Here is the full story in short. I was contacted by an old customer who was happy with my work on a project we’ve done through RentACoder. He asked why should I pay 15% fee, we already know each other, let us do the work outside. I agreed, we started the project and completed it successfully. It was a small project for $100.

The payment time came, but… I realized there is no good way to receive $100 from USA to Bulgaria. He wanted to pay me with Paypal, but Paypal does not work here. I was not able to accept his credit card either. He was too busy to go out and search for Western Union office. So we ended up with online bank wire which costed me about $35. That was 35% of my payment – I felt robbed!

Of course your customer can always find a way to pay you. But sending money over the world can be a real pain, especially for small amounts and especially in some countries.

I have been researching better payment methods all the years I work as a freelancer. There is not an ideal solution, but below you will find my impressions and conclusions about some payment systems. Hopefully you will find the one that suits you and your location best.

Paypal – Good, but not available for everyone

Paypal is most preferred from the customers from USA and Western Europe. It is easy to use for them and cheap. It costs either nothing or 4.2% to receive money with them – depending on your account type. You can accumulate your earnings and withdraw to your bank account or you can use the funds to purchase things online.

Almost everything is great with Paypal, except that they don’t work in many countries. The full list of countries which can use Paypal is available here. If you don’t see yours, you’ll have to forget about this payment option.

Credit Cards – work almost everywhere, but costly

Another convenient method of payment is accepting credit cards. If you want your customers to pay for your freelance work with credit cards, you need to set up an account with credit card processor company.

However, many of these companies charge monthly or yearly fees on your account in addition to the commission which they take. There are also many online scams, so you should be very careful when choosing such a company. Being scammed won’t be nice neither for you nor for your customer.

One of the very few reputable credit card processors, which don’t charge monthly fees is 2CheckOut. The other fees are not low however – you will have to pay $59 registration fee. Then, there is 5.2% commission on each payment you receive. Then, after you accumulate enough funds in your account, you will have to pay bank wire fees.

Bank wire – the universal solution for large payments

For your relief, there is a secure payment method which work for any freelancer in any country. The international bank wire is the most professional and secure way to receive a payment. There are no “wrong” wires – in 99% of the cases even if you give a wrong account number, the money won’t be lost, because the receiving banks compare both the account number and the beneficient’s name provided.

The problem with the wires is their cost. An international wire will cost you about $30 – $50, depending on the correspondent bank, your bank and the sender bank fees. If you have to receive only $50 you may end up getting just a couple of bucks in your account.

On the other hand the bank wires are very cost effective way of payment if you are receiving $500 or more, because the fees are increasing very little for larger sums.

Checks/Cheques – cheap but sloooooooow

The bank checks (cheques) are probably the oldest way of sending money domestic and worldwide. Presumable every bank in the world should be able to accept and pay checks. Unfortunately, many banks in Europe (and probably in the rest of the World) do not find this profitable and refuse to clear checks. So, you may have a bit of trouble before you find a bank near you which to accept checks.

The checks are usually cheap – it costs $1-$3 to be sent with snail mail. You may eventually pay more if you want to be sure that your checks will be delivered or if you want them faster (the snail mail may take up to 3-4 weeks). With DHL or other courier service the cost of sending a check will be about $35.

Then, the banks will charge you some bucks to clear the check. This varies a lot in the different banks so make sure you ask first! In most cases it will be $10 – $15 regardless of the check amount. But the first time I cleared a check I ended up charged with $52.

The bigger issue with the checks is the long time you need to wait. 2-3 weeks for snail mail and then most banks will require from 2 to 4 weeks to clear it. So in fact it may take 2 months before you can use your money.

Moneybookers – cheap for some, boring for all

Moneybookers is a service similar to Paypal. They have some very tempting features like very low comission (only 1% and never exceeds EUR 1) and domestic wires in many countries. So basically, if you reside in a place where domestic wires are available for Moneybookers you can get any amount of money for just 3-4 EUR total.

