Independent Consulting Internet Services – The Good, The Bad, and The Ugly

© cirquedesprit -
© cirquedesprit –

It is easier than ever to be self-employed, and it comes with numerous risks and benefits. Health insurance has been made accessible in the last few years (thank you Obamacare!), and the internet makes many previously expensive tools and resources affordable or free. One web-based service is in the form of online platforms that are designed to
link independent consultants and freelancers with potential clients and employers.

Some, like Flexjobs, target non-traditional work arrangements focused on telecommuting, part time and contract work, and temporary work. Project seekers can search the database and then apply in a more traditional fashion.

Others, like Elance and Guru, set up a virtual marketplace where companies or individuals can post projects and open them for proposals and bids from freelancers.

For those of us who are freelancers and independent consultants, this is a potentially powerful tool to connect with potential clients and customers around the world.

But, and this is a big but, these services seem to run a significant risk of diminishing and deflating the value of our skills and expertise as experienced professionals.

For example, I’ve seen a number of postings seeking experienced grant writers, with a published hourly rate of $10-15/hour. Experienced grant writers charge anywhere from $50/hour to $150/hour and up, and are worth their weight in gold.

These services do need to make money, and one common strategy is to charge freelancers a flat percentage of the total fee while requiring that all payments be processed through their service. Elance charges 8.75%, and Guru charges 11.95% for free memberships, and 7.45% for paid memberships.

This is on top of the self employment tax that freelancers have to pay – roughly 15%. So, assuming that the tax applies to the fee received from Elance or Guru with the deduction, the net profit for an experienced grant writer working through one of these services at a rate of $15 an hour would be between $11 and $12 an hour – before taxes.

I am curious, my fellow freewheeling indies, what is your experience with these services? Have you secured new clients through them? Have you avoided them? How do you feel about the benefits, costs, and risks associated with focusing business development efforts through them?

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