She couldn’t find the page, which was probably the main oConomy page here which currently shows 248 providers working and 95,545 registered int the system.  I admit that those numbers weren’t calculated to put a new provider in her happy place, but they don’t tell the whole story either.

It isn’t showing how many providers on the network have jobs, but how many people were actively logging time on the oDesk client at the time the numbers were generated.   Given that oDesk is a 24 hour global marketplace those numbers will fluctuate throughout the day and really aren’t anything to worry about.  They certainly don’t reflect the number of providers who are currently employed.  (I expect they’re short by at least one or two orders of magnitude).

Now let’s look at some other numbers from the same page.  There are almost 100,000 providers, and together they’ve earned just under 40 million dollars, which works out to an average of almost U$400/per provider to date.   Since not every provider on oDesk has worked, and that some profiles are so incomplete that the providers are never going to work, the numbers have nowhere to go but up.

When it comes to getting a job, none of those numbers matter.

As I said in the headline:  Chance only matters when it’s random.  oDesk buyers do not select providers by rolling dice. (Well Nelson might, but he’s a special case.)

Buyers select the provider they think is at the intersection of highest quality and lowest price. They go for the most value for money within their budget.

It’s not random at all.  Never has been, never will be.  This is business, not gambling and buyers don’t want to throw their money away.

The end result is that you’re not competing with all 95,544 other providers on the network for any given job.  In fact you’re rarely competing against as many as 10 serious competitors for any given position.  Those still don’t sound like good odds, but that’s just chopped four orders of magnitude off the ratio.

It gets better because they aren’t odds.

It’s not random.

It’s deterministic, and some of the factors are ones you know about and can control and the others are unknowable and uncontrollable.  However even the ones you don’t know and can’t control aren’t random chance.

If you write a great cover letter and your skills fit the job you are very likely to get it.  If you can demonstrate that your skills match your rates you’re even closer.

I’ll go so far as to say that any competent provider with a decent profile (including a picture) and portfolio is guaranteed to be able to find work at or slightly above their category average if they put the time in.  The work is there, and the buyers want it done more than they want their money.

Let me leave you with one other thought about statistics:

While statistics may say only one in ten people can succeed at something, they never tell you whether you’re the one or one of the nine.

Let’s start with what I consider the three most important factors:

oDesk is a free market

oDesk costs money to run

oDesk only makes money when providers make money.

Understanding those three points is vital if you want to understand how oDesk works.  Yes the oDesk Readiness Test is important, as is knowing how to work the oDesk Team, but there’s nothing really all that hard about either.

So, join me on the other side of the fold and we’ll discuss our three factors:

Glad you made it across safely.

Now, where were we?  That’s right, we were discussing how oDesk works, and to start at the beginning let’s talk about a free market.

When I call oDesk a free market I mean that it is free of artificial constraints on the cost of services.  Every provider is free to set their price and every buyer is free to set their budget.  Providers are not required to take a job if they don’t think the pay is worth it and buyers are not required to select a provider if they think they are too expensive.

I’ve seen people work for $0.50/hr and I’ve seen people work for more than $100.00/hr.  I’m not talking about posted pay rates, but about amounts that people have actually been paid for jobs they have done.

That’s a huge range, and the free market is why it’s so large.

We all know that data entry rates are the lowest on oDesk.  There are a number of reasons why that’s the case.  One reason is numbers, there are just under 33,000 providers who list data entry as a specialty.  That’s second only to web programming with just under 34,000.

At first glance you might think that would put the pay rate for web programmers into the same ballpark, but if you do you’re forgetting the other half of the equation:  Job availability.  According to the most recent oConomy figures, there were 4725 web programming jobs, and only 1035 data entry jobs listed.  That means there are seven web programmers for every job, while it’s close to 32 providers for every job in data entry.

Another reason why it’s low-paying is that for the most part any two data entry professionals are pretty much interchangeable.  Yes there are differences in speed and accuracy, but the final product from two top-ranked data-entry people should be identical.

This means that the only things a data entry professional can use to distinguish themselves from the crowd are quantitative factors, not qualitative ones.

If you combine the fierce competition for a limited number of positions with the interchangeability of providers on a qualitative level you have a recipe for low rates.  That’s how the market works.