There are some negative things with them however. They have very strict policies and may block your account for whatever reason they decide. They are very picky to credit cards – to deposit funds with credit card you’ll have to pass a very boring verification procedure. You may don’t need to deposit funds, but your customers will.

Similar boring procedure is in place for withdrawals. You need to verify your bank account by receiving a small wire with a special code. You will have to ask for full statement from your bank in order to see this code.

IKobo – convenient but risky

IKobo is another similar to paypal service where one account holder can send money to another account holder. Their fees are also low – around 4%-5% (it seems to depend on the amount). They can be funded with credit card and bank wire.

The advantage of IKobo is that they send you a free debit card and you can withdraw your funds in any ATM worldwide. Basically IKobo works great… for some freelancers.

Word of warning: Ikobo ripped me off. I signed up, received a payment and the debit card arrived. The first day I withdrew just a small part of the money. The second day it did not worked and I received email from them asking me to send ID scans and utility bill. I did it and received an automated response that they couldn’t serve me anymore. The funds were returned to the payer without asking (fortunately that buyer was serious and sent me the money again in another way). So be cautious with them!

E-gold – costly but works almost everywhere

E-gold is a bit weird system. The money which sit in your account there are calculated in weight of gold or other precious metal. So when you receive money, you in fact receive grams of gold. Therefore the dollar amount of the funds is changing all the time with the price of the gold.

The internal fees of e-gold are very low – only 1% and never exceed $1 total, even if you receive thousands. Sounds super, but there is one big disadvantage. E-gold does not send you out real cash. You must use a third party exchange service (You can find a list of such services here. I can personally recommend IceGold) which will usually charge you 2% + the cost of international bank wire. So unless you accumulate several payments in your e-gold account before turning it into real cash, you’ll only lose money.

There are various debit cards working with e-gold, but you should be very careful. Since e-gold is non-rechargeable service there are a lot of scam debit card and scam exchange services. Always choose only reputable ones (with long history and good feedback on the Net).

Users in Russia and Ukraine can use Webmoney and exchange their e-gold there and receive domestic bank wire. The same is available in some Asian countries.

Users from India and Iran may not be able to use E-gold (there were problems at the time of writing this article).

Western Union or Money Gram – probably the best solution but costly too

Western Union is probably my favorite payment method when I have at least $100 to receive. It happens almost immediately – 5 minutes after sending, the money are here. It is 100% secure and reliable.

Like with all payment systems there are some disadvantages. Receiving money by Western Union is costly. They charge $15 for amount up to $100, $22 for amounts between $100 and $200, $28 for amounts between $200 and $300 etc. Commission does not go much lower than 10% even for large sums.

Another issue of course is that you have to physically go to Western Union office to collect your money. It can’t be sent to your bank account.

MoneyGram is a very similar service. Their fees are slightly lower (see their fee calculator), but they are a bit less popular and you may need to look for an office more.

Whatever you choose, make sure you don’t fall for “too good to be true” systems. Sending and receiving money worldwide is costly, regardless what method exactly are you using. Always try to understand all hidden fees and surcharges which may be added. By having proper money management you can afford to collect multiple payments in some online account and withdraw them at once. This way you can save a lot of fees.

So you have spent few months studying various technologies – probably PHP/MySQL, CGI or Java – and now you want to put that in action. Or are you already working as a web developer for a company? This experience can help you, but it is not needed.

When I was starting as a freelance developer, I had zero professional experience. I was a prepress expert in an advertising company and in my free time was working on 2-3 open source projects with PHP. None of them was too complicated, neither I was too good in what I was doing – I only know I really wanted to be a freelancer.

The experience is not so important. The most important is your passion to do it and that you are ready to struggle for success as a freelance developer. Don’t expect the beginning to be easy – in fact the beginning is where most freelancers fail. The first projects will be hard to win, to do, and to get paid.

