It's rare that freelancers talk openly about money preferring to keep our experiences to ourselves. I'm different. Here's how I grew my business to earn $10k per month within my first few months freelancing.
This article was originally posted over on danspratling.dev, where you can see more articles about going freelance and my career.
In the 3 months I've been working as a freelancer I've gone from working 1 week in a month to earning double the salary I made at my last job, and I wouldn't have been able to do that without understanding my value and taking the risk required to create a business on my own.
Disclaimer: My earnings and expenses WILL be different from yours, and many things can factor into these figures including experience, location, industry, and project type. Trends are far more important to understand than figures, so focus on that more than the actual monetary value. Figures are converted to USD for easiest comparisons but note that I am based in the UK so tax and other figures will reflect that.
How did I get here?
I started freelancing in July 2020. We were in the middle of a lockdown at the time, due to the Covid pandemic, and I was on the verge of being made redundant from my current firm. I'd been considering freelancing for a while, so I'd been doing my research and figuring out the best way to approach the change, which I've written about here.
For context, my salary before going freelance was £40,000 per year, which is around $53,000 (both numbers are before tax).
Breaking down my financials
Income
So far I've worked for 2 clients. One as a once-off project and one which is a continuing long-term relationship. For my first 2 months, I only worked for a single week, but for the third month, I worked most days which you can see in the graph below.
| Month | Income |
|---|---|
| July | $1,451.00 |
| August | $0 |
| September | $2,852.00 |
| October | $9,705.00 |
| November | $8,296.00 |
| --- | --- |
| Totals | $22,304.00 |
While these numbers look great, keep in mind that we're only looking at the good part. We still need to consider all of the expenses which come with running a business.
Tax & Insurance
As with all businesses, I am charged tax on my income. This means that I do not get to keep everything I earn. A good estimate is to keep 30% of your income aside to pay for tax and other government expenses. I like to be cautious so I actually save slightly more than that, as I will not know the amount to pay until the end of the tax year.
| Month | Income | Tax (est 30%) | Income after tax |
|---|---|---|---|
| July | $1,451.00 | $435.30 | $1,015.70 |
| August | $0 | $0 | $0 |
| September | $2,852.00 | $855.60 | $1,996.40 |
| October | $9,705.00 | $2,911.50 | $6,793.50 |
| November | $8,296.00 | $2,488.80 | $5,807.20 |
| --- | --- | --- | --- |
| Totals | $22,304.00 | $6,691.20 | $15,612.80 |
Business Expenses
Of course, no business is without expenses. Especially one starting from nothing. Most of the expenses incurred were "optional", by which I mean I did not need to purchase them immediately and as you can see, I waited until I had work (and therefore, income) lined up before buying the larger purchases. I could have delayed these purchases until I had more income if required, at the expense of some performance or ergonomics.
- July - Largest expense: Learning materials at $24
- August - Largest expense: Software Licenses at $131
- September - Largest expense: New laptop at $3315
- October - Largest expense: New desk/chair setup at $530 each
- November - Largest expense: Learning materials at $53
(All expenses have tax included in their price)
| Month | Income | Tax (est 30%) | Income after tax | Expenses | Income after expenses |
|---|---|---|---|---|---|
| July | $1,451.00 | $435.30 | $1,015.70 | $35.00 | $980.70 |
| August | $0 | 0 | 0 | $183.00 | -$183.00 |
| September | $2,852.00 | $855.60 | $1,996.40 | $3,513.00 | -$1,516.60 |
| October | $9,705.00 | $2,911.50 | $6,793.50 | $1,133.00 | $5,660.50 |
| November | $8,296.00 | $2,488.80 | $5,807.20 | $106.00 | $5,701.20 |
| --- | --- | --- | --- | --- | --- |
| Totals | $22,304.00 | $6,691.20 | $15,612.80 | $4,970.00 | $10,642.80 |
Of course, business expenses are not the only expenses to worry about when working for yourself. You also need to consider personal expenses - you need to buy food and pay rent after all. Just covering your business expenses isn't enough. Ensure you are earning enough to cover both your business and personal expenses.
