing. Also, you're not gonna embarrass them. Right. And then. You're good. I mean, they were very happy to put me in front of, I mean national and global chains and all the rest, as well as their small businesses who have been there like long-term customers and stuff.
And they were, they were good with that, I think heavily due to the fact that I was there in person and it was a really big deal to always be in person, even though, I mean, could've evenly done virtual, I mean. That, that would've been ideal in some cases, especially, but, and then associations, man, I was too much of an introvert to go to all the different things and the cost of going to some conferences.
This is, I would say the most awkward thing that I had to deal with was all the, all the silly Christmas parties, man, because I worked for a bunch of different. So you get invited a bunch of these things and it's like, I know like one person who was a project manager, right? Like that's the only person I know.
And I met the owner for 20 minutes once. Like, that's kind of it. They're like, oh, you should come. I'm like okay.
Dave Dougherty: Yeah. That is, that is a skillset that you will also develop over time. Yeah, I got used to it. Yeah. And in my mind I'm like, well, what was the worst? Like Christmas party that happened. Well, diehard one is probably the worst, you know,
below that I think it'll be fine. It'll be fine. Yeah, I think the trust factor is there and I had, I have had very few. Professors or mentors that have actually like really done something, you know, or like lived up to what you think. They should do. Right. And I had this one mentor who I'm like forever Inden indebted to where it was in my MBA and at the time I was doing freelance stuff and it was really just like, to your point, Alex, finding somebody who might need help and just reaching out and saying, Hey, I hear you're doing something cool.
How can I be a part of it? How can I help you out? Here's what I bring to the table. And then, you know, maybe it did, maybe it didn't work out. But he. He knew I was transitioning out of being the musician and doing more of the marketing and and business side of things. So he walks in one day and goes, I signed you up for the PRSA Public Relations Society of America.
You're on the membership committee. The meeting is at 7:00 AM tomorrow. And now mind you, at this point in my life, I was going to bed at four in the morning. That was my bedtime. So the fact that I had a 7:00 AM meeting just meant, well, I'm not sleeping tonight. Okay.
But I got up, I, and I went to all of those and I tried to be as useful as I could be and I made some really good connections and, you know, just slowly built. Not just the connections with people in the area, but then also a portfolio of work that I didn't have before that I could then reference when I'm having these conversations with future clients or, you know, future employers saying, yeah, not only do I know what, what's going on, but I'm, you know, I have association experience.
I, you know, make this, that and the other happen. Like it, it ends up working well for. You know, the whole Right. Not just the, the individual. I want to do ux, I wanna do SEO kind of things. Right?
Alex Pokorny: Yeah. And that, those proof points can be really hard. That's something I struggled with doing SEO services.
Mm-hmm. Was, there's no, there's no signature on a site that says SEO done by Alex. Right. You know, like, there's no, there's no marker. So it's, it's really hard to prove that you
Dave Dougherty: did work for. And if it, and if it goes really well, you're not aware of it. Right. It's like, that's why I've always said SEO's like plumbing, like you're not aware of it until something goes horribly wrong and it's an emergency.
Like somebody ddex half our catalog.
Alex Pokorny: Yeah. Yeah. So that was tough. But I was also able to play off of the agency clients that I had when I worked full time saying that, you know, I used to do SEO work for, you know, all these different name brands. Mm-hmm. Which that really helped me on a freelance side because then they were able to trust me saying like, oh, you've done.
This kind of work for a number of years, you've done this work for large brands. All the rest of that stuff, I feel more comfortable with my client not being too much for you or too difficult of a situation, or also, you know, comfortable with you presenting and being in front of 'em too. Paid search was difficult to sell.
It would've really been nice because it would've gone retainer really, really fast. Mm-hmm. But being. A, you know, 15 hour, 25 hour contractor is one thing. Being in charge of somebody's credit card and spending their money, client's money is another layer of trust that it's really hard to get a hold of.