Are you ready to start?

1. Prepare a portfolio

You have very little chance to win your first project if you have nothing to show. You desperately need a portfolio. Here is a catch 22 – to win your first project you must show some past work. But how to have it if you have never worked on a project? Here are to possible ways to resolve this issue:

- create a project yourself. Don’t do it too fancy or too complex – you don’t want to lose months doing it or lose your motivation. For example if you are web developer, create a simple forum or a guestbook. If you are C++ or Java programmer create a simple text editor. All you need is something bug free which to show to your potential customers

- join open source project at SourceForge. This site allows you to search projects which need help based on the preferred technology or software type. Although the project owners also have some requirements, it is not so hard to be accepted – finally, the jobs are unpaid.

2. Build a resume and a website

Now it is time to build your resume. It should be as professional and tidy as if you were adopting a regular job. See this article on how to write a resume. The only difference is that this time you should put more weight on your skills and portfolio rather than your education. In most cases the high school and diploma won’t be known from the potential buyers (unless you have studied in Oxford – so don’t expect them to hire you because of it.

Put your resume and portfolio on a website. You can even use free webhosting or create it as a blog at Blogger. At this moment do not put contact details there – the freelance sites will ban you for doing this, and being a beginner you can’t expect that some random visitor on your site will contact you for a project. The purpose of your website at this stage is only to be shown to the potential buyers on the freelance websites.

3. Join 1-2 freelance sites

If you have never seen a freelance site, you may be a bit confused at the beginning. But in general they have similar requirement and structure. [See this article about freelance sites]
My personal preferences are to Scriptlance and RentACoder, but I can also recommend you Guru and GetAFreelancer.

For the beginning you’d better choose a site with free registration (like the ones above). Thus you won’t risk anything except your time.

When joining the site, don’t forget to carefully complete your profile. You can use the same information that you have put in your resume and website. If the site allows that, put a picture of yourself – it builds trust and breaks the ice of the first contact.

Don’t pretend to be a team. I have seen many developers presenting themselves as teams with many programmers and designers. This is not impressing the buyers – most often it puts them off. They are usually small business owners and webmasters or outsourcing companies who are looking for individuals and not teams – and you will even see this as a requirement in many projects.

4. Bid on 5-10 projects per day

Unless you are incredibly lucky, you will not win your first project. Quite possible you’ll not even win within your first 10 bids. It took me more than 20 bids on RAC and more than 10 on Scriptlance before I won the first. You need the lost bids to gain experience. See who won and why. See why your bid was rejected. Was it because the price or the language you used? Was it because your skills were inappropriate or your portfolio weak?

Because of this you have to be consistent and keep bidding every day. Don’t overdo it – 5-10 bids per day are enough. You need to know what you are bidding on, to be sure that you can complete it and to estimate your bid well.

5. Win your first freelance project

Sooner or later you will win your first project. Don’t give up and keep doing it until you win it. The feeling is really great even if it is a small job for $5. You will feel like a real winner – and this pays for all the efforts put so far.

But don’t let the emotions put you away from the target – stay concentrated and put all your power into doing your first freelance project perfectly. Don’t think that you are doing too much for the price you have given. Your first project will not be accurate for your financial calculations. Its purpose is not to make you money – it is to start making your image.

Do it perfectly, on time and if possible overdo it. Communicate often with the buyer, be kind and helpful. This will bring you the first testimonial and rating and boost your freelance career from then on.

6. Update your portfolio

Once completed the first project, immediately place it in your portfolio. If you have received a testimonial, create a testimonials page and put it there. Use every further project you win to grow your portfolio and improve your profile. The more you do, the more your profile and feedback grows and the easier it becomes to win projects and complete them.

This tutorial is where you should start, but don’t end with it. Keep improving yourself and working on your skills and freelancer profile. The other articles from this site will help you to master your skills as a freelance developer.

