SaaS

The Freelance Budget: You Spend How Much on SaaS!?

Lauren Bonk

We’ve talked extensively here about the benefits of freelancing: working from home, setting your own schedule, and institutin mandatory dance parties in your kitchen are just the tip of the iceberg when it comes to the awesomeness of the freelance life.

One of the most commonly-experienced shocks, however, is realizing how much out of pocket a freelancer is actually responsible for. Services like health insurance and chamber of commerce memberships are no long taken care of by an employer, and the freelancer is forced to come up with cash.

SaaS: A Double-edged Sword

SaaS (Software as a Service) and other cloud-based softwares present the conundrum of being both hugely advantageous for freelancers, but also potentially highly expensive in the long run. Usually, SaaS products come in the form of a program that is available through the purchase of a monthly or yearly subscription.

The upside is that, compared to software that must be purchased at full cost and installed on-premise, SaaS products are significantly cheaper to purchase up front. I got the chance to email back and forth with Odee Ingersoll, Director of the Nebraska Business Development Center at the University of Nebraska at Kearney, and he had plenty to say about SaaS products and their relationships with freelancers and small business owners.

“The users or, in this case, business owners, are often able to subscribe on a monthly basis, and cancel anytime. The advantage to start-ups is clear; much lower up-front costs to create and launch a business and better cash management. The cloud offers users the ability to try software and move in and out of products with a lower financial risk, and present the advantage of keeping applications current with the newest features. Now, applications are updated with the latest user data and changes, accessible on multiple devices, at any location – home, office or on the road… Overall, it’s a great win for users. Fans of Adobe used to spend $1,000 to $3,000 for a software suite that seemed outdated almost as soon as it was purchased. Now more expansive suites cost just $50 – $70 a month. Quickbooks used to cost hundreds of dollars each year up front. Now it starts at around $10 per month.”

The up-front cost is the big advantage here. It’s not likely that a new freelancer will be able to drop $3000 on a software product, but $50 a month might be doable. It’s extremely important to note, however, that SaaS and cloud-based products do come with drawbacks. Odee’s got some knowledge on that side, too:

“The downside? Users must be comfortable with the idea that to one degree or another, their use of the system and the data moving into and through the applications is likely to be monitored and remotely saved. And some programs are only available when the computer or device has access to the internet. No connection…no productivity.”

In addition to security and data saving, something to think about is the long-term effect these programs will have on that freelancer budget of yours. It’s always smart to evaluate your business a few times a year, in order to make sure it’s running efficiently as possible. You might find, during these check-in times, that an SaaS product is no longer essential, or you might also discover how valuable it is to you, and choose to invest in a permanent product that won’t continue to incur monthly charges.

Example Time

I love creating hypothetical freelancers to help illustrate a point, so I think this time I’ll introduce you to… Angie. Angie’s a freelance web designer who provides websites and branding packages for small businesses across the country. She’s a sci-fi lover, an expert omelet maker, and a long-time provider of verbal sass. As an active freelancer, however, that kind of sass isn’t going to help her organize her finances or share files… but the cloud-based kind will. Let’s take a look at how much she spends in SaaS and cloud-based services per month:

Design Software

Every designer has a need for visual tools, such as photo-editing software and design programs. Whether they’re creating an eye-catching homepage or sprucing up a headshot, they’re going to need a reliable and dynamic piece of software to do so. Angie prefers the Adobe Creative Suite, which clocks in at $49.99/month.

Accounting

Because Angie has to send invoices to clients and keep track of her expenses, she uses a subscription-based accounting program like FreshBooks. Her plan allows her to stay organized and financially connected to her clients, without having to do any tricky number-work she’s not qualified for. She can print out her statements and send them to her accountant without a second thought. Cost per month: $30.00

File Sharing

Since she’s working with people all across the country, Angie can’t afford to waste time trying to figure out how to share different kinds of files with different clients and freelancers. File storage and sharing options like Dropbox allow her to provide easily-accessible files to anyone she’s working with. Cost per month: $9.99

Document Signing

Another side effect of global or cross-country freelancing is the need to get your contracts signed quickly. Angie uses an E Signature service, like WP E Signature to make sure her work agreements are secure and legal. Cost per month: $8.08 ($97/year)
These products are commonly-used ones and don’t represent all of the cloud-based options for freelancers, but just these four products together will cost Angie well over $1,000/year.

Tips to Save Your Freelancer Budget:

Subscriptions like these are easy to set up and forget about; what if the file-sharing software that Angie chose is more than she needs? If she’s knee-deep in freelance projects, there’s a good chance she’ll just continue on her way, paying more than she needs to for that software. We’ve got a few tips here for both Angie and you:

Perform a “systems scan” a few times a year.

Are you fully utilizing everything you pay for? Go through all of your SaaS subscriptions and evaluate how much and how well you use them. Don’t throw money away on products that aren’t the right fit for your company.

Take advantage of free trials.

Many SaaS products offer a free trial option, and it’s absolutely in your best interests to use them. Trying a product for 30 days or even two weeks is worth it if it helps you utilize your funds effectively.

Wait before you go “Premium.”

A common theme in SaaS programs is to offer a free version with the option to upgrade to a “premium” level. Give the free version a shot first, just in case it turns out to be all the power you need.

Don’t forget about what you’re already paying for.

Our wise guru, Odee, has a great tip for avoiding the quicksand that SaaS subscriptions can turn into:

“A word of warning for entrepreneurs or small business owners: It’s easy to get too many subscriptions because they seem so affordable… and I see it far too often. First, the monthly charges do add up, so only buy what you need. Secondly, if you only need the application for a limited amount of time, set a calendar reminder to cancel the subscription when you’re done.”

So what’s our point here?

Are we for SaaS or against it?
Well, the truth is, we’re not here for SaaS… what we’re here for is you. We want you to be as informed as possible when it comes to purchasing tools for your freelance business, and it’s important to see both sides of the coin.

Remember:

Many SaaS and cloud-based products are fantastic, but they won’t all work for you. Evaluate your business, research products, and trust your gut… especially if it tells you to have mandatory dance parties in your kitchen.

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