Cashflow Spreadsheet for Freelancers
Managing cashflow is necessary for any business, but it's especially important for freelancers. Doing most…
If you’ve worked on oDesk very long (or if you’re new to oDesk), you quickly realize that there are two basic models for engaging with clients. In my experience, the models are:
1. High volume, low margin – lots of little jobs, lots of different clients, lots of prospecting
2. Low volume, high margin – fewer clients and higher-paying hourly work
In this article, we’ll take a look at each and determine which model is the best for growing your online business.
Many people are quickly turned off by their first impression of oDesk or Elance. This is because the majority of jobs on oDesk are what I consider to be “high volume, low margin.”
Here’s a perfect example:
Other examples might include:
As you might imagine, it’s challenging to make any money on these types of opportunities. Unfortunately, many people take on these types of jobs – and then quickly get burnt out. How many $10 transcriptions can you write before you give up (especially if the client asks for five rounds of revisions)? Exactly, that’s my point.
To be successful with this model, you probably need to have an army of low-cost subcontractors to do most of the work (assuming you can sign off on the quality). Or, conversely you could do the work yourself, break even for a while, and hope that you’re able to eventually expand into higher margin opportunities. Honestly, it takes a special person to pull this off. Many contractors get tempted by the apparent ease of a $50 project, only to later learn that things are too good to be true.
In my experience, the types of companies that post lower margin jobs are:
As I discuss in my book Executive in Sweatpants, I did try a few of the high volume, low margin jobs – with mixed results. I quickly learned that it is probably better to spend time filtering out the lower margin jobs and going for the higher-paying hourly opportunities.
For example, these types of jobs might include:
Clients who offer these types of opportunities tend to be:
Now, of course, the magic trick is to effectively impress (and win) prospective clients who offer high margin jobs. How do you do this? Stay tuned for more tips.