I think we get too easily caught up with this idea that we have to be working a lot of hours. 

There's no shortage of talk amongst freelancers about what to charge, how to know if you're not charging enough, and whether to charge hourly or on a project basis. Often, people find themselves short changing themselves by charging less than they're worth.

As individuals, a lot of people incorrectly treat their one-man businesses and the related interactions as personal transactions, and not as the business transactions they are.

Cold, perhaps. But you're not a charity case. You're doing work to get paid... unless, of course, you're not. But if you are offering up your services at below market rate, then it should be made apparent both to you and to them and understood as such.

I just parted ways with my job of five years, and am considering how I might approach entering the world of contract work. I really want to be spending my time developing community at New Work City, but I might sometimes need to take on some side work to help pay the bills along the way.  

For the moment, I want to spend as little time as possible doing billable work for someone else, so I can focus on my own stuff. So how do I approach contract work in a way that maximizes my income and minimizes my time commitment? I came up with a little experiment to help me determine the answer:

Ask yourself this:

What if I charged $1,000 an hour for my services?

Firstly, you'd probably scare off all of your existing and prospective clients. But what if you could replace all of them with just one or two? What if you found a handful of people who badly needed something only you could provide, and just a little bit of your time would be worth the world to them? 

If you charged $1,000 an hour, how many hours would you have to work to make as much as you're making now? Probably not a lot, right?

What would it look like?

Difficult (or impossible) for anyone else to render this service|
Competition drags down prices, so it would help a lot if there wasn't any competition at all. A total lack of competition may exist because you have a particular type of expertise that no one else has, perhaps because you participated in the development of a product that only a few people know all the ins and outs of, or, perhaps, it's a simple function of geography and time-- others share your level of expertise, but your potential client can't reach them here and now.

A very specific audience with a very particular need
If you're offering something that commands a $1,000 per hour rate, it won't be something that you can find in the Yellow Pages (Do kids even know what Yellow Pages are anymore these days? Get off my lawn!). Odds are that you're going to be offering something very, very specific that only a handful of people might ever have heard of or be interested in. What might that be? 

Guaranteed Value 
Your service would have to have a very high probability of delivering a significant value to the client in order for them to feel comfortable shelling out these kinds of dollars.

Put yourself in the client's shoes
Ask yourself, for a moment, what would I pay $1,000 an hour for? It would have to totally rock my world. Think about how you'd convince yourself to pay a grand for something, and see how you can flip it around and offer something like that to someone else.

Possible Conclusions

As far as I can tell, running through an exercise like this could have one of a handful of outcomes:

I discovered something I can probably get people to pay me $1,000 per hour to do.
Congrats! If you can figure out how to find the clients and book them, you're in business! Go work a few hours a month and spend the rest of the time learning some ridiculous hobby, like kite surfing.

I could probably get to the point where I can charge this much with a little prep work.
So you're not there yet, but you could be... if you just did X, Y, and Z to make yourself an utterly indispensable.

I could never charge anywhere near $1,000 an hour... but I can probably charge a lot more than I'm charging now for something similar.
This is perhaps will many of us will find ourselves. 

I'm going to think about what I have to offer and see where I end up. 

In the meantime, if you know of something I could do that's worth a bunch of money to you, let me know! :-)

-Tony