Do you work without a freelance contract? If so, did you know that you could be complicating your success as a freelancer?
As of 2014, 40% of freelancers in the United States worked as independent contractors. By 2020, more than 60 million people in the United States will freelance.
One thing is certain with the growing number of freelancers in the United States. As more people freelance, more will need to learn about the importance of contracts.
The surge in freelancing also means that contracting mistakes will become more commonplace.
And these mistakes could cost American freelancers hundreds of thousands in lost revenue. Not to mention, countless numbers of lost hours and missed opportunities.
Writing a solid and error-proof freelance contract is the first step towards success. Stop making these 9 costly mistakes and get your freelancing career back on the right track!
Mistake #1: Failing to Set Your Pay Rate
In the beginning, many new freelancers are eager to work. And they’ll settle for any rate on a word-of-mouth basis – no matter how poor the pay rate is.
Because new freelancers are happy to work and live their dream, they’ll work for pennies. And unfortunately, there are a lot of people out there who prey on those who don’t understand their worth.
Eventually, the blind eagerness of new freelancers causes many to crash and burn. Whether new or experienced, it’s important to understand how to charge for your work.
With that in mind, you should never forget to establish your pay rate in your freelance contract.
Will you charge…?:
- An hourly rate?
- Per word?
- A fixed rate per completed project?
You can always try different projects until you decide on your preferred pay rate system. For instance, you can try an hourly rate for one project, and a fixed rate for another.
Mistake #2: Forgetting to Invoice
We’ve discussed the importance of setting your pay rate. Now it’s time to discuss something else within the same realm.
When setting your pay rate, make sure the client understands:
- Payment method (PayPal, personal check, other e-wallets, etc.)
- Down payments, payment schedules, grace periods, & late fees
With this information, clients can’t dispute nor withhold payments.
Include their billing address in the freelance contract. Should they change addresses, they must notify you, or late fees will apply.
Next, clarify and sign off that you’ll send invoices on time. You can also describe an invoice schedule to coincide with your payment schedule.
Invoices must include:
- Date and identification number of the invoice
- Your name (or company name)
- Your address and contact information
- Client’s name, address, & contact information
- Description of your services & what you’re charging for
- Amount charged & owed
Invoices are important for both your record and the clients’. Don’t make the mistake of skipping out on your invoices. You could encounter a slew of accounting and taxing problems in the future.
Mistake #3: Working Without a Deadline
Requesting for a deadline seems too obvious to forget. After all, you want to know how long you have to work on a project. Plus, clients are usually pretty clear about when they expect to receive their work.
But forgetting to set a deadline on a freelance contract is a common rookie mistake. And forgetting to can lead to a few problems down the road.
For one thing, a deadline prevents you from procrastinating and failing to deliver. It also protects you should the client fail to return feedback and information.
Establishing deadlines also helps you to plan better. When your deadlines are clear and set in stone, you can plan around them and finish other projects. It also prevents you from piling a deadline on top of another one.
For the sake of your reputation (and sanity), always set a deadline in every freelance contract. If it helps, keep a calendar and write in your deadlines accordingly with a bold color so you won’t overlook them.
Mistake #4: No SPOC Clause (Single Point of Contact)
Have you ever juggled feedback and revisions from two or more people on the same project?
If you have, you know how downright frustrating this can be.
SPOC stands for Single Point of Contact. The SPOC is the person you communicate with about a project. This individual communicates all feedback, revision requests, and approvals to you.
With a SPOC, you won’t have to worry about juggling conflicting demands and requests.
Without a SPOC, different people can have you changing ideas around. They can even have you restarting projects from scratch!
As a freelancer, your time is valuable. You can’t afford to redo a project a second or third time. Your other work will suffer, and so will your work-life balance.
Establishing a SPOC on every freelance contract will keep you focused and organized. Plus, it’ll make your life a lot less confusing and hectic!
Mistake #5: Underestimating the “Scope Creep”
If you haven’t already encountered one, you’re bound to. Beware!