It may just be a coincidence, but the average rate for web programmers is about five times that for data entry, and they have one fifth as many providers for each opening.  Data entry is very much a buyer’s market.

The above should show why data entry in particular has such low average rates, but what about other fields?

Providers in other fields have something else to distinguish themselves:  Quality.

Some coders are better than others, so are web designers and writers.  This level of ability gives them something else to distinguish themselves.  They can say that the reason they are worth more than their competitors is because they provide a better product.  That gives them something else to set themselves apart and another way to justify higher rates.

Again, it’s the free market at work, this time in the other direction.  Good providers who are in demand can charge more because people want those providers specifically, and they only have a finite number of hours.

The next thing to remember is that oDesk has expenses.  oDesk Team cost money to write, and the servers cost money to keep up.  Then there are other expenses such as paying the staff and interest on financing.  The details and the amount are unimportant for our purposes, all we care about is that they exist.

Finally, we come to to the point that oDesk takes a proportion of what each provider bills.  Their earnings go up at the same proportional rate as each provider’s do.

These last two give oDesk the strongest incentive possible to drive provider rates up rather than down.  They’re in business to make money.

If you’ve followed the community for any length of time you know that people are always complaining about pay rates.  This is usually followed by a request for a minimum wage.  Unfortunately what seems to be forgotten is that this would simply be the first constraint on an otherwise free market.

Constraining a market is never a step to take lightly.

The first problem is that oDesk doesn’t exist in a vacuum.  If oDesk constrains its market, then people looking for a free market will simply go elsewhere.

The second is that it’s impossible to constrain the bottom of the market without constraining the top of the market as well.  Setting a wage floor makes it harder for people to rise above it.  They can still do it, but neither as quickly nor as easily.

Many of the arguments for a minimum wage on oDesk have to do with questions of social justice, saying that people are worth more than some arbitrary minimum.  Other arguments have to do with people saying it’s uneconomical for them to work for less than said minimum.

In the latter case the answer is simple, don’t apply for jobs you cannot afford to do.  Buyers are not responsible for your financial health.

The first case is a little more difficult:  Questions of social justice tend to move the argument outside the boundaries of pure economics.  Most countries do have minimum wage laws in place, and many of them invoke either basic human rights or the social contract to do it.

Let’s start by making one thing clear:

A minimum wage is irrelevant because we are talking prices not wages.  oDesk providers are contractors selling services, not employees earning wages.  So what people are really discussing are price controls, not minimum wages.

Remember that.

Once people accept that the discussion is about price controls rather than minimum wages, it becomes easier to understand why the various issues of social justice don’t apply to oDesk.

People don’t live on oDesk.  They live in cities, towns, states, provinces, and countries.  All of those places have their own jurisdictions and the right to set minimum wages for people working there.  They also collect taxes to pay for services and implement programs of social justice.

Don’t conflate a marketplace with an employer.

You can make money on oDesk.  If you’re good at what you do and know how to sell your services you can make quite a lot of money.

If you understand how it works you’ll make more.

I’ve been writing about money a lot lately, and not just because it’s one of my favorite things.   Today’s topic is a grab-bag of tips that can help you make more money for your work on oDesk.

Let’s start with one obvious fact that doesn’t always seem obvious to some of the posters in the Community:

oDesk wants you to bill high

That’s right, it’s in oDesk’s best interest for you to have as high a billing rate as you can manage to pull in.  They don’t want you to get jobs by underbidding everyone else, they want you to get jobs by proving you’re worth more to the buyer than everyone else.  oDesk gets paid by the buyers just like you do.  They want you to make more money because the more you make the more they make.

They have an even greater incentive for providers to raise rates than most providers do because they only get ten percent of the bill rate.  So if I make ninety dollars they make ten.   If I’m working at a charge rate of $1.00/hr they only get $0.10/hr and that’s not really worth it for either of us.

So if someone tells you there’s a conspiracy to keep rates low just laugh at them.  oDesk isn’t going to have anything to do with a conspiracy to make oDesk less money.

Okay, now that we have that squared away, on to the tips:

Tip 1) Don’t Do Data Entry

Lots of people put data entry down as one of their skills, and in some ways it makes sense.  for the most part it’s a job anyone can do if they just take care and pay attention to what they’re doing.

