The Mathematics of Freelancing
Posted August 31, 2011 in Getting Started
Whether you liked math in school, or not, there is a basic mathematics in freelancing that determines whether you succeed or fail.
If you’re a freelancer, it’s vital that you get this math right.
In this post, I’ll identify some specific areas of freelancing that are affected by math. I’ll also ask you to share your own stories.
The Mathematics of Community
The first area of mathematics that you must get right is the area of community. Your community is made up of your friends and contacts.
The fact is that, to some extent, it’s all about the numbers. Here are some examples of how mathematics affects your freelancing community:
- As your community gets larger, the greater the number of potential clients you know.
- A large community means a large number of contacts who can possibly put you in touch with a potential client.
Although, I do have to say, community is not necessarily all about numbers. Quality does count. However, the fact is that if you know very few people then the mathematical likelihood of you finding work through your community is small.
Another area related to community that is also affected by the mathematics of freelancing is marketing.
The Mathematics of Marketing
Marketing is also partly about mathematics. The equation is simple. The more people who receive your freelancing message, the more clients you are likely to have.
Also, keep in mind that applying for gigs is a numbers game. Here are some more examples of how mathematics affects marketing:
- You (probably) won’t get every freelancing gig that you apply for. (At least, I don’t.) However, if you keep on sending out those inquiries, you should be able to keep yourself fairly busy.
- Many freelancers send out an application, or two, and then quit in frustration when those specific positions don’t pan out when in fact, they just didn’t apply for enough opportunities. (Don’t let this happen to you.)
Once you’ve figured out the mathematics of marketing, you will need to understand the mathematics of pricing.
The Mathematics of Pricing
Pricing is one of our most popular post topics on Freelance Folder. It seems that many freelancers struggle with this specific aspect of their business.
However, like the other freelancing areas, pricing also boils down to an understanding of mathematics. Here are some mathematic applications for freelance pricing:
- Generally speaking, the lower the price you charge the greater the number of hours you will have to work to earn the same amount.
- An opportunity with a high dollar amount attached to it isn’t necessarily a good opportunity if the amount of work required is too great.
Obviously, you need to charge a competitive rate for your freelancing services, but you also need to charge a rate that allows you to turn a profit–which requires that you understand some math.
The Mathematics of Profit
Which brings me to the last area of freelancing affected by mathematics that I’m going to discuss today: profitability.
In order to stay in business, a freelancer must earn a profit. To earn a profit, it’s important to make sure that the amount of money that your business takes in exceeds that amount of money that your business spends.
It’s a simple equation. It means:
- You must keep good records of the amount of money that you take in.
- You must keep good records of the amount of money that you spend.
Your Turn
Freelancers who don’t understand the mathematics behind these crucial areas are at a distinct disadvantage.
Of course, there are many other areas of freelancing that are even more obviously related to mathematics such as bookkeeping, billing, and tax preparation. I deliberately didn’t include those areas here because most people already understand that math is involved.
Can you think of some other ways that mathematics and numbers have affected your freelancing business?
Share your answer in the comments.
Image by SidewaysSarah
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About the author: Laura Spencer is a freelance writer from North Central Texas with over 20 years of professional business writing experience. If you liked this post, then you may also enjoy Laura’s blog about her freelance writing experiences, WritingThoughts. Laura is also on Google+.
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13 Comments
Gold
August 31st, 2011 at 9:05 am“Get write” — What does that mean?
JP
August 31st, 2011 at 11:30 amIt means that instead of sending a private and polite message to the author you bash her in public, she corrects the typo and your comment gets outdated and silly.
By the way, somewhere I´ve seen this “you in touch in touch with a potential client.”
Thanks for your work!
JP
Laura Spencer
August 31st, 2011 at 11:38 amGold & JP– Thanks to both of you for your attention to detail. :)
JP, Actually that’s the polite way to do it and that’s what I try do for a blogger (if I mention it at all).
Do both of you agree that there’s a “numbers game” element to freelancing, or have I just been helping my kids with too many math problems?
