Latest / Freelance Careers with Fexingo: Independent Work, Consulting, and Self-Employment / How a Freelance Consultant Raised Rates by Firing a Client
Transcript
- Lucas: So Luna, we are at episode one fifty of the show, and I want to do something a little different today. We've spent so many episodes on how to raise rates with frameworks, guarantees, waitlists, all that. But I keep coming back to a story a freelance web developer told me a few months back, and it's the exact opposite move. Luna: The opposite of raising rates? Like, lowering them? Lucas: No, the opposite of adding something. She fired a client. And her income went up eighteen percent within six months. Which, on the surface, makes no sense, because this client was paying her ninety-six thousand dollars a year on a retainer. Luna: Wait, she fired a ninety-six-grand client? That's a big chunk of her income. How does that possibly lead to making more? Lucas: Exactly what I asked her. And she walked me through the math, and it's so obvious once you see it. But I think it's a really useful lens for this episode, and I want to get into it. And hey, before we do, just a quick note. If this show has ever helped you think through a career move or a pricing decision, the reason we can keep doing this ad-free is because listeners like you chip in. If you've got a couple bucks, you can find us at buy me a coffee dot com slash fexingo, and that really keeps the lights on. Luna: Yeah, and it's such a small thing that makes a big difference for us, so thanks if you do. Now, back to this developer. What was the actual situation? Lucas: So she had this client, let's call him a mid-size e-commerce company. They paid her five hundred dollars an hour, which is a great rate, and they gave her a steady amount of work every month. But the work itself was a mess. The project owner would disappear for days, then come back with a list of changes that contradicted what they'd agreed on. She'd spend her weekends rebuilding the same pages, and every invoice came with a fight about whether the work was in scope. Luna: So high rate, but high pain. I've been there. The hourly rate is great, but the hours are awful. Lucas: Right. And she told me that she tracked her actual time. Not just the billable hours, but all the unbilled time: emails, calls, the mental load of dreading their messages. It added up to about twenty hours a week of real work, but only ten of those were billable. So her effective rate was really around two fifty an hour, which is still good, but not the five hundred she thought. Luna: So she was essentially paying a tax in unpaid hours. And that's before the stress tax. Lucas: Exactly. And she also noticed something else. Because this client took up so much of her mental space, she had stopped pitching new work. Her pipeline was empty, which meant she couldn't be selective. She was stuck with this one client because she felt she couldn't afford to lose them. That's the trap. Luna: Yeah, it's a classic scarcity mindset. So what made her finally pull the trigger? Lucas: A single week. She had a project with them that required a specific integration, and the client kept changing the requirements. On Thursday, they asked for a feature that contradicted the original spec, then on Friday they said they never asked for it. She spent the weekend redoing the work, and on Monday morning they asked why it wasn't done yet. Luna: Oh, that's the kind of week that makes you want to quit. Did she just send the termination email right then? Lucas: She did, but not in a fit of rage. She slept on it, wrote a very professional email that said she was restructuring her practice and could no longer accommodate their engagement. She gave them a sixty-day notice, offered to help transition to another developer, and even gave them a list of three vetted freelancers. Luna: That's the professional way to do it. I've seen people just ghost clients, and that burns bridges. Did the client try to keep her? Lucas: They did. They offered to raise her rate to six hundred an hour and promised to improve communication. But she turned it down, because she realized that the money wasn't the problem. The problem was the unpredictability and the lack of respect for her time. Luna: That's a really mature call. So she's out the income, but what happened next? Lucas: She took a month off. Not from work, but from client work. She spent that time building a simple landing page that showcased her recent projects, and she reached out to a few former colleagues who had moved to other companies. Within six weeks, she had two new clients, both on a monthly retainer, paying a combined ninety-seven thousand a year. But here's the kicker: the total hours she works now are about the same as the billable hours she had with the old client. Luna: So she's making more money per hour and actually working less? That's the dream. But wait, how did she find clients who pay well and aren't psychos? Lucas: She was able to be selective because she wasn't desperate. She had a runway of a few months of savings, and she used that to interview potential clients. She asked them about their project management style, how they handle scope changes, and whether they have a single point of contact. She also required a paid discovery phase, which is something we've talked about before, but it also serves as a filter. Luna: The paid discovery phase is a great filter. If they don't want to invest in the discovery, they're going to be a pain later. So what was the actual math at the end of the year? Lucas: She tracked everything. In the twelve months before firing the client, her effective hourly rate across all work, including unpaid time, was two hundred and seventy dollars. In the twelve months after, it was four hundred and ten dollars. And her total revenue actually went up by eighteen percent, because the new clients paid better and she had time to take on a couple of short-term projects that were highly profitable. Luna: So the real lesson isn't just to fire bad clients, but to measure your true hourly rate. Most freelancers only think about their billed rate, not the actual rate after all the hidden work. Lucas: Exactly. And that's a framework we can all use. Track every hour you spend on a client, including reading emails, thinking about the project, and the time you spend stressing about it. Then divide your total revenue from that client by those hours. That's your real rate. If that number is lower than what you could earn elsewhere, that client is costing you money. Luna: I love that. And it's a nice way to think about rate raising, because you're not just raising the number, you're raising the quality of your time. So for anyone listening, what's a practical first step? Lucas: Take a piece of paper and list your top three clients. For each one, estimate the total hours you actually spend, including all the invisible stuff. Then divide their annual revenue by that number. If the rate is less than your target, that's a red flag. And if it's really low, maybe it's time to think about whether you can afford to let them go. Luna: And if you can't afford to let them go just yet, maybe you can use that analysis to renegotiate. Like, 'Look, I'm spending twenty hours a week on your account, and my effective rate is two fifty. I need to raise my hourly rate to four hundred to make this work.' Lucas: That's a great point. Sometimes clients don't realize how much of your time they're eating up. And if you present the numbers, they might be willing to pay more. But if they're not, then you have a clearer picture of what you're choosing to put up with. Luna: So, firing a client isn't just about removing a headache. It's about creating space for better opportunities. And that's a powerful way to raise your rates. Lucas: Exactly. And it's a mindset shift. When you're full, you can't take on new work. When you clear out the bottom, the top has room to rise. Luna: That's a great place to leave it for episode one fifty. Thanks for joining us, and we'll see you next time. Lucas: Yeah, take care, and be curious about your numbers.