How to make money online for beginners (step-by-step guide)
When starting out, it’s easy to feel overwhelmed. Here, I’ll detail the single best way to get the most bang for your buck when trying to make money online.
With the magic of the internet, you can easily start earning money online this very same month— through freelancing—and the best part is I’ve developed a simple step-by-step guide absolute beginners can use to start making money online
The bad news: Freelancing online is only for people who are willing to work hard and put in the time, NOT for those who just want to find a “magic bullet” to make money instead.
If you’re looking to get-rich-quick, I suggest you find another article. For everyone else, if you want to make money through freelancing, there are just a few things you need to know:
Step 1: Find your first client
To find your first client you need to know where they live.
No, I don’t mean stalk them, you creep. I mean knowing who they are and what problems they have. Ask yourself:
- Who is my client?
- Where do they go when they want to look for a solution to their problems?
- Where are they ALREADY looking for solutions to their problems?
- How can you connect them to your service?
In classic marketing terms, you’re going to want to define your target market. It’s an essential first step that, unfortunately, A LOT of people gloss over when they start making money freelancing online. If you don’t do this, you’re going to be at a loss at what exactly you’re selling and to whom you’re selling it.
Who EXACTLY is the type of person who might want to buy your product? Ask yourself even more specific questions now about your potential client.
- How old are they?
- Where do they live?
- What are their interests?
- How much do they make?
- What books do they read?
You’re going to want to get into your clients’ heads in order to figure out exactly what they need so that you can provide it for them.
Then, find out where they go to find solutions. Get in their heads:
- Want to pitch to moms that blog about children? Go to The Mom Blogs and start with the ones under “Popular Blogs.”
- Looking for physical or massage therapists within 50 miles of your house? Yelp should get you started easily.
- If you want to do… large dog grooming and sitting, well there’s probably a local pet store or dog park near you where owners are all congregating just waiting for you to offer them a solution.
Here are a few suggestions of some other great sites freelancers can use to find business online:
So many people email me saying things like, “But Ramit! I have this idea and have NO IDEA where to find customers!” My response is always calm, yet you know that anger boils closely below. “What have you done to research your audience? Have you emailed a few people? Taken them out to lunch? Asked complementary service providers if this is a good idea?”
The answer is almost always no.
An example that made me angry: Last night, someone said they were going to start a wedding-montage photo business. What should they do? They appeared to be stuck. Answer: Go talk to a few wedding photographers and ask them if this is a good idea. Would their customers buy it? Are there holes in the market that are not being served? What about event planners? Florists? You could do this in 1-2 weeks and save 1 year of your life.
80% of your ideas will be strengthened — or washed out — with this simple exercise. And it only takes a week or two to get started.
Get in these people’s heads & then niche it down. Read their minds and then act on those insights. So you’ve figured out where the secret large dog pet store is. Great. Now look at their website, visit the store, talk to the owner. GET OFF YOUR ASS AND TAKE ACTION.
Could you pitch one potential client each morning? You probably could if you created an email template (more on that in a bit). How about 10 over the weekend, playing with different headlines/offers so you can see which ones work better?
It doesn’t have to take a long time, and it doesn’t have to be agonizing.
Step 2: Make your offer
After you niche down your offering and find a few good leads, you’ll need to craft a pitch that is tailored to them.
In doing so, you’ll want to stress the BENEFITS of working with you — while not giving away too much information as to how you’ll help. I lost my fair share of clients while I was starting out by giving away exactly how I’d help them in my initial reach out. Stupid.
Since I’m such a benevolent and generous person, I’m going to let you in on the exact 5-line email template I’ve used to craft the perfect pitch to potential clients. It includes:
- The introduction. You’re going to want to build rapport by introducing yourself and how you know about the client.
- The offer. Talk about them. What do you want to do for them? Why are you good for that role? You’re going to want to do some research on the organization to see what they need help with.
- The benefit. Walk them through how your work will benefit their company. Are you going to free up more time for them? Are you going to maximize profits by X amount?
- The foot-in-the-door. This is a classic technique that utilizes an old psychology trick to get the client to agree to a small agreement so you can ask for a larger agreement later.
- The call to action. Be clear with this and ask them if they would like to proceed. The call to action is a critical part of this script.
When it’s all put together, it’ll look something like this:
CLIENT’S NAME,
[Introduction] I read your article about X and noticed that you’ve recently started using videos on your website.
[The offer] I’ve been doing video editing for three years and I’d like to offer to help you edit your videos and get them optimized for the web.
[The benefit] That would make them look more professional and load faster, which is important for your readers. And you’d free up time that you could use to create new content.
[The foot-in-the-door] We can discuss the details, of course, but first I wanted to see if this is something you might be interested in.
[The call to action] If so, would it be okay if I sent you a few ideas on how to help?
