The freelance dilemma – rising and raising prices

 

[Crossroads*]

It is probable that many countries will experience meaningful inflation in the short-term future.  For example, the US Labor Department announced an increase in prices of 0.9% in October of 2021, this previous month. For freelancers lacking both a CFO to analyze the risk as well as significant market strength, this inflation poses a serious challenge, even danger, as it affects our ability to make a living. As I see it, the self-employed have four options to cope with the return of inflation if it occurs, each with its benefits and risks.

To clarify why inflation is likely to become a significant factor in the short term, in simplistic terms, inflation is too much money seeking too few goods. In the last three years, governments around the world have pumped in unprecedented cash to their economies while their economies were not growing or even shrinking at the same time. Therefore, neither production nor productivity compensated for the inflow of money. Furthermore, given the current high cost of living in many countries and high level of government aid, many workers do not wish or cannot afford to return to their previous jobs, minimum wage and higher, creating a labor shortage in many industries and, consequently, pressure to increase wages. Adding the masses of people that have chosen to leave salaried positions to start their one business, employers will have to pay more to attract employees, a cost that will eventually be passed on to consumers. Thus, prices are likely to increase until a balance is reestablished.

Inaction is always an option. It is emotionally easier both for the self-employed and their customers to ignore inflation. Whether out of ignorance, the lack of belief that anything can be done, as with exchange rates, or the conviction that the market will not bear higher rates, passive freelancers hope that inflation will not be significant enough to affect their standard of living. In the worst case, the relative attractiveness of their rates will lead an increase in volume, compensating for the loss in purchase power. The advantage is that it is possible to continue with “business as usual” and ignore actual conditions. The risk is regular loss of potential income and lower actual revenue

One active response to wait for official inflation figures in order to justify rate increases to customers. In theory, freelancers can inform their customers that their rates are increasing X% to reflect the official figures for the previous six to twelve months. For the freelancer, such an approach helps reinforce the courage required to raise prices and should increase the chance that this request or notice is accepted without protest. On the other hand, this strategy recognizes a write off of indexing differences, the gap between the nominal and adjusted income. Furthermore, as freelance rates are not automatically linked to any income, there is a limit on the frequency that this unilateral increase can be made, generally around once a year. While this reaction-based approach may be simple, it also simply creates lost income due to its delayed effect even in the best circumstances.

Of course, the self-employed can take a proactive approach and inform their customers that as of a certain date, their rates are increasing. For example, a translator can announce that as of January 1,2022, their rates will be .105 EUR per word instead of .10 EUR per word to reflect increased prices and taxes. The advantage of the approach is that it reduces the impact of inflation. The danger is that not all customers will continue to provide work at the same level or at all. As a result, entrepreneurs must invest time and effort in finding customers that will pay their desired rates, a positive result in itself. Admittedly, there is no certainty that the proposed increase will fully compensate for the actual inflation but there is no certainty in business in any matter. While being proactive may create some tension with existing customers and involve increasing marketing efforts, it does provide some protection from inflation.

Another approach, at least for translators and editors, is to switch to project-based pricing. As there are no “units” in this form of proposal, the rate can be adjusted flexibly, taking into account specific circumstances such as the individual customer, the state of the relevant economy and translation markets and the actual supply and demand of the freelancer at the time. As there is no need to justify increases to the customer, they are much easier to attain in real time. Of course, it requires educating customers that you do not have any per-word or per-hour rates but, in my experience, they not only get used to it but find project proposals much simpler. While many customers, including large agencies, may not prefer this approach, end clients find it much easier to understand and budget for. Furthermore, it does allow for immediate adjustment of prices. Project-based pricing requires changing the nature of the customer-freelancer relationship but provides the most effective protection from inflation in my opinion.

If inflation does begin to significantly affect buying power, freelancers should actively consider their strategy to cope with it. Each approach suggested above has its advantages and risks. However, clearly the problem of rising prices and raising rates poses a dilemma to self-employed but the power to act is our hands.

* Captions help the blind access the Internet.

Picture: Image by <a href="https://pixabay.com/users/stevepb-282134/?utm_source=link-attribution&amp;utm_medium=referral&amp;utm_campaign=image&amp;utm_content=1580168">Steve Buissinne</a> from <a href="https://pixabay.com/?utm_source=link-attribution&amp;utm_medium=referral&amp;utm_campaign=image&amp;utm_content=1580168">Pixabay</a>

Who’s the boss? – Social media and business users

 

[Thinking man*]

At an online meetup session sponsored by the ATA Mastermind group, the moderators noted the importance of managing use of social media in terms of proper time investment. Just as in face-to-face meetings, it is neither practical nor healthy to be interacting with people every waking hour of a day. They noted several factors for a healthy presence on social media, including focus, frequency, feeling and effectiveness. Clearly, the ratio of time investment to benefit should be appropriate.

[Upward chart]

Whatever the media, including Facebook, Tweeter, Linked and Instagram, the participant can attain enjoyment, information, work or strategic position. Clearly, people follow certain sites for the pure pleasure of the content, whether it be pictures of cats or jokes about husbands, to name a few that I have heard of. It is perfectly legitimate to start and even end the day with a smile on the face. Information sites are more practical as colleagues are often the fastest source of help in overcoming the challenges of running a business and solving technical mysteries. Many freelancers actively use social media either to advertise their goods and services or find customers, a practice that has only increased in the last year. Finally, for certain services, a constant presence on social media is a key factor in creating and maintaining a market presence. All these results are potential benefits of social media use.

