As a freelancer, the most common type of job you’ll pitch involves exchanging your time for payment – you charge a certain amount for the hours you put in. As you build a steady client base, you’ll earn enough from your time to pay the bills.
However, this method requires you to be working in the business in order to earn. Any time you spend working on your business – doing admin, learning new skills, and pursuing passion projects – is unpaid labour. Also, building your business on an exchange of time for money automatically caps your earnings by the number of hours you can physically work. If you have to decrease your workable hours for any reason, your income decreases as well.
Is there another way?
Escape the hours-for-money model
Many freelancers use their creative prowess to build royalty-based or passive income streams to supplement their income. In this model, you create something once – a video, a story, a piece of art – and sell it forever. Over time, these income streams can build into a sustainable business that enables you to quit client work altogether and focus on creative outlets.
No matter your discipline, you’ll find ways to build a passive income. Photographers can use downtime to shoot and upload stock photography. Look for niches where photographs of certain subjects are in hot demand, and you’ll be able to charge a premium for your products. An example of this would be the stock site Period Images, which offers image sets for romance and fantasy book covers.
Producers and musicians could create sound-bites for use in podcasts, film, and video animations. Again, if you’re able to identify a niche, you can create premium content.
Actors could work with authors to narrate audiobooks using ACX or Findaway Voices. These platforms offer a royalty share option which enables you to earn royalties off an audiobook as long as it’s live.
Many freelancers build successful revenue streams with online teaching. Corsetry and historical costuming experts Cathy Hay, Lowana O’Shea, Luca Costigliolo, Sharon Nevin, and Elizabeth Licata worked together to create Foundations Revealed – an online sewing community where subscribers can learn historical sewing techniques and see advanced videos on corset-making. Freelancers can use simple course-creation websites like Teachable and Thinkific to share their knowledge with the world.
If you’ve already built a decent following from sharing your work online, you can use a site like Patreon to incentivize your fans to give you regular donations for work you’d be sharing anyway.
When I started out as a freelancer, I have a few novels published that earned £600 or so a month in royalties, but most of my time was spent fulfilling client work as a content writer. I capped out earnings at around £40,000 per year. In order to push beyond that number, I would have to start working weekends and long into the evenings.
Instead of doing that, I doubled down on fiction writing, studying the market and finding a niche that both satisfied me creatively and where there were lots of hungry readers desperate for more content. I also dabbled in teaching by releasing a couple of writing guides.
My work paid off. This year, I’ve been able to dial back to around 5% client work. And it hasn’t harmed my bottom line – I’m projected to earn more in 2019, most of it as royalties from my books and products. That revenue stream will only grow as I continue to add books and other products.
Transform your mindset
Following the path of creating your own content and building passive income isn’t for everyone. It requires you to think like an entrepreneur and see opportunities around you. Entrepreneurs have a growth mindset – they see their business as much bigger than themselves. They see endless possibilities.
Ask yourself how happy you are in your current business. Many freelancers struggle with the constant hustle for work with the time-for-money model. If you’re feeling tired and stressed at the idea of working with clients, then maybe it’s time to consider another path.
Look for opportunities that require a minimum of upfront work and a low initial investment. Ideally, you want to be able to repurpose work or create royalty-sharing pieces quickly. You can start with a few and build month-on-month.
Ask other freelancers in your industry what they do for passive income. You may be surprised to discover unique niches you never knew existed.
Build a schedule and dedicate regular time to producing creative work to grow your passive income. Even a few hours every week will add up over time to create a profitable venture.
Exchanging your time for money is a great way to start your career as a freelancer and build a solid portfolio and reputation. But if you want to grow your business and explore your own creative projects, consider how you might be able to turn your skills into passive income.
Do you have a passive or royalty income stream in your freelance business? How are you growing that stream?