JP
August 31st, 2011 at 11:49 amYes it is, kids apart :-) I like a theory in sales that says “know your numbers”. People usually mistakes number with objective or quota, but the most important ones are the ratios: how many calls must you make to have a customer, etc. Numbers are everywhere! I really like to measure (or I´d like to…) actions towards obtaining results, not the results. Results are the past, actions are the future.
cheers,
JP
Laura Spencer
August 31st, 2011 at 11:54 amJP–Yep, ratios are key.
But, I think it’s also important to get the right ones. For example–how many RFPs do I answer before I get a project? Project offered : RFPs If that number is too low, then your business is in trouble. If it’s too high, maybe it’s time to hire some help.
The kid is doing statistics now, so we’re tossing coins and tracking our results. Very practical stuff (although they don’t realize it)!
Gold
August 31st, 2011 at 12:31 pmI did not say she was wrong! Tell me how did you know it was spelling? Are you telling me you know everything?
It is written in the blog “Share your thoughts, leave a comment!”
I’m suggesting that it’s a statistical game. The is a chance that it may be a chance. But numbers tell all.
Morgan Drake Eckstein
August 31st, 2011 at 12:53 pmOne of my favorite freelance math equations is the mathematics of expertise. While it is not confined to freelancing, I find it important to understand. Basically, it boils down to knowing when it is time to call someone else in to do a job.
My favorite example is “Should you call in a plumber to fix something that you could learn to do yourself?” Yes, it is always cheaper to learn to do something yourself.
But the rub is that you also have to figure out if the money that you are saving is actually more than the money you would have made if you forced on the area of your expertise while having someone else (an actual expert in the profession) do the job instead.
The idea also applies to editing, advertising, etc.
Laura Spencer
August 31st, 2011 at 1:54 pmMorgan Drake Eckstein–Thanks! That’s a wonderful example of what I’m talking about. Many people don’t realize that sometimes it just doesn’t pay to DIY and they don’t realize it because they don’t understand the numbers. :)
Dr. Freelance aka Jake Poinier
August 31st, 2011 at 2:56 pmIt’s my favorite hobbyhorse, so I’ll ride it again: the math of saving for retirement! Even though I can see writing some till the day I drop, I definitely want to be grinding less once my high schoolers are out of college, circa 2019.
There are all sorts of investing websites that talk about how big a nest egg you really need (and it all depends on what lifestyle expectations you have as well as unexpected circumstances you run into). But the common thread is saving early and often, which very much ties into your point about profit.
I don’t expect Social Security to be worth much of anything by the time I’m 65, so I am making darn sure that I’ve got myself and my family covered.
Laura Spencer
August 31st, 2011 at 4:54 pmGreat example Dr. Freelance!
How many freelancers have really thought about retirement? I’d venture to say, not very many. But, it’s important. You may think you’re never going to retire, but remember that health or other circumstances may force you into retirement. So, be ready.
Daquan Wright
September 1st, 2011 at 7:11 pmI believe mathematics and science is the foundation for our universe and as such, I believe it influences and effects our way of thinking and interacting with one another.
That’s why I’m self-studying the branches of math (plus being a CS major).
I agree with the points, but I would also note that numbers are involved in quality.
Let’s say your community has 1,000 people and only 10% refer a client to you every year (that’s 100 clients per year).
Now compare that to 100 people in your community and 50% refer 3 clients to you every year, you’d get 150 clients.
So as you say, quality is definitely as important (I’d say more) than the actual amount of people. Exposure helps, but it needs to be the right people/leads.
When it comes to pricing, I’ve noted that a lot of young people are scared to price more. That’s why they just charge like $10/hr or something like that. But they don’t look at the reality of what it’ll take to make it in the long run. There will always be someone who charges more and less. The bottom line is that you need to charge enough to survive (you also want extra for saving/vacation).
never
September 19th, 2011 at 1:35 amok
friv
October 7th, 2011 at 11:20 amMath didn’t was my best point ha ha ha…but I always earn more money than I invest.But here are not added my work :) .Nice math :)