It’s also the lowest paying job category on oDesk

One reason it’s low paying is that it’s essentially commodity work.  There’s no way to put your own unique stamp on data entry so you cannot build a reputation as being the best person for it the way you can with some other fields.

It also doesn’t require any special training or even skill at the English language.

I don’t mean to disparage the job, but if you want to make a lot of money on oDesk it’s one category you should avoid.  The money isn’t there.

Tip 2) Don’t Lower Your Rate On An Invitation

Here’s an example of how lowering your rate can come back to bite you.  A provider with a very high rate (twice the category average and it’s a high average rate category) received an invitation to a position.  When they accepted the invitation, they offered to do the job for about a quarter of their billing rate.

What happened?

They were turned down because they charged too much.

Personally, I never lower my rate on an invitation and here’s why:  Anyone who invites me to do a job has already seen my rate before making the offer.  They wouldn’t have offered if the rate wasn’t acceptable, so why should I drop it?

Also, if I do drop my rate, I’m sending at least one of two messages:  a) I’m desperate; b) I have no confidence in the value of my work.

I don’t want to send either message.  The other thing that might happen is that if I do drop it the buyer may push to see how low I am willing to go.  If I drop my rate by seventy-five percent, maybe I’ll drop it by eighty percent, or possibly even more.  I don’t want to get caught in that trap.

The other problem is that the amount you were paid stays on your profile.  If you quote $50.00/hr and all your jobs are at $15.00/hr there’s no reason any buyer will ever pay you $50.00/hr.   You’ve sent the message that your real rate is $15.00/hr.

Lower rates on past jobs don’t hurt you if they show a steady pattern of increasing rates.  There’s nothing wrong with showing a few jobs at $5.00/hr, then $10.00/hr, $15.00/hr and so on.  That shows a normal upwards progression and doesn’t make the buyer think you’ve been undercharging all along, but rather that your rate has been increasing with time.

Tip 3) Let Your Profile Fit Your Description

Provider profiles are a huge subject, and I could go on for hours about them.  Right now though, I just want to focus on one aspect.

Make sure your skills reflect your area.  If you’re a writer who dabbles in programming, list your writing skills first, not your skills coding Flash or debugging HTML.  Further to that, if you have multiple areas of expertise, list the one you most want to work with first.  That’s the one you should be focusing on.

This doesn’t apply if your preferred skill is data entry and your other is voice-over, since those have the lowest and highest average pay rates respectively.  If one skill is going to pay you much more, focus on that one.

Okay, I’ve started you off.  If anyone has other tips for raising their average rate feel free to send them along.  Everyone wants to make more money and as long as your work is worth it there’s no reason you shouldn’t be working at the top of your category.

Money.

I bet that got your attention; it gets mine.

We’ve talked about rates before, but what I want to discuss today is setting them.  One of the best tools for setting your rate on oDesk is the oConomy.  It lets you see just how much people in your field are getting paid so that you can see what the market can actually bear.

I’m a writer, so let’s look at the writing category:

This graph shows how provider’s hourly rates break down against the number of jobs.  I got this information from the very useful Rate Distributions by Job Category section of the oConomy.   If you haven’t looked at it already you really need to.

As you can see, while the majority of jobs cluster around the lower end of the pay scale, there are noticeable spikes that correspond to pay rates of $5.00/hr, $10.00/hr, $15.00/hr, $20.00/hr and $25.00/hr.  The numbers are skewed a little high because the graph shows billing rates, but the message is clear:  If you’re currently making $10.00/hr and want to increase your rate you may as well jump straight to $15.00/hr, or if you’re at $15.00/hr you should go to $20.00/hr without bothering with any of the intermediate rates.

However, also note that the vast majority of jobs pay $10.00/hr or less so you may want to take that into consideration too.

Further down they list breakdowns by sub-category so you can see that the average rate for technical writing is $12.75/hr while for blog and article writing it’s $8.03/hr.

While it’s not exactly writing, many writers may consider data entry– but be warned it has the lowest average pay of any sub-category, drawing just $3.13/hr.  I don’t know about you, but that rate’s enough to scare me off.

Before we go any further I want to throw out one more set of numbers.  This is a more general chart, showing the average hourly rate for job hires over the last year.  You can find this information on the Rate Statistics page of the oConomy.