Best,
Ramit Sethi
And that’s it. What I love the most about this email is the fact that there’s zero fat on it. Each word here has earned its place and carries a weight with it. That’s what you want out of a good email.
If you don’t hear back from them after a week, you should send a follow-up email. After all, life happens. Your email might have gotten lost or they might have seen it, meant to reply, and simply forgotten about it. If that happens, here’s a good template for a follow-up email.
CLIENT’S NAME,
I just wanted to follow up with the email I sent you last week regarding my offer.
If you have any questions or concerns, I’d be happy to address them.
Best,
Ramit Sethi
Once again, the message is simple — but it allows you to go back to the top of their inbox, and therefore, to the front of their minds.
Step 3: Know what to charge
This is where the HUGE majority of people get tripped up when freelancing for the first time…and I don’t blame you if you do too. There’s no exact science on what to charge and so much of it is guesswork until you land on the right price for you.
What you should focus on, though, is your pricing model — of which, there are a few to choose from:
- Hourly. Most of us have had a job like this before. You charge an hourly rate and your client pays you per hour. The benefit for the client is that they mitigate their risk since they can just stop paying you whenever they want if they’re dissatisfied. This benefits you because there are many industry standards on what normal hourly rates for your job are.
- By project. For this, you’ll be paid per project. So say, if a client wants you to illustrate their e-book, you’ll know exactly what you’re getting paid for for the entire project with more concrete deliverables for them.
- By retainer. This allows the client to have access to you at any given time during a month. Usually, you’ll be paid on retainer if you’re incredibly integral to the company.
- Commission/Bonus. This payment model can work in conjunction with all of the other ones and can provide a healthy incentive for you to get your work done. For instance, if your client promises you a $1,000 bonus for attaining X amount of leads with your landing pages.
- Value-based. As the name suggests, this payment model is based on the amount of value you’re giving the company. For example, if you promise to write a sales page you know will generate $200,000 in revenue for the client, you can negotiate for them to pay you $15,000 for it.
Though all of the above pricing models are perfectly fine to use when freelancing, I highly suggest you get paid by the hour when starting out. After all, you’re a beginner freelancer. Clients are going to be wary of you and won’t be inclined to pay you a big project fee. If you charge by the hour, they feel safer knowing they can stop paying you whenever they want. It’s just much simpler.
Of course, as you progress in your freelance career and attain more clients, you’ll be able to embrace the whole gamut of pricing models as you see fit. But it’s just simpler to stick with charging by hour at first.
When it comes to exactly how much you should charge at first, there’s no right answer. Luckily, though, there are a few handy back-of-the-napkin tricks you can use to find a rough estimate of what you should be charging. They are:
- Drop Three Zeros MethodSimply take your ideal (read: realistic) salary, drop three zeroes from it, and voila, you have your hourly rate!For example, say you’d really like to earn at least $40,000. Just take the three zeroes from the end and you now have your rate: $40/hour.
- Double your “resentment number”I love this one because it’s both really interesting and effective. Ask yourself: What’s the lowest rate you’ll work for that’ll leave you resentful of your work?Say you’ll work for $15/hour at the VERY LEAST. Just double that number so now you’ll earn $30/hour.
- Do what the next guy doesGo to Google and search for the average hourly rate for whatever service you’re providing. You’ll get a good sense of where to start when you’re charging your clients.
The best part is after you start charging your clients, you can start to take on more or less work until you earn the amount you want.
For example, after you earn your first $1,000 it’s incredibly easy to start dialing your prices up and charge even more money from your clients.
This is called the
Tuner Strategy. Start “tuning” your rates after your first few clients. Were you making $30/hour? Start charging $40 or even $50. There’s no hard and set rule for how much you should charge. Just start tuning until you find a rate you’re happy with.
Investing in yourself
Remember: it’s okay to make mistakes. Especially when you’re just starting out. The important thing is that you get started and learn from those mistakes.
Now, one thing that you will find very common with people who have not taken the time to invest in learning how this stuff works, is they will create what’s called levels of abstraction.
Rather than just going directly to what they want, they will create all these different levels of abstraction — like making a Facebook page or a blog — that make them feel good, but that actually don’t require them to do the hard work.
Once you’ve found a place to get clients and have an email that gets responses, keep iterating on it until you are constantly getting new clients. This is what separates winning freelancers from losers. Losers wait for the perfect client to fall from the sky. Winners start somewhere, then improve their pitch bit by bit.
Why make money online freelancing?
Even if you have a job you enjoy, there’s really NO reason you shouldn’t be making money on top of that.
There are 4 good reasons why you should definitely freelance to make money.
Reason #1: Most people don’t even think to freelance on the side — giving you an edge
Because of differences in skill, motivation, and luck, few people ever try to start freelancing on the side. Instead, they choose to complain about their financial situations and blame things they can’t control like the economy and taxes while focusing on things like
cutting out lattes to save money.
