How to Diversify Your Income as a Software Freelancer
Relying on a single source of income as a software freelancer is quite risky. In times of the unstable economy, some companies prefer to hire freelancers to cover certain projects, yet these can be as well closed easily due to cutting budgets or unfinalized deals. While freelancing can bring you amazingly interesting and challenging experiences, it also requires efforts to find good opportunities.
Diversifying your client and project portfolio is one certain way to cope with uncertainty. Either overlapping part-time projects or scheduling full-time engagements in advance, whatever the case you need an advance to achieve financial stability and live comfortably as a freelancer, even during turbulent economic times.
Here are a few tips for achieving income diversification as a software freelancer:
Invest in your clients' relationship for the long-run
As a freelancer, you have a certain freedom in choosing how you can make money. You can choose to adjust to the market demand, gig seasonality, day and night jobs, and additional side projects. Whatever the case, your most important assets, besides your technical and personal abilities are your name and your brand, and they become greatly polished with good recommendations and time. Building a brand comes with having great relationships with your clients. In the end of the day, we are all collaborating with other human beings and our success depends on how well we communicate and care about having good relations and not simply providing the work.
Once you have established a strong professional relationship with a client and you have a successful delivery, you can try to upsell them additional services. Offer maintenance and support services or customization of the software for their specific long-term needs. Be proactive, understand better, and research the business of your client, so you can propose features that might be favorable to them. By thinking long-term and investing the extra mile, you want to get to know their teams and their business and build strong partnerships. This, in turn, will make your recognizable and preferred partner for them and chances are they will get back to you next time they need such services again, without checking the competition.
Be open to adjusting your rates from client to client
Many freelancers have set rates they never deviate from. Knowing what you are worth is a fantastic thing, but it is also important to understand, that the value you provide to each client is always going to be different. The same goes for you – while some projects may be a piece of cake to deliver, others can be more challenging, giving you a chance to get new skills and expertise or learn different domains. Also, there are high-demanding projects and such, where it will be very easy for you to put the output wanted for an hour, instead of eight. Being price flexible helps when it comes to getting projects, negotiating following raises, assessing the projects in the initial stages, and padding your savings. If the project is easier than usual, and you have free time, consider taking gigs at slight rates. This will give you the flexibility to pick up another more challenging gig. It is important to have multiple projects running simultaneously to ensure that you have a steady flow of averaged income in a case with a lower-than-usual rate. Financial stability aside, some people prefer to have some laid-back tasks in a mix with harder ones, so they can effectively manage their brain load.
Network and market yourself
You need to constantly be out there. With greater freedom of choice in freelancing comes greater responsibility to find and secure your gigs. So reach out to other freelancers and entrepreneurs to see if there are any collaboration or referral work opportunities.
You can also consider joining a professional association or networking group, attending industry events, and building a strong online presence. This can help you reach new clients and expand your business.
A third way to go is having a trusted impresario, a matching platform, such as GigsRemote. In this case, you will enjoy sharing what clients and projects you like, what technologies and technical challenges you are looking for and a few other desires and someone else will be doing the matching for you. You will just await the right projects for you. You can also focus on delivery with each gig, knowing that the partner will be looking for your next gig as you work.
Diversify your client base and portfolio
Diversification doesn't only come with the number of gigs you have, but with the type of work, you do. Here are some tips that can help you bring more variety to your portfolio:
- Consider creating an online training course/workshop related to your technical expertise. This can be a great way to reach a wider audience and generate passive income.
- Think consultancy – if you have outstanding knowledge in a certain area from a project or multiple completed projects, maybe this is a repeatable consultancy you can do for clients. For example, setting up specific online shops for a niche industry.
- You could also explore compliance or optimization services. Reviewing the work of others. Especially in security domains and high-performance systems, this skill is very valuable. If you have built such systems, it could come naturally to you to analyze existing ones and comment on their optimization.
- Look for government or non-profit contracts. Usually, they have specific requirements and regulations, but they also tend to have a steady stream of work and can be a great source of income for freelancers.
- Another way to diversify your income is by building a product, such as an app or a tool, that you can sell to multiple clients. This is also a good addition to your portfolio.
- Spend time creating your online portfolio: add screenshots of the top-rated projects you have done and add a short straightforward description and key technologies. Ask people you have worked for to write reviews about the work you delivered and add them to your portfolio. Building an online portfolio with samples of your best products and testimonials from clients will not only attract clients but make them hire you.
Manage your finances
Last but not least – don’t forget to track your income. Learn how to separate your business expenses from your personal expenses. We all know we should be saving money. Ideally, you should be saving at least 20% of your freelance earnings for at least three months and use it to build your safety net. Once you achieve good level of income stability you will be able to turn down work you don’t want, and even start investing your savings.
As a freelancer, you may want to consider getting health insurance, disability insurance, and even liability insurance. It's also important to make sure you have the right coverage in case of accidents. Look for communities or platforms, where this is available at an optimized cost.
Consider using proper software for invoicing, bookkeeping, and doing all accounting and financial upkeeping. Here you can find a list of the best personal finance software including free and paid options to suit a variety of financial goals. Or hire an external company to do this for you. It is always best to focus on your core knowledge and activities.
Pro tip: Share financial wisdom and ask for it!
With freelancing, you belong to an enormous community of people who’ve decided to take their professional career development more hands-on. People who stand to be more engaged and professional overall. Who act like their own boss doing sales, accounting, delivery, and client relations in at once. One of the best ways to achieve financial stability would come from talking about it with peers. Be proactive in sharing your tips and ask others how they manage their finances. Learn from other’s others’ mistakes and apply their success.
If you want to hear more content on the topic, you can visit the Freelance Finance Fix podcast by Alex M. Lynch.
Remember that diversifying your income takes time and effort, but it's a worthwhile investment that can help you achieve financial stability and grow your business, especially in economically turbulent times.
Thinking of becoming a freelancer? Start your journey with GigsRemote here.