Latest / Freelance Careers with Fexingo: Independent Work, Consulting, and Self-Employment / How Freelancers Win by Walking Away From Bad Clients
Transcript
- Lucas: There's a freelance copywriter I've been following named Jenna. She came to me with a story I think a lot of freelancers will recognize. She had one client, a mid-size SaaS company, that accounted for about 40 percent of her monthly revenue — steady work, always something new to write. Luna: And that sounds like a dream, right? A retainer that big, consistent cash flow. Lucas: Exactly. But here's the thing — that client was also the reason she couldn't raise her rates. Every time she tried to bump from $50 an hour, they pushed back hard. They'd say things like 'we're a long-term partner, we expect loyalty pricing.' And she bought it, for two years. Luna: Two years at $50 an hour? In today's market, that's low for a good copywriter. Lucas: It's below market. And she knew it. But she was scared to lose that 40 percent. So she stayed. Then something snapped — she realized the client wasn't just paying below market, they were costing her more than $50 an hour in hidden ways. Luna: Hidden costs. That's the part I think a lot of freelancers ignore. What did she find? Lucas: She started tracking every single interaction. Not just billable hours, but the time spent on emails, on status calls that ran long, on revisions beyond the agreed scope. She calculated what she calls her 'bad client tax' — the hours she spent that she never billed. For this client, it was about 8 hours a month. That's $400 a month she was essentially giving away. Luna: And that's just the direct time. What about the opportunity cost of not being able to take better work? Lucas: That's where the math gets really painful. She realized that because this client tied up so much of her capacity — she was booked solid — she couldn't take on a new client who would pay $100 an hour. So the real cost wasn't just the $400 in unbilled time, it was the $800 to $1,000 in revenue she was passing up each month. Luna: So she's losing money by keeping the client. That's a powerful reframe. Lucas: She finally did it. She gave them a 60-day notice and let them go. And within three months, she had replaced that income with two clients paying $85 and $90 an hour. Within six months, she was at $125 an hour with a boutique agency. Luna: And her total revenue? Did it drop initially? Lucas: It actually dipped only one month. By the end of the year, her revenue went from $70,000 to $92,000. And she was working fewer hours. That's the leverage — when you cut the dead weight, you create space for better clients. Luna: I love that. And this is something we've touched on before — the idea that your worst client is often the one you're most afraid to lose. But I'd love to hear the specific signals. How do you know a client is costing you more than they're paying? Lucas: There are three big red flags I've seen in my own consulting work and in stories like Jenna's. First: the revision loop. If a client routinely asks for three or four rounds of edits on work that was clearly scoped, that's a sign they don't respect your process. Luna: And they're not paying for those extra rounds, right? It's just expected. Lucas: Exactly. The second flag is late payment. If a client consistently pays 30, 45, 60 days late, that's costing you time chasing them and potentially interest on your own bills. For Jenna, that client averaged 45 days late. Luna: That's brutal. Especially when you're billing hourly and relying on that cash flow. Lucas: Third flag: scope creep that never gets compensated. The client asks for 'one more quick thing' and it turns into a full day's work. And you say yes because you're afraid to rock the boat. Luna: So what's the framework for calculating that bad client tax? Give us the steps. Lucas: Sure. Step one: track every hour you spend on that client, including non-billable time — emails, calls, revisions, chasing payments. Do this for one month. Step two: subtract the total hours you actually billed from that total. That's your hidden time cost. Multiply by your effective hourly rate to get the dollar amount. Luna: And step three? The opportunity cost. Lucas: Step three: estimate the hourly rate you could get from a new client. Subtract your current rate, multiply by the hours you spent on this client, and that's your opportunity cost. Add it to the hidden time cost. That's your bad client tax per month. Luna: And if that number is positive — meaning it's costing you more than they're paying — it's time to have a conversation or walk away. Lucas: Exactly. And look, I know walking away is scary. But Jenna's story shows that the upside is real. She went from feeling stuck to earning more with less stress. Luna: We actually hear from listeners who've done similar things. And it's a big part of why we keep making episodes like this. If you've gotten value from the show, a few listeners chip in monthly through Buy Me a Coffee at buy me a coffee dot com slash fexingo. It's ad-free, listener-supported, and that support directly funds us diving into stories like Jenna's. Lucas: Yeah, it's a small group that keeps the lights on, and we're grateful. So if that's you, thank you. And if you're curious, it's buy me a coffee dot com slash fexingo. Now, back to the signals — there's one more that Jenna identified that I think is subtle but important. Luna: What's that? Lucas: The emotional drain. After a call with this client, she'd feel anxious, frustrated, like her work wasn't good enough. That stress spilled into her other projects. She started measuring her energy level before and after client interactions. It sounds a little woo-woo, but it's a real cost. Luna: I don't think it's woo-woo at all. If you're dreading client work, you're not going to do your best. And that hurts your reputation with good clients. Lucas: Exactly. So she started asking herself: 'Does this client energize me or drain me?' That simple question helped her see the pattern. And once she let that client go, she had more creative energy for the clients who appreciated her. Luna: So for freelancers listening, what's the first step? Should they calculate the tax first, or just start noticing the emotional signs? Lucas: I'd say start with the tracking. It's concrete and gives you data. But also pay attention to how you feel after interactions. The combination of data and intuition is powerful. Luna: And when you do decide to fire a client, how do you do it professionally? Jenna gave 60 days notice, but is that always the right move? Lucas: It depends on your relationship and your financial buffer. Jenna chose 60 days because she had some savings and wanted to transition smoothly. But some freelancers give 30 days, or even two weeks if the client is toxic. The key is to be clear, professional, and not burn bridges. You can say something like, 'I'm restructuring my practice to focus on projects that align more closely with my expertise.' It's honest without being confrontational. Luna: And what about the fear of losing that income? How do you handle the gap while you find new clients? Lucas: That's the hardest part. Jenna started prospecting before she gave notice. She had two new clients lined up by the time she let the old one go. So the key is to start building your pipeline while you still have the income. Even one new client at a higher rate can replace a lot of low-paying work. Luna: It's a reminder that your time is your most valuable asset. And keeping a bad client is like keeping a broken tool in your toolbox — it takes up space and weighs you down. Lucas: Well said. So to sum up: track your hidden time, calculate the bad client tax, and don't be afraid to walk away. The data will show you that it's often the best financial move you can make. Luna: And if you have a story about firing a client or raising rates, we'd love to hear it. You can find us at the show's website. For now, thanks for listening. Lucas: Thanks, Luna. And to our listeners — go track that tax. You might be surprised at what you find.