I was fine with not having the work because I obeyed the first rule of freelance work – always quote your rate so you are satisfied no matter if you get the work or not. This is a great rule which hasn’t failed me yet when freelancing. It helps keep my rates fair.

This guy is not technical and doesn’t know programming. This situation identifies the single biggest problem programmers have working for non-technical people – they can’t extract value from a rate.

It is well known amongst programmers that there is a 10x difference in productivity between the best and worst programmer. I’m definitely not the best, but I consider myself fairly competent. To toot my own horn, one time I was trying to solve a bug with the help of another colleague. While I was showing him the bug, I identified another bug and fixed it up within minutes. Later he told me that the bug I quickly fixed had been assigned to a senior developer who had been trying to solve it for nearly two days!

Unfortunately, non-technical managers do not understand programmer productivity. My 2X rate as a freelancer actually works out to X as an employee. Let me explain.

As an employee, there is a lot of inefficiency in going to work at an office for 8 hours per day. In fact, out of an 8 hour day, I think most people only get about 4 hours of productive work done by the time meetings, interruptions, tiredness and breaks are factored in. Charging 2X as a freelancer actually works out to the same deal, if not better. As a freelancer, I have control over my work environment and would be working only when I felt like working which makes me more productive. I can work when and how I want rather than being constricted by a set time and space. If I am tired, I stop work, take a nap and then start again afterwards feeling refreshed.

Some programmers are simply just better as a result of their effort and experience. For example, a friend of mine has paid someone $100/hr for some tasks. He tells me he pays this because the guy gets things done much quicker than somebody else. If he were to hire someone at $15/hr, the guy might take 15-20 hours to do what this guy can do in one hour. The savings justify the high rate. Expensive is cheaper.

To non-programmers, it is really tough to believe that someone could be that much more productive but it’s true. A bad programmer can actually be negatively productive and push back progress. If you were building a house, a bad programmer would be the equivalent of someone coming in and knocking down a few walls when the house was almost complete. Bad programmers will introduce bugs and write hard-to-read code that will force someone else to spend time correcting it.

I don’t blame non-technical managers for not knowing this stuff. They haven’t programmed before so the only way they could know this is by reading about managing programmers, which not many seem to do. However, if a manager was that ambitious, they would probably have already picked up a little programming knowledge.

To all non-technical managers: learn about how software is produced and what makes a good programmer productive. The effort you put in will make good programmers want to work for you and it will help save you time, money and frustration.

It was a very interesting way of using technology to your advantage. Marketers always want to hit that price point where price x customers will provide the most revenue. This company was able to leverage technology to help them do that. It’s just another way in which the web can help your business in ways that can’t be done offline.

This is a post about another pricing strategy.

Recently I signed up for Safari Books Online. On their subscription page, they offer two choices – the unlimited Library at $42.99/month or the limited access bookshelf at $22.99/month.

I can read up to 10 books per month for $22.99. Being this is about half the price of a technical book, I thought it was a good deal and signed up.

Today I received an email with special holiday pricing. Sign up by the end of December and I could receive access to the Full Library for just $29.99 per month. Since it was just a little more, I checked it out to see if it was worth it.

When I came to the Change Subscription page, this is what I saw:

Notice anything different?

Now, they have a third option – the 5-slot Bookshelf for only $9.99/month. I imagine this option is for people who are considering cancelling their account. It is a way for them to keep their business by offering a reduced price for reduced services.

In my case though, their plan backfired. I was happily paying $22.99/month but since 5 books a month is plenty for me, I reduced my subscription.

In summary: Because of a marketing effort to get me to upgrade, I actually downgraded my account. I suppose the lesson is to be careful with pricing. It’s good to make an effort to keep customers but you don’t want happy customers paying less than they would have otherwise.

No. You already run a business, and that business is You, Inc.

No matter if you are an employee or employer, you are operating a business. Each month you have revenue (income) and expenses. You have a balance sheet (whether you realise it or not). You have at least one customer. Sounds like a business.

One of the best realisations I have had in my career is that I am not an employee, I am a business of one. As an employee, I choose to provide my services to one client. As a business, it is quite risky to have just one client. However, if you choose to do so, you need to be aware of the pros and cons.

Thinking as owner of You, Inc. puts me in a different mindset than if I consider myself an employee. As an employee, the company is in control of the work I do. As a business owner, I am in control. It helps me question things like: Is this the kind of business I want to be in? Am I providing good value? Will my clients want to work with me again?

When you start thinking of yourself as You, Inc., different questions start to come up? Am I running my business well? Am I investing in the future of my business? How can I grow? Is it smart having only one client? What are the goals for my business?

It is important to run your business well because how you run You, Inc. today is the way you will run a “traditional” business. If you do not communicate well with your client now, then you will not communicate well with clients in the future. If you are running a loss every month, you will do the same with your business. Does You, Inc. operate with little or no debt? It is important to get You, Inc. running smoothly before moving onto bigger things otherwise you won’t be able to handle them.

A year after winning the lottery, most winners say they wish they had never won. Generally, life only lets you move on to the next step when you are ready. If you jump too far ahead, such as in the case of lottery winners, it usually causes too much hardship.

To run You, Inc. successfully, copy what successful businesses do. Just do it on a lower scale.

Good businesses spend money on sales and marketing.
Good businesses do not rest on their past. They are constantly investing in development of new products (skills).
Good businesses demonstrate values and try their best to live up to them.
Good businesses reward those who help them.
Good businesses treat others fairly and courteously.

To shift your mindset, spend a little time each day thinking about your business. If you were in control, what are some things you would do differently? Then realise that you are in control.