It doesn’t matter what freelancer A is charging. It doesn’t matter what net profit ratio freelancer B is making.

You shouldn’t set targets based on what other people are doing.

You should set targets based on what you can do and what you want to do.

I imagine that most freelancers are pretty unique in how they run their business. Some prefer longer projects with more security. Others like lots of projects on at once. Others like to grind low level work. Some like to outsource as much as possible.

As freelancers, we are dealing with a tiny tiny sample of the market. When the economy goes bad, most of us are working with too small a sample to have any real say on what is happening. At any given time, we might be working with 1-15 customers. The market size at any given time for a specific area is absolutely massive and orders of magnitude greater than what we are working with.  The normal ebb and flow of freelancing offsets any data we might think we have. (This is why, freelancers that do the same thing as us are rarely competitors.)

When you combine the tiny data set and the different personal preferences between freelancers, it turns out that benchmarking numbers is next to useless.

What is useful, on the other hand, is learning from other freelancers. Ask, what is this freelancer doing that could also work for me? What techniques or documents or strategies fit my personal goals?

Answering these questions is much more helpful than questions like, what should my net profit ratio be? What should my charge out rate be? These later questions give answers that are useless without also knowing the reasoning behind them.

Limitations for freelancers are placed from the inside, rarely the outside.

Related posts:

1. The difference between good freelancers and bad freelancers
2. Charging more for your freelancing
3. Outsourcing for freelancers

In fact, the only time they are competitors is when they’re bidding on the same job. I’ve found that only rarely happens, especially if you’re like me and avoid wasting time quoting for quote collectors.

Anyways, our main competitor is the status quo.

We generally don’t have to prove that we’re better than xyz firm. We have to prove that our solution is better than the status quo, and costs less than the benefits associated with what we do.

When we start thinking like this, we talk in different language.

Instead of “WordPress is the most popular CMS and is better than all the alternatives”, we say “WordPress has a feature set that will work perfectly for your goals to have a blog featured heavily on your site” or ” Magento is a great solution for you because it’s got all of the functionality you require, plus it’s open source so it will cut costs considerably”.

Beating the competition is not a case of having better features and benefits than other solution providers in your area. It’s about providing a solution that improves the status quo as much as possible.

Related posts:

1. Benchmarking is bogus
2. 5 reasons why job boards suck
3. 4 lines you can add to a proposal that will get you paid in lightning speed