A “Scope Creep” refers to a client who extends the scope of a project by adding more work. They pile revision upon revision. They’ll throw in requirements that weren’t mentioned before, even after paying you.
Ideas change and new visions happen. Clients see new opportunities to optimize your finished product.
And it’s OK… So long as they compensate you for the extra work you do.
The client must acknowledge that you reserve the right to adjust your pay rate. Make sure the client signs off on this in the freelance contract!
Without a clause that will protect you from scoping, you can end up working a lot of unpaid time.
Mistake #6: Forgetting a Revision Clause
With the ever-dreaded “Scope Creep” in mind, we should address something else like it.
At some point in your freelance career, you’re going to encounter a stubborn client. Possibly more than one!
This client will relentlessly send back revision after revision. Until your work is perfect in their eyes, you won’t see the light at the end of the project.
To set boundaries between you and the client’s demands, establish a revision clause. A revision clause outlines the number of edits and revisions you’ll do at no extra cost.
The client will have to pay after exceeding the allowance of free revisions. This keeps them in check and keeps their demands at bay. But it also protects you from doing extra (unpaid) work!
Mistake #7: Disregarding Copyright & Intellectual Property
A lot of new freelancers starting out think they’re jump-starting their portfolios. When you get your first gig, it finally feels like, “This is it. I’m freelancing, making my own work, and I’m getting paid for it.”
For certain freelancers, like writers, programmers, and photographers, it’s not always so simple.
Clients buy the copyrights of completed work after paying you. After receiving payment, you can’t claim that the finished product is yours. It also means you cannot sell the work anywhere else.
If a client fails to pay you or adhere to the terms of your contract, you own the work. That includes copyright and intellectual property rights to the work.
To protect both you and the client, spell out the copyright terms in your freelance contract. Include:
- The client’s intended use for the work
- Where the work can be used and displayed
- The duration of the client’s ownership
- Other rights transferred to the client
When starting off as a freelancer, it’s likely that you’ll have to hand over the rights to most of your work.
Unfortunately, this is how a lot of new freelancers get started. It’s not always fun, but never fear – you can show for the work you’ve done!
When starting out as a freelancer, talk to your clients. Many of them will be happy to offer future recommendations and referrals!
Mistake #8: Skipping the Cancellation Fee
There’s nothing more disappointing than starting a project to have it cut short before you can see the end of it.
Sometimes as a freelancer, you’ll have clients who bail on projects. To make matters worse, sometimes clients bail when you’ve already started working.
Yet, you can protect yourself in these situations.
By setting a cancellation fee, you can ensure that you’re paid for the work you put in.
What that cancellation fee amounts to depends on the freelancer. Some charge for the hours they clocked in. Others charge 25-50% of the fixed, final rate.
It’s important to talk about why this is important to you in the freelance contract. Explain to the client – in writing – that in the case of a project cancellation, your other work suffers as a result.
It’s only fair that you’re compensated for the time and energy you put in. It’s not fair to waste your time when you could’ve focused on other work.
Mistake #9: Not Signing the Freelance Contract
Last, but not least: Don’t forget to sign the freelance contract!
Why on earth would a freelancer forget to sign the contract that binds him to a project and client?
It’s not always that freelancers forget to sign their contracts. It’s that freelancers assume all will go smoothly and that there’s no reason for the contract.
Freelancers also get intimidated by negotiation. They’re scared to delve into the legal aspects of their work. So they shy away from contracts altogether.
No matter how trustworthy a client seems, you should always assume that things could go wrong. That’s where a contract protects you (as well as the client).
Avoid disputes and drawn-out legal battles. Get everything in writing – and make sure both you and your clients sign off on everything!
Avoid These Mistakes in Your Freelance Contracts!
Mistakes in your freelance contracts can cost you thousands of dollars and lost time. As a freelancer, you can’t afford to lose time and money over contract mistakes.
To learn more about other common mistakes that freelancers make, search this blog. Want to share your experiences and hard lessons learned as a freelancer? Leave us a comment!