For someone like me who is a "jack of all trades master of none" type of freelancer, this formula works fairly well. I have the advantage of having a full time job and freelancing on the side for extra spending/saving money. But if I ever do make the great leap to a full time freelancer, this formula tells me that I can make it for only a little more than I charge now.
Granted, I'm in a suburban/semi-rural area, so I may actually have to raise my rates to make a livable wage on my own, since the client pool is smaller, and this is part of why I haven't already made the leap. Admittedly, the "imposter syndrome" the author spoke of is probably a factor as well; deep down I know I'm good at what I do, but every time I have to research something I end up feeling like a know-nothing. That's something I'll have to overcome not only if I want to set forth on my own as a full time freelancer, but even if I want to advance as an employee.
If it's of any help, the impostor syndrome isn't unique to new freelancers. I've been consulting steadily for over a year, and I still feel it frequently. Acknowledge the feeling but don't let it be a barrier. (Maybe someone more experienced can chime in if I'm wrong about this.)
I contracted full-time for about 2.5 years before going back to being an FTE for the stability. Even as I steadily raised my rates upwards of $150/hr+ I still thought back to when I was charging $70 and that I was doing the exact same work and providing the exact same value.
Even when you're in the thick of it, it's sometimes hard to contextualize that no, I'm not charging too much now, I was just charging too little then.
You will lose clients as your rates go up, it's only natural (I had one complain very loudly when I went from $70 to $80 an hour, even though he only needed 2-3 hours of work a month at most; he left when I went to $95 about 6 months later). With few exceptions, most of them will be the painful ones.
I've done IT based side work for nearly 20 years now, so I know it's not unique to those just starting out. My main problem really is that I'm just too helpful; I have a natural inclination to help people, and that leads to being taken advantage of at times.
There is one particular client I could have charged twice my regular rate and they could have afforded it, but they saw how "nice" I was being by charging them (a sole proprietorship business) the same rate as the old lady down the street, and figured they had a sucker. When I tried to raise my rates they dropped me and hired someone who charged twice what I did but ultimately wasn't willing to put up with their attitude like I was. Of course, I considered it a good thing as I lost a headache, but I also lost a good referral.
In short, I need to stop trying to help my clients financially by offering rock bottom rates (and devaluing myself - imposter syndrome again), and focus on doing the job they are willing to pay me a good rate for. I can still undercut the competition, what little there is here, and make a decent living doing it.
> every time I have to research something I end up feeling like a know-nothing
I once heard a programmer say her job description was "learning new things". I'm a generalist like you, with a handful of specialties, and I don't think you should have any guilt or embarrassment about doing research. In fact the ability to research and learn is a skill too.
Granted, I'm in a suburban/semi-rural area, so I may actually have to raise my rates to make a livable wage on my own, since the client pool is smaller, and this is part of why I haven't already made the leap. Admittedly, the "imposter syndrome" the author spoke of is probably a factor as well; deep down I know I'm good at what I do, but every time I have to research something I end up feeling like a know-nothing. That's something I'll have to overcome not only if I want to set forth on my own as a full time freelancer, but even if I want to advance as an employee.