You just clicked a few buttons!
I get this reaction a lot on logos that on the surface seem to quite simple. If it was that simple to design a logo then why did you not go to this 12 year nephew with a torrent version of Photoshop in the first place. But they still want the logo though, just at a better price. The cause of this is how do we quantitfy creativity?
What I do
I wont take a job from a new client or a one off design without a 50% deposit, and I only provide the proofs when the cheque clears. If its fairly large job or theres material, fonts or stock I have to purchase then I usually collect a further 25% at this point. I only provide the files when the final cheque clears (yes that well heeled client driving a 300 Kompressor will give you dud cheque)

Sticker Shock
In the past I would often be well into the design before I even considered how much this job would cost. Most clients who’ve never commissioned a professional design have no idea what the general costs are. This might also be an industry problem, its not like we sell cars where you know that a BMW costs more than a Yaris. There are also a designers of vastly different skill levels charging vastly different prices, so there isn’t really a set standard rate card.
What I do
A while back I engaged the services of an accountant, like many fellow designers I absolutely suck at bookkeeping. This gave me a far better understanding of my current financial needs and what I need in the future in order to survive. Armed with a more realistic figure of what my input costs are I’m now able to quote more accurately before starting a job, and I always give a written quote. Only once the client and I agree on a fair rate will I then proceed with the project. I now have a fixed rate card which i hand to the client as well, this sometimes brings in more business as he realises the scope of my services.

The Quickie
Some clients either because they trying to get cheap work or truly have no idea how long it takes to create a design or shoot a product will often feel that something that takes me a few hours to do should automaticly cost less. The reason it took so quick is because of the years of experience I bring to the table, not because its a small job. I often remind clients that the amount of enthusium I put into the job is directly related to the financial reward. Sometimes this doesn’t work though.
What I do.
This has no easy answer, but I often remind them logo’s like Fedex takes a lot of development and time before you can get a result like that.

Dead Beat Clients.
There are some clients who walk in fully intent on screwing you over.
What I do.
Do some research on your potential client, he has to have done business somewhere in the area, perhaps chat to your clients, you never know who knows who. Check local chambers of commerce or complaints sites for any cases / reports on him.

Slow Payers.
Governments, local municipalities and larger corporations have the worst payment cycles of all. And most wont pay a deposit so you sit for up to 120 days after having paid the printer without money.
What I do
If you have to pad the bill in order to account for interest on you overdraft then just do it. At best you will make almost as much as you originally intended. I also invoice on delivery, the date of payment is often calculated on receipt of the invoice. So if your invoice cycle is the 20th of the month and you completed the job on the 3rd you’ve added a whole 30-40 days to the final payment date.

I’d love to hear if you have any tips for me.

Legal Issues.
Freelancing as a Graphic or Web Designer is different from starting a business as say a hairdresser. You may not need to register for a licence depending on your countries and local metro by-laws. Tax laws also differ and in some instances if you earn below a certain income level you need not register to collect VAT. You need to approach your local small businees development centre and collect as much information as possible. Your local bank would also have phamplets designed to assist the small business owner.
Branding & Marketing
You in the business of creating brands for customers, start with yourself.  Depending on where you are the market may be so saturated that you would need to be exceptional in your profile in order to stand out. As designers we can trade under a company name or our own name as a brand, which ever way you decide you need to establish a unique identity for yourself. Try finding a niche market that is under serviced and take ownership. A startup designer is hardly expected to be a trend setter but imitating an established designer will soon brand you as a copycat wanna be, a reputation  which will be very difficult to shake off later. Proper self branding can often be the difference between a successful business and failure, trust me if you cant brand yourself you shouldn’t be charging people to brand their business.
Portfolio
These days the most effective portfolios are online. Most potential clients do not have the time to meet with you and to browse your designs online. Coupled with a impressive print portfolio should set you apart from the competition. Your printed material should be at the very least of high quality with a consitant corporate identity on everything you presenting. Designers are expected to be a bit eccentric, presenting a funky or unusal business card could help a potential client remember you better.
The most common error by new designers is shoving everything they ever done in there in the hopes that something will catch someones eye. If you show me the stuff you did in college I wont bother turning the page, rather go do some pro bono work for a local charity and present that. Your portfolio has to show the client not only what you are capable of doing but what you can do for the client. Word of mouth is far more effective at getting you new clients and retaining the current ones that the slickest email marketing campaign with the best landing page.
The Matrix
Network constantly. While this wont endear you much to your girlfriend much when you pick up a new client at her spa you can always buy her something pretty with new income. Don’t be afraid to strike up conversions with people about what you do. even your doctor needs business cards or script pads. Social network sites like facebook , twitter, digg, linkedin are a great way to keep in touch with clients and other designers. Creating a reputation for yourself as professional, talented with some unique skills takes time. Set yourself up with a blog and start posting on that one skill or talent you have that sets you apart.
Elevator Pitch.
http://en.wikipedia.org/wiki/Elevator_pitch

An elevator pitch or elevator speech is an overview of a product, service, person, group or organization, or project and is often a part of a fundraising, marketing communications, brand, or public relations program. The name “elevator pitch” reflects the idea that it should be possible to deliver an elevator pitch in the time span of an elevator ride, or approximately thirty seconds to two minutes

This can be an oral, written (think “about us” page) or a youtube video. Its a business “pick up line” It has to attention getting, professional and get to the core identity of your brand. It saves you time, prevents leaving out important information about you and prevents you stuttering while trying to impress a prospective client.