If you look closely you’ll see that the majority of oDesk jobs come between $13.00/hr and $15.00/hr and that the rate has stayed pretty constant over the course of the last year.  It’s important to note that these numbers reflect the pay rates at which people were actually hired, not the rates they would like to be paid.

Now that we’ve got the numbers down we can talk about what triggered this post.

Most of you probably know there have been a lot of posts on the oDesk Community about wages lately.  I discussed one of those threads in a previous post here.  Well, the discussion hasn’t stopped, and the minimum wage adherents are out in full force.

Looking at the numbers I don’t see any reason why oDesk should implement a minimum wage.  The most common suggestion is $5.00/hr and the numbers clearly show that the average hourly rate on oDesk is over twice that amount.

In fact, according to the rate distribution chart there are only two sub-categories that average below $5.00/hr:  Personal Assistant at $4.88/hr and Data Entry at $3.13/hr.   Both are under Administrative Support and personally I would consder $4.88/hr close enough to $5.00/hr that it doesn’t matter.  So with the glaring exception of Data Entry, almost any average job on oDesk should be paying more than $5.00/hr.

Yes there will always be buyers who want the world for nothing, but the numbers clearly show that they aren’t getting it, and that $1.00/hr jobs are very much the exception not the rule.  Going back to writing for a moment; if you’re an average writer there’s no reason why you shouldn’t be making an average of at least $8.00/hr, especially since the average billing rate for working writers on oDesk is $9.53/hr.

Remember that number:  We’ll come back to it.

Now that we know the average, we have somewhere to base our rates.  If you want to charge significantly more than the going rate you need to be able to provide your buyer with a benefit for that additional cost.  If you cannot convince your buyer that you’re worth more than the average rate for your category you won’t get any jobs.

I tend to read peoples’ profiles as well as the threads they post in.   It’s often very interesting reading, especially when it’s someone complaining about the low wages on oDesk, because it tells me what kind of experience they have had on the site.

Here’s an example:  I checked the profile of one person who had been taking part in the discussion of low wages and discovered that they had only taken two relevant tests, with an average score around the 55th percentile, and was looking for $25.00/hr to start.  This was a writer with an error in the first sentence of their profile overview.

As it stands that person is not going to get work on oDesk.

To begin with they’re charging almost three times the average rate for the category.  Remember, your average writing job bills at $9.53/hr which means the provider earns $8.57/hr.   Regardless of their background, without feedback and given their test scores they’re currently sitting squarely in the middle of the pack, if not a little below.

This isn’t an isolated case.

I’ve seen several people complaining about wages lately who have profiles that show no oDesk experience and a billing rate that’s two or three times the category average.  Unless you have an amazing profile and a fantastic portfolio that’s just not going to cut it.

You can work steadily for more than your category average on oDesk.  Nelson, Bill and I all do, and so do a number of others.  You just have to prove to the buyers that you’re worth it.

Buyers can and will pay you what you’re worth.

The catch is they’re going to base what you’re worth on what they see on oDesk and the oDesk marketplace, not your own opinion.

I recommend that every new provider start by setting their rate near the category average and then moving up in rate as they build hours and earn feedback.  Show the community what you’re worth.  Once you have good feedback and enough hours to build a real history you will find you can raise your rates.  Test scores matter less then too.

So next time you see one of those threads complaining about low rates on oDesk take a look at the oConomy.  What you see might surprise you.

One of the contributors posted a well-thought argument, complete with supporting figures that showed how low rates on freelance sites tend to drive out high rates.  The basic point was that if buyers see the same kind of job being done for $0.50/hr they are not going to pay $15.00 or even $5.00/hr.  It doesn’t make economic sense.

That’s a great description of how a commodity market works.

oDesk is not a commodity market.

All of our regular contributors work on oDesk.  None of us work for $0.50/hr and all of us get invitations from buyers.  If this was a pure commodity market that wouldn’t happen.  It isn’t, so it does.

Before I go any further, I’d better explain what I mean by a commodity market.  To me a commodity market is one where all products are essentially the same and they primarily compete on price.  Oil is a commodity, as is wheat and a number of other products.  The thing to remember is that when you are dealing with commodities no one source will give you a better product than any other.  A barrel of oil is a barrel of oil.  It will convert into the same number of gallons of gas whether it comes from the North Sea, Saudi Arabia, Venezuela, or Kuwait.

