Passive income for web designers and developers. Photo by borman818.

If you’re a freelance or self-employed web designer or developer you know all too well about the ups and downs of cash flow.  You’ll also know that the concept of passive income in our field is not one that many of us web workers entertain or know much about.  So here’s what I can share with you on the subject of creating and profiting from a passive income as a web geek … and hopefully give you an insight into how you can smooth out the peaks and valleys of your cash flow in a way that can truly change your life.

Passive model income for webs designer and developers

Next time you get a web design and development project consider this.  Instead of charging $X for the project, doing the work, getting paid and that being the end of the deal, you can try this approach which I use frequently:  Rather than your regular fee of $X, charge a discounted fee of $Y for the design and development of the site. Then charge $Z per month for the following:

• High speed hosting
• X number of email accounts
• Spam filtering
• Database backup (if Wordpress or Joomla etc. powered site)
• HTML/CSS backup (site backup)
• Security update (if Wordpress or Joomla etc. powered site)
• One hour phone training (if Wordpress or Joomla etc. powered site)

See where I’m going with this?  Your clients want all the above, immediately the high speed hosting and email (because every site owner needs this) and they also want to feel like they have everything being taken care of with the security updates and data backup.

Why this approach rocks

• Your client gets the site (or blog) they want
• They get their site or blog at a discounted rate (“Normally $X, get this package for $Y”)
• You get $Z every month to keep the site live, backed up and updated (Wordpress and other platforms update regularly with core upgrades and security fixes). I charge a minimum of $47 a month for this.
• If you hate hosting (like I do) then team up with a hosting provider who can do the hosting and provide hosting support. This is important to me because if I had to reset a password or answer another “I how do I set up my Outlook?” I would lose my shit. I’d rather pay $7 to $9 a month and get a hosting company to deal with it since that’s their core bizzo anyways.

Risk reversal

Clients love this model because they get into a great looking site for less (you are discounting the upfront design and development fee remember?) and you should love this because you will recoup that discount (and more) in the long run with the monthly fee.  The lower upfront cost is a great risk reversal and means more clients will take you up on the offer.  Just make sure you make it clear that they must host the site with you (or your chosen hosting partner) in order to take advantage of this offer.

Be aware of new businesses

You can safely offer this kind of package to an established business.  Reason being that anyone who been in business for four plus years is probably going to be around for years to come. However, given the failure rate of new businesses, you might want to consider traditional pricing and fee models with these clients. New businesses are by default just riskier to deal with.

Quick math

As stated, I charge a minimum of $47 a month and up to $135 per month for these kinds of packages with the pricing depending on the client.  For small, local business they get the $47 package.  $9 goes to hosting, the rest is for me and is (mostly) passive income.  It’s still a great deal for them and for me. Multiply that $47 by 20 sites and you’ve got a good recurring income predominantly on auto-pilot and a ton of happy clients who have killer sites, email and the knowledge that their site and database is being backed up and safe should hard drives crash, fires break out or hackers mess with their site.  Total win win equation.

Give more value and get more passive dollars

For more passive income, you can learn (or outsource) some basic SEO and bolt on a simple SEO package to the above.  Most local small businesses operate in markets that are easy to snipe for the keywords they want. It really isn’t all that hard to get a site to rank #1 for “carpet cleaning  [suburb] [city]” or “[city] [suburb] electrician” etc.  I do entry level SEO packages f0r $447 setup and $57 a month recurring.  And again, clients love them because they get their sites to the top of the search engines and actually start hearing their phone ring more often with calls of “I found you on Google, do you guys …  [clean carpets, deliver Chinese food, unplug drains or whatever]?” If you really want the business, you can naturally offer discounts on whatever your standard rates are to close more deals.

Summed up

OK so admittedly these aren’t totally passive models if you are doing the Wordpress and plugin updates yourself (you can outsource that too) but they are pretty darn close.  The time is takes to update Wordpress and a handful plugins for a client every now and then is minimal. And again, you are giving your clients great value with a discounted fee on design and development and chances are you will have them as a long term client who will be with you – and paying you every month – for years to come.

Given the interest in this subject I am writing a thorough guide on this subject which I will be adding to the Elite Freelancing Method in the next few months.  Hopefully this will help some of you struggling to take your businesses to the next level with some steady cash flow.

Photo by lefthand.

Recession got you bummed? Fear not, there is much you can do.

I’m no economist, but it seems only natural that markets should correct themselves (level off and perhaps retract) after consecutive years of positive domestic and global growth. In any case, the situation is what it is. So what’s a freelancer to do amidst leaner and tougher economic times? The answer is: Be even more valuable to your clients.