Charging for your service
You have to charge for your services, dont be afraid to place a price on what you do.  You need to have a detailed breakdown of what your input costs are, rent, insurance, salary (yours and staff), utilities, transport etc. This total amount is the minimum amount you need to make without going broke, anything after taxes is your profit.
There are 2 common methods of charging, both with pros and cons.
A fixed price:
You quote the client a set amount for a certain task, regardless of the amount of time it takes to complete. This works well if you have a fair amount of experience and can accurately judge how long it will take you to complete a certain task, it also sits well with most clients as they know before hand how much they are committed to you for.
Pros:

• Easier to budget for the month
• Profitable for efficient designers
• Easy to determine how many projects are need to make ends meet

Cons

• Less skilled designers will be underpaid by overestimating their skills
• Hourly Rates:
• More common at agencies due to the corporate type of cliental and they expect to be charged that way. Many freelancers who come from this environment simply continue charging this way as they dont know how to set fixed prices.

Pros:

• You paid for the time involved
• Easier to budget for the week or day

Cons:

• Inaccurate hourly rates can case a shortfall
• Less skilled designers can unfairly penalise the client by working inefficiently
• Timesheets need to be filled and submitted timeously

If you think I’ve missed something post a comment.

While its nice to hold the lofty ideal of ‘job satisfaction’ and doing things for the love of it there are certain practical concerns for those born without the proverbial silver spoon ie. we still need food, a roof over our heads, clothes to wear.
I’m not against doing things for the love of it, I just want to be paid for it, and paid well. I’m totally against someone else deciding how much I should be paid for my work. Graphic and Web Designers are in a rather unique position of being ideal freelancers.

Some pros of freelancing:

• You decided how much you earn.
• You report only to yourself (and family).
• You get to choose which jobs to take and which to turn away.
• You can get up whenever you want, work the hours you want too (be warned its a lot more than if you were employed).

You can’t get fired.

• You can work anywhere, imagine sitting on the beach with your laptop and cell phone earning money watching the money and waves roll in.
• You get to meet a far more interesting variety of people than if you were office bound.
• Some cons of freelancing:
• You decided how much you earn.
• You get to meet a far more interesting variety of people than if you were office bound.
• There’s no set income, if you suck at accounting keep expenses under control will be a major stumbling block.
• You’ll work harder for your self than your boss.
• You’ll find that keeping a client happy is far more difficult than you thought.
• There’s no retirement fund, medical aid, leave, loan facilities and all the other lovely corporate benefits. Retirement planning is something you need to take care of from day one. I’ve exchange web development for financial planning with a local broker.

Ponytails vs Bean-counters.
If you work for an agency/company by now you must be tired of the constant conflict between the number crunches and the creatives. They dont get us at all, and any creative accountant usually gets arrested at some point so its pointless trying. Not having to put up with them is probaly the best part of being a freelancer.
You wont be able to get rid of them completely, in order to comply with most countrys tax laws you would need an accountant or bookkeeper at the very least. Amazingly the bean-counters actually help to keep your business in decent financial health.
What do you need to start:

1. You don’t really need much start up capital. Primary cost would be a high end PC or Mac especially if you want to run CS5 at its full potential. Next major expense would be software, (please use licenced legally bought software). Ebay is a good source if retail prices causes sticker shock, just use your common sense.
2. A portfolio web site is a cost effective means of getting your brand out there. If you have no web development skills maybe you could trade your graphic design or photographic skills with a web developer.
3. Basic stationery like business cards, invoice / quotation books. You could email all your quotes and invoices. Approach a local printer and offer some free design in exchange for some printing.
4. While its nice to have an office if you have to choose between a car and premises, I’d choose the car. You can always offer to meet the client at his office or a local coffee shop like I did when I started out.
5. Selfstarter Skills. While its nice to have flexable working hours if you spend the whole day sleeping, its another day you didn’t earn anything.

Is this the time for you to freelance?

With the current economic turmoil its hard to advise anyone to leave the security of a job and a paycheck to slog (and slog you will) it out there on their own. But there’s always going to be a financial crisis, that’s what investment brokers do, they buy when the stocks are really low and sell just as the price falls after a peak, and that’s how they make money. If you the kind of person who procrastinates, if you always going to buy that dress after you loose 5kg’s or as soon as summer starts or just as soon as the time is right, freelancing is not for you.
If you’re the kind of person who likes a challenge, can make yourself get up in the morning, can commit and deliver to a timetable, likes to lead the followers, likes to take risks then maybe this is the lifestyle for you.

I’ve always been interested in designing and spent much time scouring whatever adverts and business cards i could lay my hands on. Most of what I saw seemed generic and hardly impressed me much.
Prior to taking the plunge I researched the surrounding businesses to see if there was a need for graphic design services. An opportunity soon presented itself to do typesetting services for small print shop.
The combined income from the fashion design and graphic design allowed me to do the following:
1) I invested in hardware and software required while I was still working full time.
2) I saved up 6 months of expenses so that I was covered while I started my business and wasn’t forced to take on another job.
3) I put together a portfolio and approched local businesses and newspapers offering my sevices.
4) At that time Graphic Designers were a rather rare breed and I was fortunate to not have much competition, but it was harder to convince potential clients of the need for my services.
5) I took small jobs first. It gave me the the opportunity to learn at low cost as if anything went wrong I could afford to fix it.
This was in an era before the internet, I din’t even have a scanner and cd burners were only invented a few years later. In the next post I’ll outline what you need to do in 2010 to start freelancing.