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Table Of Contents  The Online Freelancing Guide
 >  Introduction - Online Freelancing Overview, Options, Opportunities and Challenges
      >  Introduction and Overview of Online Freelancing

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Overview of the Online Freelancing Project Process and Freelancing Marketplaces
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Comparing Online Freelancing to Conventional Freelancing
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Comparing Online Freelancing to Traditional Employment
(Page 3 of 6)

Expenses and Earnings

This is perhaps the area where the most misconceptions exist about freelancing, both online and conventional. A lot of people get into freelancing with completely unrealistic ideas about how much money they can make doing it. They also look only at the money they’ll save in certain areas, instead of also considering where freelancing will cost them more than it did when working a regular job.

Pros:

  • Expertise Equals Earnings: Simply put, if you are good at what you do, you can earn a lot of money as a freelancer. The more specialized your field, and the more you stand out from the crowd, the more money you can make.

  • Work More, Earn More: Unlike a wage-earner or salaried employee, your earnings aren’t limited, nor are the hours you can work per week. If you have the projects, the more you work, the more you earn. Even better, as you work more and build a reputation, you can increase the rate at which you are paid fairly rapidly, as opposed to waiting for years to get a decent raise.

  • Travel Cost Savings: You can work at home, instead of commuting to a job. The savings here can be substantial, in terms of both time and money, depending on what you’re currently spending. For example, my wife and I both work from home, and this actually enables us to have only one vehicle for our family of five. We save thousands of dollars in leasing/ownership costs, maintenance, fuel, taxes and so forth.

  • Workplace-Related Savings: You probably won’t work in your pajamas, but you also don’t need a fancy wardrobe when you freelance. This can save quite a bit of money if your profession would normally require business attire.

Cons:

  • Lower Hourly Rates: Due to competition, especially from workers in lower-cost regions, most freelancers earn less per hour than they did as full-time employees.

  • Uncertainty and Dry Spells: You can earn as much as you want, but only if you can find enough projects to keep you busy! This is a bit easier for online freelancing, since freelancing marketplace sites provide a steady stream of leads for you to bid on, but dry spells are still very common. For all but the best and luckiest freelancers, you must expect significant fluctuations in earnings, and have the resources to buffer periods of reduced earnings.

  • Fees: Online freelancing sites are in business to make money, just like you. Count on paying roughly 10-15% of your earnings in fees, depending on the site(s) you use and how much dollar volume you do each month. For newcomers, those percentages can be even higher.

  • No Benefits: Freelancers are independent contractors and get no benefits. This can be a major issue if you don’t have a spouse who is able to provide them.

  • Work Less, Earn Less: If you have an unproductive day at the office, your boss won’t dock your salary. But as a freelancer, if you have a bad day and get only half as much work done as normal, you effectively only earn a half day’s pay.

  • No Vacation or Sick Time: Along the same vein as the item just above, as a freelancer you get no time off for vacation or illness. Again: no work means no pay.

  • Tax Implications: Self-employed freelancers may end up paying more in taxes than they would if they earned the equivalent amount as salaried workers.

  • Freelancing Expenses: The counterpart to saving on travel and wardrobe is the need for a home office or other place to work, and office equipment such as a computer. Some types of freelancing may also require you to provide trade-related materials, especially professions in the artistic field, which the company would provide if you worked full-time. To take the flip side of the example I gave before of my wife and myself: while we save by having one vehicle, we had to buy a more expensive house than otherwise would have, because we needed two rooms that we could use as offices. (This isn’t strictly necessary; in the past we’ve shared an office. Of course, we’d probably be divorced by now if we had kept that up. :) )

Previous Topic/Section
Overview of the Online Freelancing Project Process and Freelancing Marketplaces
Previous Page
Pages in Current Topic/Section
12
3
456
Next Page
Comparing Online Freelancing to Conventional Freelancing
Next Topic/Section

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