If you’ve been freelancing for any length of time, you’ll know that your cash flow probably looks like a volatile stock chart; spiking up and down, up and down. The nature of our game is one day we’re so busy we can barely keep up, the next it’s so quiet we can hear the wind whistling through the trees.

Working on retainer is one way to smooth out cash flow volatility, yet during a recession, it’s even more important to focus on providing added value to your client base and help keep your income stream healthy.

This isn’t about being some flakey networker that spams clients with fluff, it’s about doing your best to provide your clients with some real benefit from knowing you. The more genuinely valuable you are to your client base, the better off you’ll be.

Now, I know customer service is something many freelancers aren’t fond of, but listen; when it comes to your clients, you want to be at the forefront of their minds, always. Lets take a look at some techniques that allow you to quickly and easily stay on their radar … and add value where possible.

Ping your clients

The no-brainer way is with a quick e-mail ping.

“Hello Dave, Checking in to see how everything is going and whether I can help you with anything?”

Article of interest

While you are cruising the web, take note if you spot something that might be of value to a client.

“Hello Dave, I came across this article on potential new regulations that could affect your entire industry and thought it might be of interest to you.”

Add a link to the article. The more relevant the it is, the better.

Refer and introduce

Check your client base and see who might benefit who then make some quick introductions.

“Hello Dave, I’d thought I would take a moment to introduce you a client of mine, John Citizen. John runs Crazy Potato Studios and has a great team of SEO experts that I think would be of benefit to you.  John, Dave works over at Better Buggy Whips Inc. and can service all your buggy whip needs.  I’ll let you guys connect and take it from here.”

Naturally it’s preferable to connect two people whose offerings compliment each other but one beneficial “introducee” will do.

Error check client websites and update

Take a moment to scan client web sites for errors.  A good technique here is bug hunting for breaks in that ultimate nightmare of all professional web developers; Internet Explorer.  Cruise around your client’s websites and spot breaks and errors then notify them about it.

“Hey Dave, I was doing some quality control on your site today and found that X was breaking on page Y in Internet Explorer 7 on Windows XP.  Give me a shout if you want me to fix it for you.”

Offer a little free time

Ping select clients with a “Limited Time Offer” of free time (your time, that is).  For example:

“Hello Dave, A quick note to let you know that as a valued client of mine, I am extending 2 hours of my time to you for free to use as you wish.  There are some conditions for this free time which are as follows:  You can use this free time towards any of my services.  This offer of free time expires exactly two weeks from today. My recommendation is to use that time taking care of X but again, you are free to use this time any way you wish.”

This generates a ton of goodwill and you’ll find that more often than not your client will end up spending more than the hour or two you give away for free.

Wrappin’ it up

Ok so now you’ve got a few techniques you can roll out when the urge arises.  Remember, be of value to your clients and you’ll always stay busy and well paid.  If you have some techniques you use during slow times, let’s hear ‘em!

Job data by Simply Hired

Average salaries in web design and development for September, 2008.

What surprised me the most was that flash design and development jobs have a lower average than general web design and development positions. I’d always assumed that the niche skill set of working with Flash paid better, not worse.

Also interesting is that along with user interface developers, project managers are pretty much the highest paid position.  Not surprising given that the average PM needs to be able to understand (and speak) fluent Geekanese with developers and then translate that into a language that the average client can understand.

The data & money.

In a nutshell, what this data tells us is that vanilla web designers are worth the least.  Along with project managers, peeps that can design and code user interfaces are worth the most.  Naturally full time jobs pay less per hour than freelance and contract jobs but there are trade offs galore. Full time people generally have to sucker it through traffic, work nine to five, go to meetings, get paid vacation time etc.  Freelancers march to the beat of their own drum and likewise incur benefits and disadvantages of their own.

Me & my goals.

I had modest goals for my life as a freelancer. I wanted to work a light work week so I could have more free time to spend as I wish. Also important to me was working from home so that I could nix having to commute. And lastly, I wanted to make above average income.

It took me a little while to work out how to achieve these things goals but with persistent trial and error, I got there. In my last year as a full time freelancer (2006) I made about $90k working approximately 25 hours a week.  I’m (by far) not the best web designer around so I figured I was doing something right.  I subsequently wrote The Elite Freelancing Method to teach people the same techniques and best practices I used to reach my goals.

What about you?

Are you making above or below average? Would you like to be making more? Have you struck a good work/life balance?  If so, what are some of the most effective strategies you have implemented to make it all happen … or what are some of the main challenges impeding you?  Lets hear it in the comments.