The closest thing to a commodity on oDesk are the various article mills that post jobs where they offer to pay $2.00 or less per article for a dozen or more 500 word articles a day.  They may say they want excellent writers and perfect writing, but what they really want is merely competent writing and a serviceable product.  That’s a commodity:  any moderately skilled writer can produce those sorts of articles without much trouble.

Those are the kind of fixed price jobs that have driven down prices on a number of sites.

There is a way out of that trap though:  Don’t market your work as a commodity.

I get jobs because people want me.  So do Nelson and Bill.  While any one of the three of us could do a very good job for you on just about any writing project no two of us will do exactly the same job on any project.  We aren’t the same person, and we aren’t marketing ourselves as the same person.  We all market ourselves differently and we all work differently.

We aren’t selling commodities.

One common reaction to low rates is to suggest a minimum wage on oDesk.   It comes up regularly in the community and just as regularly gets squashed back down.  Personally I don’t support a minimum wage on oDesk for a number of reasons.

My first reason is simple.  A minimum wage acts to commoditize work and I don’t want to work in a commodity market.  The very idea of a minimum wage is that all work is the same and so it should be valued the same.  When it comes to writing and creating, that’s simply not true.  While I hate very low rates I have seen work and profiles on various sites where the work really wasn’t worth more than $0.50/hr.   Putting a minimum wage makes the argument my work is worth the same as poor work and I won’t accept that.

My second reason has to do with the nature of the online marketplace and how it differs from the offline world most people are used to.

Here’s an example:

Let’s say I have a fast food restaurant at the corner of 1st and Pine in Dogston and they introduce a minimum wage.   Meanwhile, there’s no minimum wage in Catsville over in the next county, but that doesn’t matter, I’m in Dogston so I’ll have to pay it.  My store has a fixed location and so do my workers, and that means I have no choice but to pay the minimum and they have no choice but to accept it.

It’s either that or take my business elsewhere, but there are costs involved in closing one business down, moving to another county and starting up there.  I probably can’t make the difference back in the labor savings so I have to accept the minimum wage.

It doesn’t work that way online.

If oDesk institutes a minimum wage, all the buyers who post jobs below that rate will go to other sites, and the providers who can only get those jobs will follow them.  After all, how much does it take to type otherjobsite(dot)com into a browser and go through the account setup process?

In the long run it will make no difference to most of these buyers and providers.

Now some people may argue that oDesk is better off without those buyers, but this is the real world where things are often buried in shades of gray.  Some of those buyers may be paying very low rates for article mill work and much higher rates for web design or other content work.   Some of the low rate providers may develop reputations that will move them up into the higher rate brackets.

The reason some of those buyers may pay different rates to different providers is simple:  They pay more when they value work higher.   So even if they are paying commodity rates for one job they may not pay it for another.

So remember, if you want to make more money on oDesk, you don’t need a minimum wage, you need to escape the commodity trap.

The usual pattern is: read the job board, find something that I can do within a buyer’s budget, construct a cover letter, submit samples, apply, and wait. And wait.

The thrill comes when this process is turned upside down and interested buyers email me. Yippee!

What was it about my profile or my portfolio that had them picking me (and maybe a few others) out of the vast herd of writers at oDesk? Whatever it was, it’s a great feeling when it happens. I’m suddenly no longer a 5-drink Lucy (the one who only gets propositioned at the bar after suitors have had a few) and I’m the budding starlet plucked from an obscure waitress job to work on the big screen. (That would be a better set of metaphors if I were female.) Anyhow, it’s really nice.

Before becomes now.

Back when I was anxious about finding work, worried about reaching volume and money goals, and applying for almost anything that had the barest scent of a job I could do- back then, they said, “Get a few jobs done and done well. Fix your profile. Accumulate some samples. Do this, and buyers will find you.” Sure. Sounds nice.

All BS aside, they were right. Thoughtful and motivated buyers don’t just screw around with a job posting. This is especially so if they are experienced buyers with lots of previous projects completed. You only have to look at the ‘initiated by’ column on postings to see that buyers are actively looking for good fits. When ‘buyer’ appears in that column, it means they searched for and found someone they are interested in hiring. Once in a while, that someone is me.

Get past the flattery.

Enjoy the moment. Take the ego boost. But then, move on.