So if you’re in that small group of motivated freelancers who DO actually earn more, you earn the lion’s share of side revenue. When you pick an area to excel in where there’s a built-in barrier to success — like earning more money on the side — the winners get disproportionate rewards.
Reason #2: You can scale your rates and offers to earn as much as you want
When it comes to freelancing or just making money for yourself in general, the sky’s the limit in terms of earnings.
Hell, I’m a good example of that. I started my blog in 2004 while I was a student at Stanford. Back then, it was just an ugly blog that no one read.
It wasn’t until 2007 that I created my first ever online product: a $4.95 e-book that I was afraid to sell because I didn’t want to seem “sales-y.” It was the first time I charged readers for my material. They responded by calling me a “sellout” and saying I “jumped the shark.”
Fast forward to today. IWT transformed itself into a multimillion-dollar business. We’ve launched over 18 successful products including courses on career development, psychology, fitness, cooking, and freelancing. And we’ve built a business with over 30,000 paying customers.
“We get it, Ramit. You got lucky and were able to make millions from your blog. Stop bragging.”
My point is this: Whether you’re freelancing or starting a business, you can scale your prices and offerings to the point where you’re earning as much money as you want. Each price point can act as a stepping stone to the next one as you learn more about your customers. The only question is whether or not you’re willing to get started.
Reason #3: You’ll hedge your risks
What if you lost your job tomorrow? Would you have another source of income to fall back on? If not, you’re going to have to dip into your emergency fund…if you have one that is.
From reading this site, you know about the importance of diversifying your investments. It’s the same idea when it comes to your revenue sources. That’s why it’s so important that you make sure that you have an extra source of income — and freelancing is perfect for that.
And if you start while you do have another job, you’ll be able to build and establish worthwhile connections and clients for later.
Reason #4: Managing your money and earning more money is a powerful combination
Combine earning more with the automation strategy for saving, investing, and spending that I outline in my book and you’ll have a powerful financial combination guaranteed to set you up for a Rich Life.
Remember: There’s a limit to how much you can save but no limit to how much you can earn.
FIRST, do this…
Now the question is HOW you can freelance on the side.
To figure that out, you need to first answer two very important questions:
- What am I offering?
- Why would anyone want to buy from me?
That’s it. Once you have those two questions fully answered, you’re well on your way to a successful freelance career.
What am I offering?
I truly believe that every single person out there has a marketable skill in them — many just don’t realize it. As a result, it becomes the most common barrier preventing people from freelancing or starting their own business.
When it comes to deciding what you want to do, though, you just need to ask yourself four questions:
- What do you already pay for?We already pay people to do a lot of different things. Can you turn one of those things into a freelance business?Examples: Clean your home, walk your pet, cook your meals, etc.
- What skills do you have?Now, what do you know — and know well? These are the skills you have that you’re great at — and people want to pay you to teach them.Examples: Fluency in a foreign language, programming, SEO, cooking skills, etc.
- What do your friends say you’re great at?I love this question. Not only can it be a nice little ego boost — but it can also be incredibly revealing.Examples: Workout routines, relationship advice, great fashion sense, etc.
- What do you do on a Saturday morning?What do you do on a Saturday morning before everyone else is awake? This can be incredibly revealing to what you’re passionate about and what you like to spend your time on.Examples: Browsing fashion websites, working on your car, reading fitness subreddits, etc.
Find an answer to those questions and I promise you you’ll find a way to make money freelancing.
Why would anyone want to buy from me?
I know what some of you are thinking: How on earth do I find someone who wants to pay me to do XYZ???
Listen, I get it. You might think that your skills speaking fluent Portuguese or your ability to do awesome magic tricks will never earn you money.. .but that’s simply not the case.
Check out these three totally real freelancers and businesses that earn money despite seeming “unmarketable.”
- Bird Tricks: Have a parrot? Want to train your parrots to talk and do tricks? There are people out there who will teach you how (as well as many who want to LEARN how).
- Grammar Girl: This site offers you “quick and dirty” grammar tips each day to help you improve your writing and communication skills.
- Tennis Elbow Secrets Revealed: That’s right. It’s entirely dedicated to one problem persistent in many people’s lives: Tennis Elbow.
Though these businesses are unconventional, they prove one salient point about freelancing: People will be willing to pay you for ANYTHING, as long as you’re adding value to their lives.
You might not think your magic skills are profitable until you realize that birthday parties, schools, and even businesses are willing to pay you to perform — some might even pay you to teach them. Simply put, the sky’s the limit when it comes to freelancing.
“But Ramit, I’m a writer/designer/developer. And there are TONS of us out there. How am I supposed to sell my talents?”
Look, It doesn’t matter if there are other copywriters or designers or whatever else out there. As long as you show your client that you’re able to offer real value and benefits, they’re going to hire you. Period.
