The Economics of Freelancing
Many people look at freelancing as trading time for money.
Others claim that it is a business that does not scale.
While there is truth in those claims, there is potential to make significant money through freelancing.
And you can do this while working on projects that you love.
It is accomplished through a simple understanding of The Economics of Freelancing.
Freelancing Economics 101
Think of the most basic economics principles that you learned back in high school.
Supply & Demand
In economics, what happens when there is a limited supply of something, and an increasing demand?
Its simple, the cost of the supply goes up.
Now lets apply that to freelancing...
As a freelancer, if you are trading time for money, then time = supply.
Since you have a finite amount of time, then what happens when you increase the demand for your time?
The cost of your supply goes up, your rates increase and you make more money in less time.
Increased Demand + Finite supply of time = Higher rates
If you want to charge more then you need to create a demand for the service that you offering.
When there is an extremely high demand for your services, you can justify charging more and turning down projects that are below your budget range.
If you don't have a high demand for your services, then you will be forced to take whatever low budget and not exciting work that comes your way.
Freelancer Economics 101: Increase the demand for your services, and the cost of your time will raise. - Click to tweet
Stephen Speilberg was once a freelancer
How much do you think Steven Spielberg would charge to produce a video for you?
Probably quite a lot because the demand for his services are through the roof.
But believe it or not, he started off doing paid freelance work just like anyone else. As they honed their craft eventually the demand for their services grew and the opportunities grew at the same time.
While you won't become the next Spielberg overnight, if you can create a celebrity status within your industry, it will begin to increase the demand for your services.
How to create demand and raise your rates
The goal to creating freelancing demand is to consistently market yourself every single day.
You must take small actions, to consistently work on new ways to market yourself and bringing in new potential prospects
And at the same time you must hone your craft and elevate your status within your industry.
Begin speaking at events, writing on the topic, producing videos, etc.
Do whatever it takes to begin setting yourself a part and become a thought leader in your industry.
Try to become a celebrity within your industry.
First you must become great and your craft, and then you must share what you are doing with the world.
Increase the demand for your services, and the cost of your time will raise. - Click to tweet
The bottom line:
As a freelancer you have supply (your time) and demand (for your services).
Your supply is limited, you simply cannot create more time.
Thus if you increase the demand for your time, then your prices will inevitably have to raise.
Its simple economics.
What are you doing to increase the demand?