Taking a Closer Look at the Rent a Coder Fee
By Lisa_G
Rent a Coder Coder

    The end of 2004 is rapidly approaching and many of us in the U.S. are starting to think about our annual income tax returns. As I was tallying up my gross and net income I naturally started taking a close look at my expenses. After all, it's not how much you make, it's how much you keep that's really important.

    Not surprisingly RentACoder fees represented a big chunk of my operating costs. With a 15% commission automatically taken from each project, and me having completed over 100 projects, it was easy to see why the total commission paid jumped out at me as a pretty big number. So I started to think...

    I recently went to a trade show which was sponsored by a local business organization. It cost me $399 for a booth and another $200 for brochures and literature to give away. I left the show with a lot of business cards in my fish bowl and one project for $2000. It took me four days to complete the project, thirty-five days to get paid, and another 4 days for the check to clear once I deposited it.

    I did the math: $599 in costs to land a $2000 job. My "commission", or cost of getting that project, came to 29.95%. If I had won that project through RAC, instead of trolling it up at a trade show, my costs would have been 15% or $300. It cost me $299 MORE to get this job on my own plus 10 hours to get ready to attend the show and another 10 hours at the show. If you factor in my hourly rate of $65 then I only actually made $101 profit on that project.

    Next I looked at the fact that it took me 39 days to get paid. If I had won that project through RAC it would have been paid within 7 days of the next payment period. Since I opt to get paid twice per month then the longest I would have waited would be 21 days.

    Finally I considered the "fear factor". What if the client never paid me? What if they paid me and the check bounced? I recently did a project on one of the other freelance sites. It was relatively small, just $45, but I never got paid. The people who run the freelance site offered to contact the client and "see what they could do". The client never responded to them. This freelance site calls their payment system "Safe Pay". When I wrote and asked what part of the word "Safe" applied to me getting my money, they never replied. If I had won that job through RAC, and the client had accepted the work, I would have been paid -- guaranteed.

And lastly I considered the number of projects that I had completed on RAC; 106 on the day that I wrote this article. I also considered how many projects I had bid on but didn't win. I estimated that number to be around 300. What would it have cost me in advertising and marketing dollars to get in front of 300 people and pitch my services? It cost me $599 just to go to the trade show where I left with just one project. I would need to have continual direct mail, print, and Internet campaigns running to keep the same flow of prospects coming across my desk. The costs for that? Inestimable! Plus who would manage the advertising? If I did, then when would I write?

So, as I sit here doing my pre-tax planning, and looking for costs to cut, the 15% that RAC gets doesn't seem like a big number after all. I think I'll cut out going out to lunch instead.