Hey, how’s that, there is everything on the Net! I was sure he has not searched, but when I tried myself I understood he was partially right. There are a lot of discussions about freelancing and a lot of sites offering useful information. But there is also a lot of disinformation and myths which keep many capable people out of this business.

Let’s sort the most common delusions:

1. Freelancing is too risky

Sure, every business is risky. But is it riskier than your day job? What happens if you make a big failure in your job? You may get fired. Then you are left without any income and must look for another job. In freelancing, if you make a failure you will lose one client. And the smart freelancers never work with only one client.

Without proper money management freelancing is really risky. If you spend all the money you get each moment, you won’t be able to meet eventual low months. That’s why you need manage your finances and put money aside when you have more than needed.

2. Freelancers are underpaid

Really? Who said that? As a freelancer I was earning 2-3 times the salary in the last company I worked for. And I considered it a decent salary.

It depends entirely on your skills how much you will get paid. Of course worldwide freelancing is harder for people who live in US and Western Europe because they have to compete with much cheaper offers of the rest of the world. But I know about several freelancers who charge $60 or more per hour and still can’t complain of lack of projects. It’s all about you.

3. There is too much competition

There is no market without competition. But internet freelancing gives you not only all the competitors in the world. It also gives you access to all the clients out there. For everyone there is a place under the Sun. The competition in freelancing is not worse than the competition for getting a job in a local company.

4. It takes all your time

Yes, maybe – if you work very slow or if you are too greedy or if you have nothing better to do than working.

Freelancing allows you to manage your free and work time on your own. It does not force you to work all the time. Some freelancers have no free time at all, but this is entirely their decision.

5. Only programmers can freelance

Why don’t you visit Guru.com for example. You will see so many professionals from so many different fields freelancing.

The freelance business is available for everyone whose work can be done remotely. This includes all web based jobs, writing, copyrighting, arts, consulting, all kind of computer jobs, accounting and many, many more.

6. You wait too long to get paid

This is possible depending on what payment methods you are using. An international bank wire usually takes just 3-4 days. If you are doing your freelance business thru a third party service, such like a freelance marketplace, you will have to wait for them to send the wire. This usually can take up to a week.

If you accept Paypal or credit cards, the payment appears in your account immediately. From then on it takes time for the money to come in your bank account however. Depending on where you live it can take 3-4 days again.

If you accept e-currencies like e-gold you can use debit cards and cashout faster – in 24 hours or so. Usually it is expensive (about 10% of your money burns in fees).

So, what do you think, is a week too long wait to get paid? What about the office workers who wait two weeks or one month to get their salary? It all comes to proper money management. If you don’t immediately spend all you receive, you will have no problems with the payment delays.

7. When you are new, you can’t get a project

It is well known that the buyers of freelance projects are looking for established providers. Usually. Your resume is very important (see how to write a resume).

Many of the customers however are looking for small help for cheap. The freelancers with a lot of experience usually are not very interested in such jobs. This is your chance. If you are new, aim for the small projects – even if it is a job for $10, try to do it and over deliver with quality. Get a testimonial and a happy customer. Work for your name and it will start working for you later

8. Freelancing is not letting you grow

Do you really believe this? A programmer or a web designer who works in a company usually work on a small piece of a large project. On the other hand, the freelancer often has to complete the entire project, to solve new problem and to learn new technologies.

In fact if you want to be a successful freelancer you must grow and learn new things all the time. Isn’t it a great way to expand your skills?

9. You must spam people or bug them on the phone

I’ve never ever spammed anyone, nor I had done any cold calling in my freelance career. There are a lot of people who look for something to be done. Instead of contacting someone who may not be interested at all in your skills, it’s much easier to find these who are already looking for things to be done.

See the best way to find freelance jobs without spamming anyone or ringing phones.

10. Freelancing is only temporary employment

If you make nice income and feel like doing interesting things, why stop doing it?