Yeah, there's probably methods to do it and there's probably better ways to sell it, but,
Dave Dougherty: well, especially on the freelance side, I've discovered, like for that kind of stuff, it's better if you have a company. There's something about a company versus Yeah, sure. Alex the freelancer. Sure. That is another one of those proof point things.
So, you know, maybe to add on to episode 50 when you're considering what you should call yourself, maybe don't, do you know annemarie's advertising do? Sure. You know, stag and steer or whatever. I don't know. Like whatever you want to call yourself up into the right. Pick something. Right. So Ruthie, in the limited amount of time we have left for this conversation, I'm curious, as someone who has not dabbled in the freelance world, what are you hearing?
What are your takeaways, thoughts, comments, questions, concerns about the stuff we brought up?
Ruthi Corcoran: The first one I can't help but keep going back to is just the amount of time as a freelancer you spend not doing the thing you are trying to do. Right. Right. And there are I think depending on the type of either freelance or independent business you're doing, perhaps there's more and less of that.
Right. I've heard, I've, I've heard other areas where especially through the, the various. GoFundMe, Patreon type style activities, content creators can perhaps find a way to spend less of that overhead, but especially when we're talking about the, the types of marketing that we're talking about, the ability to get.
Lots of different clients that seems like a, a pretty significant obstacle to just being able to do your job. That's sort of a one takeaway I have. The other thing I was thinking about, and I know this is a bit off topic, but as we were, as you were describing, the various. Ways in which pricing was set.
You had this agency come in and say like, Hey, here's what we're gonna set the pricing at for this particular thing. And then almost established a benchmark for the rest of the market. And potentially that came down over time as freelancers like yourself came in and like brought it lower, et cetera.
Created competition in the market. It can't help but think about this.
AI's Impact on Freelancing
Ruthi Corcoran: Sort of world of AI tools we're in right now and go, oh, that's exactly what is happening in the marketplace right now. Mm-hmm. We had some initial players come out with, here's the price for our AI tool, and amazingly we had open AI come out and say, well, it's, it's free, or it's like 20 bucks a month, like basically free.
And, and then we have all these other tools that sort of are doing the connective they're creating that connective connectivity across different tools to say, Hey, this will help you do X thing, right? Or they're creating, they're building off of niche prompts or they're building off of integrations with, with different tools and they're able to set a price.
But that's where we are right now is we are in the price discovery phase. We do not know how much AI tools cost, how much they will cost, and how they will evolve, right? And I sort of have been thinking about that in terms of oh, this is just fascinating to see how it uncovers and who the different price setters are right now.
And that's,
Dave Dougherty: I think it'll be interesting to see, like I've. I heard in a number of different podcasts and a number of different, like AI related, like research papers and stuff where they're like, yeah, it's not inconceivable that, you know, chat GPT charges you $20,000 a month for a particular tier. Because if you are a business and you are able to replace one or two contract workers or you know, full-time employees mm-hmm.
It's through automation that absolutely is worth $20,000 a month because Good, you know? Yeah. All the other, all the other costs like insurance or you know, it's gonna be really hard for some of the businesses not to pay attention to that. You know, and bringing more things in-house too, like, I mean, that's just, that's one of the things that AI is I.
Having an impact on, so, which could totally hit the freelancers. I think there was a study that looked at the introduction of AI and the amount of certain activities on I. Fiverr or some kind of freelance marketplace. I forget what it was. Maybe I'll have to dig that up and share that on LinkedIn.
Ruthi Corcoran: You know, Dave, but was, it's been a while since we've had an AI episode, so I wonder if one of our next ones we bring it back.
'cause there's been a lot of changes that tons that we've seen even the last month, but.
Dave Dougherty: Yeah. All right.
Conclusion and Final Thoughts
Dave Dougherty: Well thank you everybody. Hopefully this is helpful. If you are interested in freelancing, you can figure it out. It, it can be scary, but you can figure it out. And with that, we will see you in the next episode of Enterprise Minds.
Take care. Bye. Cheers. Cheers.
