Ask FreelanceSwitch #8

In this issue of Ask FreelanceSwitch, Travis King and Thursday Bram look at when to take a client to court and how to set your rate for the first time.

Ask FreelanceSwitch is a new regular column here that allows us to help beginners get a grip on freelancing. If you have a question about freelancing that you want answered, send an email to askfreelanceswitch@gmail.com.

Bang a gong. Let’s get it on!

Question #1

Last year I signed a proposal and contract with a client for an online application which has been in development for 8 months. Several attempts to obtain client feedback were met with complete silence until one day the client sent my colleague a terse email to state that the solution we provided was not what he asked for.

We made an effort to address his concerns by email but never received a reply. Since then, we have attempted to contact him by email to ask for his assistance in moving forward with the project and providing enough feedback so that we can address his concerns better, but he refuses to respond and has withed payment of our invoices, against the terms of our contract. Currently, we have performed $9,000 of work which has not been paid for.

How can I ensure that I am not taken advantage of as a freelancer? What things can I do to make sure that my case is as solid as it can be for court? Should I even take my client to court? Is there anything I can do to try to get payment directly before going to court?

- Sarah

Thursday: If you have a signed contract in hand, you have a starting point for taking a client to court. However, there are a few things that could be done to make this a better situation: first of all, you’ll need to attempt to contact to your contact via mail (not just email). While most freelancers are used to conducting business via email, a court will generally expect you to have made every reasonable effort to contact your client and that includes mail. Send it by certified mail so that you have a record of your efforts.

Before you head to court, try having a lawyer write up a letter informing your client of your intent to sue and offering a chance to settle before hand — how well it works will depend on your client. It’s worth a try, though, because having a lawyer write up a letter is a lot less expensive than actually taking someone to court.

If it comes down to bringing the matter in front of a judge, there may be a question of what state your claim will be heard in. Hopefully, your contract listed your state as the location for such issues. If not, you may have to go to the state where your client is based, assuming you’re in different states. How small claims are handled can differ from state to state, as well. In many states, the limit for small claims court is $5,000, but it can go as low as $1,500 and as high as $25,000.

While you may not need a lawyer for small claims court, this sounds like a situation where at least consulting with a lawyer before taking it to court may be worthwhile.

Travis: Well Sarah, I’m not a lawyer, and ever since Matlock was canceled, I no longer play one on T.V. , but don’t let that disqualify me from giving you some top notch advice.

My first bit of advice is – don’t listen to me, get yourself a good lawyer.

Sadly, no matter how good I look in a suit or how well I can pull off the line “Permission to treat the witness as hostile your Honor”, that doesn’t make up for the fact that you need solid legal advice. Nine thousand bones is no small chunk of change, so it’s worth going after if your lawyer thinks you can pull it off.

Also, a tip for the future, don’t let yourself get down that much money to any single client. If your client starts owing you thousands of dollars, it’s time to bill that bad boy out.

Question #2

I’ve been doing some “freelance” work from time to time, being a student at the Academy of Art. Usually I was volunteering, or working for friends, or for relatives, etc. Now I’m doing the same thing, but for a hotel, which is going to pay me for this work.

How do I estimate my price for the first time?

- Ania

Thursday: There are a lot of factors that go into deciding prices for freelance work: your location, your experience, your specialty. When I first started freelancing, however, I essentially picked a number out of thin air. I took what I could be earning hourly if I had a job doing something similar and doubled it. This is a very rough estimate, of course, and not necessarily the one I would recommend. However, it does have a few benefits: doubling my hourly wage meant that I could still cover taxes and other expenses an employer normally covers, while still earning about the same. On the negative side, it still meant that my income was pretty low because I was still a student at the time. If you’ve got the expertise (whether or not you’re a student), bump up your rate.

Want some more precise numbers? Check the Hourly Rate Calculator. It does take longer to calculate, but it will give you an idea of what you actually need to be earning.

Travis: You’re not alone Ania. For most freelancers, the first paying client is always the hardest to quote. 9 times out of 10 you’ll end up quoting way too low your first time, anyway. I remember the first website I quoted was $150 for the home page and $50 for each additional page. What was I thinking?

As Thursday mentioned, the FreelanceSwitch Hourly Rate Calculator is a great starting point. It helps you to think beyond the – How much do I want to make – to make you focus on – How much do I need to make. The sad reality of running your own business is that your hourly rate doesn’t mean that’s how much money you get to put in your pocket at the end of the day. After expenses and taxes you’re left with a sad and emaciated version of what was once your hourly rate.

If you’re still having troubles coming up with what to charge, there’s a simple equation I use to arrive at my hourly rate – Time x Rugged Good Looks = Hourly Rate.