I was laid off my full time job early this month. I've been looking for work ever since. At my friend's company, they use a 3rd party web application to collect data from visitors to the website (Basically its a survey). They want to stop using that 3rd party software, and re-create the survey themselves, with a few changes. My friend got me an interview for this job. Its my understanding that once the job is done, we both go our separate ways. Is this what is meant when people talk about 'contract' or 'freelance' work? I found the interview very strange, because they didn't ask for my qualifications, or even my resume. They just explained what they wanted to be done, and asked me to get back to them with a quote. I'm confident that I'm up to the task, but since I've never done this type of work, I have a lot of questions. First of all I'm worried that I might not have appeared very professional in the interview. I've only ever had fulltime work, so I dont have my own company or business cards. All I did was scratch my email address and website down on a piece of paper. How bad does that look?? They have asked me for a quote. What exactly does that mean? Is it just a number with a dollar sign? Or is it a number along with a completion date? Or is it a complete breakdown of how many hours I tend to spend on each aspect of the system, and an hourly rate? Ive always been extremely terrible at estimating how long a project will take. Its never been a problem at previous jobs, because my boss knew that I sucked at estimating. All he knew was that I worked damn fast, and that things would be finished "as soon as possible", and that was good enough for him. I guess this has come back to bite me because I feel like if I overestimate the time, then I wont get the job, and if I underestimate, then I'm losing money for any overtime work I do. They didnt mention either way, but should I assume that I will be working primarily in their office, or at home? For some reason I feel like they're not expecting to have to make room for me (which is good). Basically I'm pretty nervous about this. I know I can handle the job, but all this other contract related stuff is new to me. Are there any other things I should be asking?

I've been doing contract work for 4 years now and I've seen all types of clients. Some want me on-site, others let me work from home.

The big things client care about on a quote is the price and a timeline. The client really doesn't care if it takes you 40 hours or 400 so long as the price is acceptable and you get it done on time.

Being new at contracting, you will likely get nailed when it comes to bug fixes or new features (or blatent spec changes) being added on the fly.

You need to clearly define your responsibilities in your contract. For example, I usually warranty my work for a few months. If errors come up that are clearly coding errors on my part, I fix them as part of the job. I also add an expected % to my quote to cover this happening.

However, if the client comes back and says "x isn't working as designed" and I determine that I met the specifications, my client has to pay my hourly rate for the change.

The same goes for spec changes mid way through development. You won't believe how many clients will say "We met with the group and they think it would be better to do this and that". Of course, I may be half finished coding that part of the program and making those changes might add 100 hours to my work. When that happens, I demand a meeting to determine a new ammended quote or if they really need the change. Most often, the client goes without the change as it was a nice to have.

No matter what you do, cover yourself for what your responsibilities are. Also make sure to define payment terms and expectations. I typically work a month, bill the client and get paid 30-60 days later depending on the client. When you are just starting out, going 2 months without cash can be tough.

Oh, by the way. Once you get a few clients under your belt and feel comfortable, you never want to go back to being an employee. The money is better and if you do it right, you have much more freedom. I work on average 80-100 hours a month and make more than $20,000/month not counting my sub-contractors.

John

Thanks for the info.

You sound like you've already overcome a lot of the problems I expect to face. I dont suppose you'd be willing to show me a sample contract?

I've actually worked from home for the last 18 months of my last full-time job. I absolutely loved it. It is so much more comfortable and productive than going into an office.

By the way, what are some of the downsides of being a freelancer? Obviously finding new jobs and coming up with quotes is not my favorite thing. I'm sure there is a lot of other non-development overhead involved with this type of work too.

When someone asks where you work, what do you tell them? Do you just give the name of your current largest Client? Or do you consider yourself 'self-employed'? Do you have a company? How difficult/expensive is it to create a company?

Quote: Original post by AndreTheGiant
By the way, what are some of the downsides of being a freelancer?

One downside in the US is that you're expected to pay an extra 9% right on to of the rest of the taxes you pay simply for the privilege of working for yourself. It's balanced out somewhat by the higher pay and other deductions you can take as business expenses though. But if you're not expecting it, it will kick your ass your first year as a contract developer.

As far as forming a business goes, I'm not sure on the specifics in Canada, but the primary reason to do it in the US is to provide some liability protection. If you do something to get yourself sued, they can only go after your business, not take your home as well. If you're seriously considering doing strictly contract work, you should definitely consult a lawyer and/or and accountant who can cover all of those aspects with you. It would be well worth the expense.

For a first time in an area you have little experience in a piece of advice that may be useful is, in estimating time lengths take your worst time estimate and multiply it by 10. Double that and give them as a range.

Quote: Original post by tstrimp
As far as forming a business goes, I'm not sure on the specifics in Canada, but the primary reason to do it in the US is to provide some liability protection. If you do something to get yourself sued, they can only go after your business, not take your home as well. If you're seriously considering doing strictly contract work, you should definitely consult a lawyer and/or and accountant who can cover all of those aspects with you. It would be well worth the expense.