On average, my personal expenses are around $1600 (£1200) per month so it's essential I earn more than this. Personal expenses are always something to consider when calculating how much your freelance business needs to earn, as you still need to earn enough to pay your bills and effectively pay yourself a wage. Below is a new graph, taking personal expenses into account.
| Month | Income | Tax (est 30%) | Income after tax | Expenses | Income after expenses | Income after personal Expenses |
|---|---|---|---|---|---|---|
| July | $1,451.00 | $435.30 | $1,015.70 | $35.00 | $980.70 | -$619.30 |
| August | $0 | $0 | $0 | $183.00 | -$183.00 | -$1,783.00 |
| September | $2,852.00 | $855.60 | $1,996.40 | $3,513.00 | -$1,516.60 | -$3,116.60 |
| October | $9,705.00 | $2,911.50 | $6,793.50 | $1,133.00 | $5,660.50 | $4,060.50 |
| November | $8,296.00 | $2,488.80 | $5,807.20 | $106.00 | $5,701.20 | $4,101.20 |
| --- | --- | --- | --- | --- | --- | --- |
| Totals | $22,304.00 | $6,691.20 | $15,612.80 | $4,970.00 | $10,642.80 | $2,642.80 |
Summary
These graphs may look like they are getting worse and worse, and over the course of 5 months, I've not made a lot of money considering how flashy "earning $10k in a month" sounds. I earned very little for the first 3 months due to the time and effort required just finding the work. These are only the first few months of freelancing, and this is why starting any business is hard, and it's always possible for there to be more periods where I don't have much work.
I needed to improve my setup and order some new equipment (an ergonomic chair, desk and a new laptop) which were a significant cost but could also have been delayed if necessary and did not have to be as expensive as the ones I chose. I could have opted for cheaper equipment or delayed the purchases if I was worried about the expenses. These are expenses which won't occur for another 3-5 years, however, so this upfront cost doesn't concern me.
With the major expenses now paid for, all further income can be used for future business growth and ensuring stability.
If you'd like to keep up to date you should follow me on Twitter where you'll be the first to see my newest blog posts (and more).
Top comments (13)
Thank you for sharing this, Dan. It's always helpful and illuminating to get a behind-the-scenes look into consultants' revenue and expenses. And congratulations on making this happen considering the difficult time we're in!
Thanks! It's rare that I see this sort of thing being shared so I wanted to help others out.
Loved the detailed breakdown of everything. It's always good to discover how consultants work in different countries and what issues do they have. And taxes... oh my... here in Russia, people are moaning that the 12% tax for consultants and freelancers is a pure robbery 😂
Thanks for the transparency.
To get some context, would you mind sharing a bit about your background? Work experience, education, etc.?
Sure! I had been working as a frontend developer for 4 years before going freelance - which will definitely contribute to the growth.
I worked exclusively on the frontend, integrating with many difference CMS and technologies including WordPress, CraftCMS, Kentico and stuff I'd practiced in my own time.
I now focus exclusively on headless technologies, providing the frontend for my clients. My preferred tools are react with Nextjs/Gatsby and tailwind but I'm flexible and can work to many different approaches.
Education-wise, I have a university degree but I don't even mention that to freelance clients. I wouldn't say it has been relevant since my second job.
Thanks, that puts it into perspective. I think freelancing can be a very attractive work model, but with sufficient experience.
As Jan said, thanks for the transparency. Eventhough there are things to consider as you have pointed out, your approach makes it look pretty achievable.
Thank you for the inspiration and for such a great piece!
Great work, it's really inspirational. I'm nowhere near your numbers as i also turned freelancing since the pandemic started.
I'm curious though how do you usually find and reach out to clients during lockdown ?
My presence on twitter has been extremely helpful and people there helped me find work, mostly through referrals which has been great!
This is interesting and I am now following you here (and on twitter) to see more what this is all about. Are you going to enter the #dohackathon here at dev.to? I completed my entry and would really be interested in your feedback on my UI design. If you get a chance, take a look and let me know what you think.
I love that you're willing to put your self out there to share this kind of information! Thank you for sharing! You're a real one!
It's only numbers, and it helps that I can use it to make the title a little more clickable. It's important that people have an understanding of the impact of expenses, and I'm always happy to use myself as an example! 😁
I wish it were that easy and straight-forward.