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I read a lot of freelancing groups and blogs, and occasionally, I'll come across a piece of advice that on the surface seems like a great tip – but if you think about it more closely, you realize that for many people, it's actually quite terrible advice. This morning, I spotted one of those and I wanted to discuss it in a little more detail. I'll paraphrase for the sake of keeping the advice-giver anonymous:
“Are you struggling to make the jump from 4-figure months to 5-figure months? Stop trying new things and do more of what's bringing you money. You're losing focus and losing momentum. Double down on what's working.”
At first, you think, “Yeah, I know lots of people who are always jumping around and as a result, they never reach their potential.” That's very true, and there are definitely cases where people can try too many things and never make progress. When it comes to freelancers making 4-figures trying to get to 5, though, I have to take issue with it. Here's why:
When you start freelancing, you're often taking on smaller jobs and lower pay as you build up experience and get better at estimating the time things will take and the ROI you'll deliver. Most of the $7000/month freelancers I know actually have MORE clients and work MORE hours than the 5-figure freelancers I know. Why? It's all about consulting/freelancing life stages. Anybody who knows me knows I'm a bird nut, so I'll put this in avian terms.
Also – as a note, this refers ONLY to those freelancers and consultants who work alone. Hiring on teams and creating a firm or agency totally skews the numbers because employees give you leverage (which you may or may not want to deal with, depending on your desired lifestyle).
Freelancer Life Stages
Hatchling Freelancer – These freelancers take on pretty much any work they can find. Some earn minimum wage or even less after factoring in admin time and taxes. They're often the hardest-working freelancers around, but they never get anywhere. Many of them see service providers in India and Africa working for pennies and they assume they have to price themselves accordingly (completely forgetting all the advantages they offer over those distant providers). If they don't quickly find a way out of this phase, they usually burn out and go back to a day job.
Nestling Freelancer – These freelancers have a slightly better understanding of what's going on, but most are still working for $50/hour or less. That might sound like a lot, but again, once you factor in taxes and admin time and prospecting, you're still looking at long hours and an existence marked by struggle and uncertainty.
Fledgling Freelancer – This is the phase where freelancers earn enough to pay the bills, but most aren't reliably making 6-figures. In the upper-4 to lower-5 figure range, though, we start to see a divergence not just in rates, but in strategy. A lot of these people are basically doing the same thing they've always done, just charging a little more and working with more clients.
Juvenile Freelancer – The juvenile freelancer is consistently making a solid six figures (and if it's less, it's because they're doing it on an extremely part-time basis and they're not trying to serve more than one or two clients). Almost everyone who wants to move from a lower phase into this phase will need a major attitude shift. You can't generally go from 4-figures to 5-figures monthly simply by piling up tons of $500/month clients. That's *20* clients you'd need to hit $10k, and you have to assume you'd be losing a few now and then..and you'd need time to find more, all while servicing those 20 clients.
Now, there ARE exceptions (particularly with software-based services and very, very low maintenance clients who don't expect to talk to you regularly), but let me be very clear – that's not at all typical among consultants and freelancers who consistently have 5-figure months. In fact, if you looked at the typical day of these freelancers, you'd think it looked too easy. That's because there's a shift that tends to occur before hitting this phase. What's happening?
- They're targeting different types of clients
- They're beginning to shift towards value-based pricing
- They're more confident and they know their value – they've internalized it
- They've adjusted their offerings to focus on services that allow for higher earnings
Mature Freelancer – These are the rockstar freelancers who have deeply internalized the things that took them from 4-figure months to 5-figure months. They become more confident, and more consistent. They're targeting bigger clients, building bigger networks, and generally building on the reputation they've established up to this point.
Many of these freelancers earn $500k or more annually, with some getting into the millions. Most have additional streams of income like books, training, or public speaking. Value-based pricing is used almost exclusively in this stage. While most freelancers in the lower 6-figure range have a lot of monthly retainers, you'll often see more one-time or occasional projects among the highest earners.
For example, I reached a point in my career where I realized that if I stopped providing ongoing monthly digital marketing services, I could help a lot more companies make a lot more money. My strategies were sound, but I knew they could be implemented by much cheaper providers if I just set someone on the right path, or helped them correct course. I also realized that in spite of my best efforts, being someone's on-call, ongoing provider is not the best fit for me. What I'm really, really good at is going in, listening to a company's problems, then absorbing all the data and figuring out the small changes that will either make a ton of money or save a ton of money. While my ongoing marketing clients were all doing really well, I knew everybody involved would make more money if I focused on audits and strategy rather than monthly retainers for ongoing service.
What This Means
Now, not everyone goes through all these steps. Not everyone reaches all of them. Moving to each successive phase generally requires a shift in mindset, but the biggest change occurs between the nestling and fledgling stages. In other words, it's between 4-figure months and 5-figure months. To make that jump, you can't double down on what you're been doing. It will feel like walking up a down-moving escalator. Making the transition here requires you to balance what you've been doing while testing the waters with different types of clients, different types of projects, and different types of pricing. What gets most people to $7k/month isn't what will get them to $10k and $20k months. Granted, there are those rare exceptions who start consulting and immediately take on nice fat retainers from exactly the right kinds of companies, but that's not most people.
Most of us grew up thinking $50k was a nice middle class salary. Most of us arrive at freelancing early in our careers rather than stepping out of high-paying mid-career jobs. We've grown up surrounded by economic struggle, and we think making money is hard. That's why we go through the phases. Some people don't put in the mindset work and don't surround themselves with successful people, and they get stuck in those lower phases.
If you were raised by upper middle class parents, or you left a high-paying job to start consulting, you'll probably start at a later stage. It's not a competition, and you don't need to feel shame about that. You just need to recognize that if you're like 95% of freelancers, you're going to need to make adjustments to pass into the later stages.
There's a great book that talks about this phenomenon called “What Got You Here Won't Get You There: How Successful People Get Even More Successful” (affiliate link). Although the book is written with corporate climbing in mind, a lot of the advice applies to freelancers and entrepreneurs. Take note – it's written by someone who's successfully transitioned to the “mature” phase. Author Marshall Goldsmith routinely charges executives $250k for his coaching. There's also an illustrated version of the book for those who prefer to get the broad strokes without all the extra details.