You have to evaluate the offer as you would any other: Is the money right? Is this something I want to do? Can I fit it in my schedule?

Recognize you have a bit more power than you normally have. The buyer is halfway sold going in. So consider your wants and needs a bit. Now is not the time to be swayed by the simple compliment and flattery of being singled out.

I have made that mistake. Because a buyer invited me directly, I agreed to a lower price. Oops. I no longer make that error. I bid (and try to justify my bid) based on the job as presented. Actually, I usually ask for more information as a matter of course, but then I bid towards the high end.

Try and use the they-want-me power when you have it.

Beware of the scammy.

There is a type of buyer who uses the provider listings to generate wholesale invites. I don’t think of these are real jobs at all. These folks are just broadly posting their job as an invitation instead of on the job board. The only thing I do with them is add a message when I decline the offer. The message is usually a variant of “You aren’t paying enough and I don’t think you will get a very good product.”

These folks already know this, but I still do it.

Until the terrain at oDesk changes (perhaps by adding a minimum?) scammy invites are going to show up. As long as they don’t overdo it, I don’t have a problem with buyers who want to game the system this way. They are entitled to get the lowest price they can for the work they need done.

So, follow the advice I got, and enjoy the invites when they come your way. Just make sure it’s a party you want to attend before you RSVP.

This was on Rent-a-Coder which uses  a different system than oDesk, but it got me thinking.

Before I go too much further I’ll give you a quick breakdown of how their process works.  Essentially the bidding process on RAC works like a private message board.  If you are interested in a project, you make a comment on it.  There is a place where you can put in a bid with your initial comment, or you can leave it blank.  If the buyer likes your comment they can reply, starting a dialog.  You can put in a monetary bid at any time, so if you end up deciding the project isn’t for you, you don’t ever have to commit to a price until you know what the job entails and whether you really want to do it.

There are some definite advantages to this system, especially when dealing with fixed-price rather than hourly jobs, and while oDesk doesn’t do things the same way, there are aspects of this that you can take to any site.

The simple fact that a buyer has posted a job on any site already tells you one important thing about them:

The project matters more to them than the money.

Remember, they’re willing to give up money in return for the project, so it’s the project that matters.

But what does this mean to me?  You may ask.

Simple, it means you’ll have a better chance of getting this or any job if you focus on the project before the payment.

Your buyer is completely uninterested in your finances.  The only thing they really want to know about you and money is whether giving you money will help them with their project.  If they feel you will give them the best value for their money then you’ll probably get the job.

The other thing to remember is that if you don’t get the job the money doesn’t matter.  You can be not paid any amount for a job you don’t do and you won’t get any richer.

Now I’m not saying that money isn’t important or that you should work for less than you are worth.  I’m saying that you need to focus on the job first.  There are some jobs I wouldn’t do for any money, and it makes complete sense to find out whether a job falls into that category before discussing money.

By focusing on the project rather than the money and communicating that to the buyer you will not only increase your chances of getting the job if you want it, but also of making it a good freelancing experience for both of you.  The discussion will let you know what’s really expected, not just the basics that are in the initial posting.  Once you know the details, you’ll have a much better idea of how much time and effort it will take to do the project.

This is a huge benefit when you’re considering taking on a fixed-price job.  There’s nothing worse than bidding low because you thought a job was going to be quick and easy, only to find out there was much more to it than you expected, and that you’re now working for pennies on the dollar.

That’s just one pitfall you could have avoided by focusing on the job rather than the payment.

One issue I run across in writing is that I work extremely fast. I can come up with ideas for creative projects very quickly, and I type quickly. Therefore, working hourly has a inherent drawback for me. To make an effective income, I have to raise my rates to compensate for my speed. I can turn that into a major advantage for the buyer. They pay more per hour and get the product quicker, and you can capitalize on your speed by marketing it as a valuable part of your skillset. If you can work quicker, their opinion is that they payed about the same they would pay a slower provider, yet they received the product now instead of later. In those cases, they are usually more than willing to pay higher rates still for the speed factor. You make more money in less time, and the customer is happy!

I have a few other tips which are actually useful. These are methods that have worked for me with consistent effect.