[Media types]

Given the sheer number of media types and forums, it is neither possible nor desirable to be everywhere even if you are a full-time social media director. The ideal strategy is to identify a few forums where your target audience, whether customers, colleagues or both, are found and continually monitor and participate in them. Not only will the time spent managing the media stay reasonable but the long-term benefit will be substantially higher as you become known or you catch the available job minutes after it is posted. Clearly, identifying the ideal forum is partly a matter of trial and error and may need to be assessed periodically. Still, properly directed efforts are a worthwhile investment of time.

[Clock]

Unlike teenagers during the summer vacation, business people generally have too many tasks to accomplish during a day. This fact creates the need for prioritization and scheduling. Social media management is one of these tasks and should be conducted when and how often as required, depending on the goal. Information and marketing can be on once a day without any loss while lead searching is a time-dependent goal and may have to done more frequently to be effective. However, it is clear that a one-minute scan of new posts should not regularly turn into a half hour break because it means that more vital tasks are being postponed. To attain the best results, scheduling a regular time for business media monitoring ensures proper attention without overinvestment of time.

[Battery]

One of the keys to daily and long-term success is positive energy. In other words, people must strive to eliminate any avoidable factor that saps energy. In practice, any site whose content and discussions mainly contain pessimism, hostility and one-upmanship should be avoided as their damage is greater than any benefit they provide. By contrast, forums that professionally and objectively discuss dilemmas help us form an opinion as if we had personally talked with a colleague. Thus, it is vital not only to consider the content of the media but also its tone. As said, since social media is an alternative, albeit a forced one, to face-to-face discussions, always choose positive people even if they disagree with you. You should feel encouraged after a personally social media exchange.

Bull and bear]

The ultimate test of social media time is the benefit attained. The assessment depends on the desired goal. For example, one or two leads a month may justify the time spent monitoring a certain site while it may be necessary to wait a year before reaping the benefits of a long-term marketing campaign. For information sites, an effective and quick solution for a time-consuming problem may justify a regular scan of the posts as it shows that that the site can be beneficial. As for the sites that makes us laugh, the measure is obvious – it makes us smile almost every morning. By contrast, if the site content is generally not relevant for whatever reason, it would be advisable to search for a better forum in terms of the time investment.

Entrepreneurs can utilize social media to improve their business or allow it to sap their time and energy. A conscious decision of how and where to allocate work time leads to effective use of these media for the intended purpose. These choices need to be periodically reassessed as circumstances change. It is vital that the entrepreneurs make active choices and show that they are the boss.

* Pictures allow the blind to fully access the Internet. All picture via Pixabay.

All employees great and small

I failed to post last week due to circumstances beyond my control. My father fell down, broke his hip and had a stroke.  I flew to the United States to help my parents.  Fortunately, the danger is over.  He is currently at a rehab center starting the long process of getting back on his feet.

During this difficult week, I had the wonderful experience of interacting with great front-line employees in many enterprises. Their dedication was expressed in a variety of ways that all shared one feature, caring. For example, the manager at the Tarzana Inn arranged for me to have my regular room even though I gave him only 24 hours’ notice. The barista at Peet’s Coffee in Tarzana learned my name and favorite drink by the third day (dark chocolate orange mocha, to be specific). The nurse at the rehab center volunteered the Wi-Fi code without being asked. All these acts, among others, were not sales in a formal sense but much better than any sales pitch could ever be because they were from the heart, not a formal sales pitch whose purpose was to make money.

I am aware that the CEO's of many companies work long hours, successfully foresee future developments, understand developing technology and create successful corporate cultures. They are well compensated too.  Yet, in the vast majority of cases, customers neither know their name nor directly feel their presence. People notice and remember if the sales clerk or waitress was pleasant and made every possible effort to help, even if such effort was not part of their jobs. They notice that that they no longer had to explain how weak they wanted their coffee or how wide the shoe had to be. In short, customers appreciate being treated like individuals, not numbers, and reward enterprises that do so.

That lesson is valuable for all freelancers and small enterprises that cannot compete on price with larger companies. Customers will pay more if they are treated as special.  This competitive advantage includes the ability to pick up the phone and reach a person immediately instead of a going through a labyrinth of phone options, have a meaningful discussion of payment terms, receive an immediate solution to an issue and not have to start at the beginning with a new service representative each time. The scale of a freelance or small business becomes a strength and an advantage as compared to its large corporate companies.

Of course, this strength has to be structured, marketed and applied in order to be effective. The failure to invest time in understanding your customers, express this advantage or treat each customer as special will nullify it. This means that successful entrepreneurs must know the essentials of each of their clients, ensure that both existing and potential clients know that they will receive special service and conscientiously provide it.

Since freelancers wear all hats by definition, they only have to persuade themselves that special service is worth the extra effort, a much easier task than creating a corporate culture and hiring the right employees that will do so.  You are all employees, great and small.