Sometimes after closing a deal I start counting the money as if the project is done. Of course we all want our freelance projects to be easy and to be finished smoothly. But very often various troubles happen which bring a lot of hassle to our heads.

Of course there are no problems which can’t be solved. But isn’t it much better to prevent the issues before they happen? Remember, in most cases both you and your customer want the same – the project to be finished sooner, the payment completed and everything to work perfectly. To fight the troubles before they appear is the best way to make it happen.

So what can turn your freelance project into a nightmare and how to avoid it?

Low Quality Work

This is so obvious and yet so many freelances skip it. If your program does not work or your design is ugly or your article has grammatical errors you can’t expect the buyer to be happy and pay for it.

You are a professional and value your skills. Use them to create a wonderful product or service. Never ever work just to complete that project “somehow”. Not only that you may miss the payment, but you may degrade your great reputation.

Communication Issues

These are easy to catch. It may be your or your customer fault, but that does not matter. If there is no communication, there is no successful freelance project.

You must update your customers about the progress of the projects you handle. Let them know when you expect it or part of it to be done. If you take a vacation, let them know. Never let them wonder where you are and why you don’t respond emails. This is essential for your success and your name.

If your clients are silent, bother them. Being too gentle not to disturb them is not a good freelance practice. They are responsible for the projects just like you are. If you have nothing special to ask, just give them update and ask about their opinion. Don’t let them forget you.

Unclear Project Specification

This has failed several projects for me. It is essential to understand very well from the beginning what you have to do, how much you will paid and when you should be ready.

If something is unclear, don’t be afraid to ask questions. There is no stupid question. Ask about everything until you get it perfectly clear.

Sometimes I can’t manage to understand the whole project in detail from the beginning. But I don’t start work before having the overall picture. The small details can be clarified later with questions.

Just trying to read your customer’s mind usually results in extra and unpaid work, bugs, broken deadlines or project failure.

Ask questions and get clear specifications. Don’t work without that.

Non Secured Payment

It’s nice to have trust in your customers, but some people will abuse your trust. Unless you know well your client, you do need to secure your payment in advance. You can either ask for advance payment, partial advance payment, escrow (the bets option especially if you work through a freelance marketplace) or partial payments when parts of the job are completed.

Negotiate the payment terms before starting the project. If you don’t do that and try asking for advance payment later, your customer may feel pushed.

Using Third Party Products

If you are a programmer and want to use a third party or GPL code in the program, you must ask the client to agree. Some buyers will want to resell the program you make for them, or may want to use it in environment with special license requirements.

Don’t break any licenses – it will not only break your reputation, but you can see yourself ending up as defendant.

The freelance writers may quote or retell in their own words someone else’s texts. But you should never just copy text from anywhere.

In general, any usage of third party work must be discussed with the client. You can’t know all the considerations your buyer may have. Instead to risk your payment and reputation, negotiate using any kind of third party products.

Lack Of Trust

This is the interest and you can’t trust anyone at 100%. There are many scammers or simply guys who can’t do business normally and will try to scam or outsmart you in hundred of ways.

But don’t be paranoid. Without a basic level of trust you can’t do freelance business. There is a delicate balance which should be reached. Once agreed to some basic payment terms and timelines, stick to them and don’t be oversuspicious. If you have agreed to send part of your work first, just take the risk and do it.

Obviously if your customer does not trust you, there is no way to be productive either. I always avoid customers who start directly asking what I’ll do if there are bugs in my work and wanting me to guarantee 1 year free support. Of course I’ll fix any bugs, but I hate to be pushed and to feel suspected in dishonesty without giving any reason for that. Better avoid such clients from the beginning.

The freelance business is riskier than the traditional business. Your customers are often virtual and there is little you can do in case the things go wrong. So the best you can do is to prevent the issues which can lead your projects to failure.

Have you met some of these issues in your freelance career and how did you solve them?