Suddenly Self-Employed? Seven Ways to Boost Your Income

July 8, 2010 — -- Fresh on the heels of Independence Day, a fellow freelancer confided in me that he wasn't sure this self-employed thing was all it's cracked up to be. One, a demanding client had been giving him grief. Two, work he'd come to count on from a steady client seemed to be drying up. And three, he couldn't remember the last time he'd gotten a raise, taken a Saturday off or shaved and showered before 6 p.m.

Sound familiar? For green and seasoned freelancers alike, all can be common problems. And while I can't help with your grooming issues, I do have some suggestions for optimizing your workload, increasing your income and boosting your morale.

Follow the Money

Writers, designers and programmers with an artist complex are sure to bristle at this suggestion. But craft is only half the freelance equation. If you care about eating, you have to run a smart business too. And the only way to do that is to balance those sexy-yet-low-paid gigs you do for love and glory with some snoozy but lucrative projects.

Don't Let Any One Client Dominate Your Time

This is simple math, really. If 60 percent of your work comes from one cash-cow client and that client buys the farm, you've just lost 60 percent of your revenue. Sure, you'll have weeks where most of your time is spent serving one client. But as a rule, I recommend not giving up more than 20 to 25 percent of your annual schedule to any one client.

Track Your Project Time

Getting paid $1,000 to write a white paper or $5,000 to design a website might sound terrific. But if that white paper takes you 40 hours to write or that site 200 hours to finish, you're grossly undercharging. (To the uninitiated, $25 an hour might sound like a lot, but by the time you factor in taxes, overhead, health insurance and the like, it's actually a freelance pittance.)

Using a free online tool like myHours, Slim Timer or Toggl to track the time you spend on each project can help you determine which projects aren't just worth the returns.

Stop Reducing Your Rates

Here's the problem with lowering your rates by 10 or 20 percent to attract new business during a recession or dropping your fee to accommodate a struggling client: once the financial storm passes, you're still left making 10 or 20 percent less than you used to. And if you already were hoping to boost your rates by 10 percent this year (because what freelancer couldn't use a cost-of-living or profit margin increase?) you now have that much further to go.

In the history of freelancing, no client has ever said, "You know what? You've been doing such a great job for us and we're feeling more flush this year. Why don't we restore your rate to what it used to be and give you a 10 percent pay hike?" Instead of waiting for clients to give you a raise, demand one yourself, even if it means replacing your lower-paying clients with less stingy ones. Remember, if everyone can afford you, you're not charging enough.

Institute Project Minimums

I know it's hard to turn away work, especially when so many freelancers are clamoring for it. But if you're scooping up every one-time, rinky-dink, $200 project that lands in your lap, you're doing yourself a great disservice. With each new client comes a new relationship to forge, a handful of administrative chores and a potential learning curve. Better to invest the time either in a client that will have repeat work for you or in a one-off project that pays at least $500, $1,000 or whatever minimum price works for you.

Set Firm Limits on Pro Bono Work

I know it's equally hard to turn away some of the more worthwhile volunteer or "paid in exposure" freelancing opportunities that worm their way into your inbox. Although giving back to the community of your choice or getting your name in front of thousands of people who wouldn't have heard about your services otherwise might make feel you all warm and fuzzy inside, neither will pay the bills this week. If you have a hard time saying no, sit down with your calendar and figure out how many freebies you can sanely do -- one pro bono website a year, one unpaid talk at a conference a quarter, whatever. Doing so will help you draw the line in the sand when those with outstretched hands come calling.

Hire an Assistant or Intern

We freelancers like to pride ourselves on doing it all, from sending out invoices to making post office runs to updating our website or Facebook fan page. But every hour spent on back-office tasks is an hour you're not spending drumming up new work or completing projects you can actually bill for.

If you average $80 an hour as a freelancer but find yourself sidelined by five hours of repetitive administrative work a week, that's $400 a week -- or $20,000 over 50 weeks -- you're giving up. Better to mine your local university for a capable intern or farm out some of that administrative work to an assistant for $10 to $30 an hour (plenty of unemployed professionals could use the money). You'll still come out ahead financially.

This work is the opinion of the columnist and in no way reflects the opinion of ABC News.

Michelle Goodman is a freelance writer and former cubicle dweller. Her books include "My So-Called Freelance Life: How to Survive and Thrive as a Creative Professional for Hire" and "The Anti 9-to-5 Guide: Practical Career Advice for Women Who Think Outside the Cube." Follow her at @anti9to5guide.