How much money a freelancer can earn

Freelancers, contractors, gig workers — whatever you want to call us, it’s estimated that 40% of workers will be freelance by 2020. While I’m a freelancer by choice (and I absolutely love it), I’ve also experienced some major hurdles with self-employment. The picture isn’t so rosy for everyone. For many people, freelancing is less an opportunity and more a burden. The freelance economy is complicated, so if you’re a part of it, let’s break it down.

Freelancer vs. Gig Worker

Before we dig into how much you can earn as a freelancer or gig worker, we need to differentiate between the two. Both are self-employed, but there’s an important distinction when it comes to earning potential. After all, you’re a lot more likely to hear about someone who earns six figures as a consultant, tax professional, or even a writer than you are someone who earns six figures on Uber.
When people talk about the gig economy, they’re generally referring to the sharing economy: companies like Lyft, Airbnb, and TaskRabbit, that employ independent contractors to carry out different services. According to a recent Pew study, nearly a quarter of all Americans earn some money through these platforms.

John Liston, the Manager of Strategy and Operations at All Set, said that it’s also important to differentiate between the different type of gig services, too.

“Too often people lump all aspects of the gig economy into one uniform bucket,” Liston said. However, there is a big difference between contracting through a service that sets your pricing and dictates when jobs are available to you and contracting through a service that empowers you with technology and marketing to reach a set of customers without setting the terms for you.”

Uber and Lyft are examples of services in the first bucket. Your earnings depend on the amount of time you have available. The company itself sets your rates and if you want to earn more, you simply need to work more.

“These services are great for gig workers as a short-term income boost but can actually be detrimental to stable career growth in the long term,” Liston says.

Freelance is a broader category that might include gig workers but can also include writers, web designers, or someone who owns her own consulting business. While the IRS doesn’t see much difference between gig workers and freelancers, the major difference is that freelance implies the ability to charge more when you hone a specific skill or level of expertise.

“The second type of service where you set your own terms when working with customers offers a chance to begin your gig on the side and turn it into a full-time job if you are successful.”

Examples of services in the second bucket would be Upwork or Liston’s own company, All Set. Despite his affiliation, Liston breaks it down perfectly. There are two main differences between freelancers and gig workers: an opportunity for growth and the ability to set your own rates.

How Much Gig Workers Earn

It’s hard to gauge how much the average gig worker makes because the nature of their work isn’t average. You have different people working different hours in different capacities. For example, one analysis from Priceonomics estimated that 85% of side gig workers (Airbnb, Lyft, Etsy, TaskRabbit) make less than $500 a month. There are some crucial caveats here, though.

First, this doesn’t factor in how many hours they work, which almost makes the finding pointless. If the average hours worked per month is 20, then $500 isn’t so bad. If it’s 160, the earning potential is even worse than it seems.
Priceonomics brings up another caveat. They asked users of their site, Earnest, a student loan refinancing service, so it’s not exactly a random sample:

“this data is just reflective of the Earnest user base, who are typically refinancing college loans and therefore may be more likely to be treating these services as a ‘side-gig’ than the typical service provider who may be more likely to treat it as a fulltime job and have different earning levels.”

Finally, it doesn’t consider just how different the earning potential is from one platform to another. Uber and Airbnb? That’s not exactly comparing apples to apples. Airbnb is more passive income than Uber, which takes up a lot of workers’ time.
So let’s look at what the average Uber driver can earn. According to Josh Mohrer, their former GM in New York, their drivers earn $25 an hour. This would mean Uber drivers earn upwards of $50,000 a year, which doesn’t seem quite right. So BuzzFeed News interviewed a handful of random drivers, looked at their pay stubs, and crunched their data. They reported (emphasis hours):

The eight drivers netted hourly wages of $15.22, $21.17, $27.54, $32.90, $36.88, $37.12, and $38.25 — not including one-time referral or sign-up bonuses or one-time deductions. They worked between 5.78 and 42.65 hours per week. Overall, their combined hourly wage during this time was $31.61... it’s important to note that this is still before accounting for other weekly driver expenses such as gas, car payments, car maintenance, and wear and tear...if we assume an average weighted driver wage of $21.90 per hour, which factors in just a fraction of driver expenses, and assume drivers work 30 hours a week (again, not necessarily typical, but a middle range of the hours worked by the eight drivers we spoke to), we can assume a rough projected yearly driver salary of $34,164.

This is pre-tax, of course, and it still might not seem that bad for driving your own car and making your own hours. But it also doesn’t include retirement benefits, vacation or sick time, and, most importantly by far, the cost of health insurance.

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About Matovu George William

Born on the 25th November. Am a freelance website designer,Mobile App programmer and Technology blogger with clientlists and portfolios focused on arts, music, film and community work. Dedicated advocates of Clean, accessible design and have a sharp attention to detail. Since November 2007, i have a strong management and communication skills. I Keep aware of current web and print technologies and trends. Am a diligent Internet researcher. I also have a passion for typography, having designed a number of my own fonts. Panoramic photography is an activity that has always been a hobby, but which we are now bringing into my professional work.