When working for an hourly rate, you can easily find yourself in a plateau where you are stuck working for less than you should be. When people see that you’re asking for $50 an hour, yet you’ve only done jobs for $12 an hour, they seem to think it’s a bit fishy. To start making decent rates, you need to step your payment up slowly in increments. If you’ve only done jobs for $12, then try bumping your average rate up to $15. Get a job or two under your belt for $15 and then go up to $20. The higher you go, though, the more jobs you have to complete at that rate and your previous rate before people will accept that you are worth the money. Also, if there is an easier job with a tighter budget, you look like a better candidate if you’re dropping your rates from $20 to $15 for them.

Another tactic I’ve found very useful is to negotiate fixed-priced jobs by hourly payment. With previous clients, I’ve told them my hourly rate, but they said that they couldn’t afford it. With someone working at a normal pace, they probably couldn’t afford it. However, I will offer a fixed-price quote on short hourly jobs. For example, for a five page document with an average of 500 words per page, I’ll calculate it as $0.10 per word. So, that’s 2500 words for a total payment of $250. Then, I’ll tell them that I’ll work at $50/hr+oDesk fee while they limit the hours per week to 5. That way, I’ve had job experience at $50/hr, I’m guaranteed payment, and the buyer knows exactly what he or she is paying for the job. It’s security for everyone involved.

Just doubling your rate on your profile won’t give you anything. A buyer won’t consider you to be worth the money unless you have proven job experience and a good rating tied to it. Go the extra mile to make sure that the client is happy with the work so that you’ll have a great rating. If you ever need quick money, you can swoop in on projects below your average rate and appear to be the best candidate for the job. Since the buyer sees you working for $30 an hour consistantly, they’re “getting a bargain” by having you work at $25. All the while, you’re raking in cash hand-over-fist.

Those are just a couple ways to keep your rates going higher and higher. They have worked for me quite well. You just have to put in some elbow grease to climb the ladder.

Inertia is your enemy

Remember when you first started out? How hard it was to get into the groove? Well, you are in a new groove now. And it’s time to push yourself a little.

One of the hard and harsh mathematical truths of freelancing is that we have a finite number of hours to sell. If you aren’t getting top dollar for your time you’ve got a lower paying job than you ought to have. But, having regular work is a comfort. It’s nice to relax into the routine and let inertia just carry us along.

The way to see inertia as your enemy is to recall the last plateau you were on. Before you climbed up to the plateau you are on now. You wouldn’t conceive of sliding back to the ‘before’ and you won’t want to go back to where you are now– once you make the next little climb.

Consider this

You’ve already demonstrated you can do the work and do the work successfully. Buyers should have little doubt that if they hire you, you will get the job done. The income bottleneck isn’t with the buyers, it’s with you.

Here’s some info to wise you up. From the 2008 Writer’s Market:

• e-mail copywriting: $73 (these figures are all hourly averages)
• Web page writing: $83
• Technical writing: $84
• Online editing: $58
• Web page design: $90
• Ghostwriting: $70
• Rewriting: $63

That’s per-hour averages. That’s what writers are getting paid to do what you do. There are plenty more categories I didn’t list. I couldn’t read through my tears.

So, the excuse that you aren’t worth it is bull-dooky. You are worth it.

How I know you are underbidding

This is a marketplace. Buyers are looking for the best deal they can get and providers are (supposed to be) looking for the highest price they can get. If you aren’t getting rejected for a large percentage of the jobs you bid on– jobs you are fit for– you are pricing yourself too low.

Buyers should always have the option of choosing a provider based on price. You don’t want to be that provider. You should be getting passed up for most of the jobs you apply for. In order to get the creamy jobs, you have to let many lower-priced jobs pass you by.

If you aren’t getting turned down enough, you are too cheap. Seriously. Buyers are competing for your time. You owe it to yourself to let the auction play out. If you were selling volume, or could just manufacture more, then you could make a living just cranking out more product. But you know this isn’t the case. As soon as you start one job, you are unable to take on the next one. And if the next one paid half-again as much as the one you were stuck with?

You absolutely cannot be afraid of not working. When you are between projects, you get to work for yourself. Improve your skills, work on that e-book, or try out some other ideas you’ve had (more in my next blog post on ideas for finding higher-paying work).

The buyer you want is the buyer that can afford you. Be the Porsche. Let the Escort buyers keep walking. Even though your rate is high for oDesk, it is still dirt cheap compared to industry averages. You can save buyers money while still making a better wage.

