All right, everybody. Welcome back to Freelancer school. I am Mike Volkin. And today we’re going to be talking about a lot of last time that freelancers and consultants experience and that is doing discovery calls and proposals. Those obviously take time away from your day, those are not billable. And at least I don’t know of very many freelancers who charge for proposals, at least overview ones I charged before, I don’t do it on a regular basis, but I charge for creating proposals that are much more detailed. But at any rate, a discovery call if you’re not familiar, this is a I guess you could say an introduction call that you are interviewing
The prospect as well as they are interviewing you to see if it’s a good fit.
Of course you don’t charge for these you know, it’s an intro call, you can’t charge because you don’t really have the job yet. And they may be going on five or six other discovery calls from from freelancer. So the point of this podcast is how do you get money from that? How do you recuperate that kind of those kind of actions with not only discovery calls, but also building out quotes, scopes of work proposals, that kind of thing? Well, here’s what I do. And here’s what you should do as well do a little bit of math. What I want you to do if you don’t do this now is start to measure your conversion rates so for example, if you go on for calls if you know after the fact after you do these you know let’s just say you’ve you’ve measured 20 discovery calls and you know, that you close one in every four calls okay? Now discovery call if you’ve taken Freelancer masterclass shouldn’t last more than 30 minutes, all right. So if you go on for calls at 30 minutes each that is two hours of law.
work, but then you know from your conversions that you close one and every four on average, okay? You might close two in a row, then you might go eight without closing one, but it all averages out. So I want you to at least start off by measuring 20 to 25 discovery calls and seeing how many of those you close, okay, then you’ll have an idea of, you know, one and four, one and five, whatever. And then given that half an hour discovery call, you have in this case, lost income, because let’s say you charge $50 an hour, and you went on four calls at 30 minutes. So four times 30. That’s two hours, okay? And at $50 an hour, at two hours, that’s what 50 times two is 100. Right. So $100 in lost income, on average, for closing client. Now, how do you get that money back?
Well, you build into it, you build it into your quote, you should know that for every quote you send out to a client you need to bill in
an extra $100 because you know, it takes
For calls to close a client on average, so bill in an extra $100 that is if your rate is $50 an hour and you
have a 25% close rate one in four obviously if your bill rate is higher you should close you should build in more but also don’t forget there’s also all the other factors that are involved with marketing right there’s the proposal and the quote process that takes time as well. And also, if you’re running marketing funnels like I suggest in in in Freelancer masterclass, you have to build in the cost of the ads, you have to build in any, any time you spend marketing. And you also have to build in any time you spend on overhead like non non billable hours on your company, all that has to be built back to your client. And it doesn’t you don’t it’s you don’t have a line item on your on your invoice for discovery calls, but you build it into your hourly rate. So if you basically want to get $50 an hour out of your client, you should really be building 60 70%
$80 an hour to account for all those other activity. Does that make sense? So don’t just think that hey, because you charge $50 an hour as a freelancer or consultant that you’re going to be making $50 an hour. That’s not true. What I like to do is a very general rule of thumb, if you don’t want to go on 20, something discovery calls and do conversion as analysis and all this stuff, you want to save 25 to 30%
of your income for overhead stuff, overhead cost that I just described on this podcast. Okay? So if you’re charging $100 an hour, you should really be charging 125 to 130 to cover those costs, assuming you’re going to get to keep $100 out of that one. 121 30, whatever you want to charge. Okay, does that make sense? I hope it does. And that is the proper way to run a business and account for the expenses and to recoup those loss. Those lost hours. And have a great day. Thank you for joining us for freelancing school. Be sure to subscribe to get the latest updates on the show. Go to freelancing masterclass.com to become a master freelancer