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.

At the time of this writing, Fernando’s profile headline reads “Linux Administrator, PHP/Java Developer, MySQL/Networking Servers”. While it clearly sums up his many skills, I think that the title doesn’t do his skills justice.

In the world of business marketing, there is a focus on something called the Unique Selling Proposition; that is, the thing you offer that makes you different from your competition (you can read more about the Unique Selling Proposition on Wikipedia if you like). Freelancers need to adopt the same mindset.

In Fernando’s case, there are many other providers advertising the same or similar lists of skills. Most of them are listing them in the same manner. Somehow he needs to set himself apart from the crowd.

Here’s what I’d recommend: pick just one or two skills to focus on, and think like a journalist to write a compelling headline.

Which skills to pick? Well, there are a couple of different approaches that might work well:

1. Be a big fish in a small pond. Look for an area with less competition where you can really stand out. For Fernando, this might be Linux Server Administration; there are significantly fewer providers in that area than, say, PHP or Java programming.
2. Consider your preferences. Undoubtedly there are some types of work you find more enjoyable than others. Focus on the one or two you like best, and let other providers do the work you don’t like as well. In Fernando’s case, it sounds like he likes the server work best (based on his Objective).
3. Look at what has worked for you in the past. Are there areas where you’ve been more successful getting work? It may or may not be on oDesk, so consider your previous work, too. Looking at Fernando’s work history and feedback, he’s found success in several areas, so I’d fall back to the other methods to pick a specialization.

Once you know which area you want to focus on, you want to write a compelling, benefits-driven headline. Remember that the buyer is looking for someone to solve a problem, so use your headline to present a solution.

If Fernando decided to focus on Linux Server Administration, his headline might be something like “End server nightmares: Linux Server Administrator with 10 year of experience” or “Expert Linux Server Administrator: I’ll help you grow your business”.

Then use your Objective section to expand on the promise of your headline.

Obviously I’ve spent a lot of space talking about the headline, because that’s my primary recommendation for Fernando. I’ll focus more on other areas of the profile in future reviews, so to wrap this one up, let me just provide a quick list of the stronger and weaker parts of the rest of Fernando’s profile.

Stronger:

• Profile portrait is friendly and encourages trust
• Accurate assessment of English skills (for non-writing assignments, I’ll gladly hire someone with 3 or 4 out of 5, as long as they’re honest about it)
• Several assignments and good feedback are very encouraging for a buyer
• Most sections of the profile are filled out, which suggests that Fernando is serious about getting work

Weaker:

• The portfolio section is empty; it could be used to describe and link to previous work
• In the resume section, there are many web addresses listed but most of them aren’t actual links; this is inconvenient for the buyer
• Test scores could be better (and low test scores can be hidden); it might be time to re-take some of the tests or hide low scores
• It might be worth hiring a native-English-speaking editor (on oDesk!) to help polish the headline, objective, and resume sections

I hope you’ve found this profile review helpful! I welcome your feedback in the comments, and if you’re an oDesk provider, I encourage you to submit your profile for review.