If they have something like a limited libility corporation in Canada then its worth the bit of money to set one up for your business. As tstrimp said, if you don't have something like that and get sued then all of your personal possesions are up for grabs too.

borngamer, you have a specific field you contract in for that kind of money? Thats some serious change for any profession.

My business is proprietary development in the healthcare industry. So yes, I manage to command a very high rate compared to say a Java or web programmer.

In Canada, it's pretty easy to setup a business. I run mine as a partnership with my wife and setup was a minor $50 license fee. I could have went for a corporation but I prefered having a partnership style business instead.

A corporation will cost you somewhere in the neighborhood of $800 if you have someone like the BDC setup all the details for you.

I went for a partnership because I use my home as my office when I'm not travelling to client sites. I write off a portion of all my home and utility bills and unlike the US, running a business in Canada is much lighter on the taxes due to all the legal write-off's.

The biggest downside I had was the two years I spent in bed after a head injury. It's pretty rough trying to run a business when your sick, even worse when you are unconcious for nearly 2 years. During that time I massed up a great deal of debt which I'm still paying off. However, I was lucky. I had some very supportive people who work as my sub-contractors. They carried my workload while I was out of commission and kept my reputation afloat.

Financing your own business is a challenge at first. Banks won't give you anything until you have 2 years of business financials to back yourself up. However, if you are under 33 years old, check out the Canadian Youth Business Foundation (cybf). They will loan you up to $15,000 to start your business and they have impressive payback terms. They gave me the financing I needed to start.

Liability Insurance is something you really need to consider as well. I carry about $5 million on myself to cover any potential issues. It runs me about $8,000 a year in fees but well worth it (and you can write it off).

Finding clients hasn't been too much of an issue for me. Sure I have the occassional dry spot where I may have a week or two with no work, but typically I'm booked at least a month or two in advance (sometimes a year in advance). Getting clients to pay on time is sometimes a challenge so you need to have enough money to live off of when they don't pay. The worst I ever had was 6 months late on approximately $120,000. That was painful.

Being the cheapest is also not the best thing either. You need to find out who your competitors are, how they are percieved in the industry and quote yourself in the same range. I've been told by many clients that there are people who offer quotes at half my rate. When I ask them if they were happy with their work in the past, they quickly sign my contract knowing that I deliver a better product.

Care about what you do and always make sure your client knows you are putting their needs first and you should do well. Never take a contract that pays less than you are worth and always be honest in all your business activities.

Additionally, try to build a network of people you trust in your industry. There are going to be many who try to take advantage of you, so having friends on your side helps. For example, I have two contractors who work for me. If I'm having a hard time finding them work and they get a lead, they usually pass it my way and I take a profit from securing the contract. They do this because they know I'll back them up and do the same for them.

If you have any other questions, let me know. I'd be glad to answer them.

John

Quote: Original post by borngamer
Being the cheapest is also not the best thing either. You need to find out who your competitors are, how they are percieved in the industry and quote yourself in the same range.

This. I'd be skeptical of any full time contractor who didn't charge at least $75 / hour for the type of work I'm looking for. When I was doing contract work to supplement my income, I charged $100 / hour for as long as it took to get done.

Quote: Additionally, try to build a network of people you trust in your industry.

Networking is absolutely essential if you're going to make a living off of contract work. Most companies aren't going to look you up in the phone book. They'll ask someone they know if they know anyone who can do the work.

Specification. Spend the time and meetings neccesary to spec the service you are to provide. Get a signed agreement on the spec so you are proteted against sudden changes of heart by the customer. Since there can be disagreement suddenly about what your solution should provide - prepayment is vital.

I don't know what the norm is in the US or Canada but in Denmark some form of prepayment is usual.

For small projects I always ask for 25% of the agreed amount upfront and the final 75% on completion. For longer projects > 30days I would still ask for 25% upfront at more on different defined stages of development.

This protects you against the client suddenly withdrawing from the project because you won't meet some ridiculous request they suddenly come up with. Also it gives them some confidence in you. Once they have given you some money - you are also more obligated to get on with the work and not put them behind other paying customers. Win/Win for both parts.

Quote: Original post by tstrimp
I'd be skeptical of any full time contractor who didn't charge at least $75 / hour for the type of work I'm looking for. When I was doing contract work to supplement my income, I charged $100 / hour for as long as it took to get done.

I wish I could find clients willing to pay that much. It doesn't help that I do some work in the gaming side of things, I also tend to work with small/startup companies which is maybe a factor too. But regardless, I typically quote an initial figure of $75+ and have to go lower to get the work. Maybe I simply need better contacts to richer clients, because I like to think I'm pretty good at what I do - I get good feedback anyway. Or perhaps the kind of freelancing work I do is too undermined by the competition from Asia.

If anyone charging $150-200/hr wants to take a massive markup and hire me at $100/hr I'm quite happy to increase your earnings by $400+ a day!


To add something of value to the thread, in the UK you can set up a limited company (like an LLC in the USA I think) for about $100... you are then a legally registered company with directors, shareholders etc.