Raising your rate with established clients

You have them, I have them– bread and butter clients. They started out with a small project and the relationship has kept going. They like your work and they keep giving you more. Unfortunately, although they provide steady work, your rates have moved past what they were when you first started dating. Time to raise your rate.

Steel yourself for a ‘no’. Remember, although you risk losing a client (and maybe a client you like) you just can’t continue selling your time and talents for cheap. Don’t bluff. Get ready for, “Sorry, I can’t afford that.”

The way to do it is politely and professionally. Remind them of past work and how well things went. Let them know ahead of time that you are raising your hourly rates. “Starting next month, my rate is increasing to X dollars an hour.”

Complete current work at your existing rate, but be firm. This isn’t personal, it’s business. If they can’t afford you at the new rate, they can’t afford you. No hard feelings– great working with you, keep me in mind for future projects.

One of three things will happen.

1. They won’t complain and your higher rate will go into effect. Sweet.
2. They will moan and gripe and maybe fire you for awhile… and then, a week or a month later, you will get an email asking if you are available. Still sweet.
3. You won’t hear from them again. Not sweet, but we are all grown-ups here, right?

So, bottom line. Gird your loins, put on your professional businessperson attitude and raise your rates. Quit being an amateur, playing at writing. Get serious. Get paid.

The jaws that bite, the claws that catch!”- Lewis Carroll

In the end, I lost two working days, $25, and risked some bad feedback from an upset buyer. It started well enough…

The job posting was to ghost a hundred page e-book. More details came after an inquiry: The buyer already had most of the book done; he just wanted a rewrite. He said he was a writer himself and proudly pointed to a web page he’d written. His only problem was not having enough time to ‘tweak’ his e-book. Fair enough. I’m in.

An easy job starts to go downhill.

He touted it as an ‘easy job’ (don’t they always say that?) and sent me his first draft. There was a lot of material, and it wasn’t badly written, so I sent a letter of understanding to finalize the project and got to work. So far, as common as plastic ware.

Ah, but then I sent him my proposed table of contents and part of a chapter to get some feedback. “Oh,” he writes, “I sent you the wrong draft.”

“That part was already done by the first writer.”

First writer? And he then sends me a new draft. Again, the term ‘rewrite’ is mentioned. And, hey, there’s even more material in this version anyhow. Less for me to write. Sometimes the gods of writing smile on you.

No worries. Back to work.

I reviewed the forward, introduction and first two chapters. I rephrased here and there, added some paragraphs where things weren’t that clear– a couple of thousand words or so. The first writer had done a decent job and most of the text was fine as written. Maybe this was an ‘easy job’. But sometimes the gods of writing only look like they are smiling– when they are really smirking.

Things go horribly wrong.

With the initial misunderstanding, it’s two weeks into the project now. I sent off what was completed so far, along with some suggestions for an appendix…

“It’s all wrong”, was the reply.

“You can’t use any of the material I sent; I copied that from the Internet. You have to rewrite it.”

Oh boy. He’s a writer. I’m a writer. No communication.

Man or machine?

The descriptive ‘rewrite’ when I use it, means to correct, fix awkward phrasing, add or subtract to clarify or make a piece stronger. To him, a rewrite meant completely rewording something.

He had a sort of machine in mind. A machine that took sentences and reordered them. A machine that used synonyms to generate ‘new’ text. From my point of view, delivering new material (from what amounted to internet research) required internalizing the ideas, digesting them, and producing fresh copy. Not darned socks, new footies.

In short, when he said ‘rewrite’, it meant ‘write’.

Suddenly, it was obvious that he wanted some 40,000 words. I had seriously and fatally underbid. I withdrew as politely as I could.

The moral.

Clearly, I get the blame for this fiasco. I didn’t understand exactly what I was supposed to do. I made two false assumptions.

First, I let the amount of money lead me to think the scope of the project matched what I would normally do for that amount. Secondly, I assumed that another writer would understand what I took ‘rewrite’ to mean.

This guy was an amateur copywriter on the side. He wasn’t a freelancer who wrote for a living. There’s a world of difference between those two types of writers.

So, the moral is to question, question, and question until you know for sure and certain what they want– then price accordingly. Oh, and the $25? Turns out that since I canceled the project, I still owe elance their fee. The fee they would have gotten had I completed the project as bid.