[Update - added Kottke.org micropatron report near the end]

RadioHead have taken a bold move with their latest album “In Rainbows” as they allow fans to set their own pricing for the digital download (summary, long write-up with pictures of the process).

Except for a fixed credit-card overhead (around 45p) it seems that you can set any price you want (0p? Apparently 0p can work). Obviously this is a damned disruptive move for a large music group in the established industry, and about time too.

This is covered at Slashdot and BoingBoing and with an economics twist on The Long Tail and at the always-insightful BubbleGeneration:

“In quite a bit of recent work, we’ve been pointing out to clients that it’s a trend that is on the cusp of explosion…because it’s gonna absolutely revolutionize the economics of music.
…
Suffice it to say that open pricing is a strategic solution which deeply, deeply dominates the economics of music.”

I’ve toyed with the idea of using adaptive and user-defined pricing for our two commercial Python tutorials at ShowMeDo. So far we’ve settled for a fixed $10 purchase price - but maybe we should revisit a more flexible pricing model?

I particularly like the idea of letting a user choose their own price, having first established a ‘recommended’ price, and later giving the user the option of donating more if they really liked the content.

This lets people pay less than they might if they’re unsure and then come back and top-up the price if they found the information valuable. This would of course be backed by a money-back guarantee, that goes without saying.

A similar thread was discussed over on the 37signals blog for ‘Jane Siberry’s “you decide what feels right” pricing‘:

“The Canadian folk-pop singer Jane Siberry has a clever system: she has a ‘pay what you can’ policy with her downloadable songs, so fans can download them free - but her site also shows the average price her customers have paid for each track. This subtly creates a community standard, a generalized awareness of how much people think each track is really worth. The result? The average price is as much as $1.30 a track, more than her fans would pay at iTunes.”

Jane’s site includes a page describing her approach and it contains statistics on the prices currently being paid by purchasers.

This comment on the RadioHead thread at Slashdot covers several related examples of set-your-own-price music sales.

Matt Weston sent me a pointer to Jason Kottke’s kottke.org - during 2005 he ran a fund drive asking his readers (as ‘micropatrons’) to support his salary so he could work on the blog full-time. As far as I’m concerned his blog is a ‘digital good’ for the sakes of this entry.

He reports on day 2 and got some media coverage and raised just enough money to pay 1/2 his normal salary for a year.

After 2 months he gave an informative report on the results of the funding drive:

“And finally, the answer to the $64,000 question: is this a sustainable business model for independent media on the Web? The short answer is probably no, with a few caveats.”

Along with a concluding report after a year:

“[2] Since everyone and their uncle has been asking, about 1450 micropatrons contributed $39,900 over the past year…99.9% of that coming during the 3 week fund drive.”

Jason’s case is the only micropatron experiment that I know of (thanks for the reminder Matt) - anyone know of others?

A feedback mechanism is important, in ShowMeDo we could easily show what a user paid (and donated) and a user’s profile would presumably state if they were a penniless student or the MD of a tech company. Giving people a chance to be honest, pay what they want, and be a responsible member of a community feels like a very sensible thing to consider.

Are there more examples of setting your own price for a digital good that I’ve not covered here?

Most people are helpful and supportive of freelancers. They know that freelancers survive by being good, trustworthy and helpful and so they try to help. Do remember to tell people that you are freelancing, what you do and what you’re looking for.

Don’t bore them, just let them know what you need and they’re bound to bear you in mind when they meet other people. Always let people know if you’re about to be available, you don’t want unplanned downtime.

Articles: Introduction, Successful Freelancing, Talking to People, Making a Sales Call, Books and Resources.

Meeting People at Events

There are plenty of events you can go to as a freelancer to meet potential clients and freelancers. Here in Brighton we have a great set of local geek events [Sussex Digital - thanks Dave & Josh!].

OpenCoffees are a great and relaxed way to meet local small companies (I’m co-founder of OpenCoffee Sussex).

Look out for Geek Dinners and Girl Geek Dinners (boys need a girl to invite them). Here we have the Sussex Geek Dinners and Brighton Girl Geek Dinners. Each are free to attend and great places to network. We also have Vine Brighton, your area is bound to have similar events.

Brighton hosts the £5 Apps meet (I’m a co-founder) - a meetup for those that are interested in start-ups and can-do techy types. Someone presents and idea or company they founded, everyone asks questions, beer is consumed, people network. See past write-ups of our last six £5 Apps meetings.

Make Yourself Known by Organising Events

A great way to get known in a local scene is to organise events. You can offer to help run existing events but if there’s something missing and you want to see it happen - organise it!

I wanted a venue to discuss entrepreneurship, my friend John wanted a geek event to discuss projects, we created the £5 Apps as a result. After 6 months we now have a successful event, beer is funded by local companies and we have 20-30 attendees every month. We’d love to hear about other £5 App events elsewhere in the country - drop us a line if you want to run one!

Similarly, with another Jon (Inuda) we wanted a relaxed coffee morning for local tech companies so we organised OpenCoffee Sussex at the Sussex Innovation Centre. We’ve had 7 great meetings now, bi-weekly, they’re also now funded allowing free coffee, each is attended by 12-20 local companies.

Organising events takes a few hours a month and is a great way to get yourself known. In part I wanted the £5 Apps as I’m a bit overwhelmed by public speaking - running an event is a good way to get essential practice at speaking in public.

I also felt that Brighton lacked a mailing list for tech companies to talk business. Along with Ivan Pope we organised the Brighton Digital mail-list. The list is small and building a list always takes time, it grows every week and over time it will become a useful local resource. We’ve already had some conversations between local companies discussing local resources and swapping ideas.

What’s the value of these events?

As ever - you have to offer value to other people when you organise things. Your own events and mail-lists aren’t a mouthpiece for shouting about your own company, they’re just a useful way of establishing your credibility whilst providing a useful feature to others.

Figure out what is missing in your local scene and build an event around that. Find a partner who wants to share the workload, make sure there is interest and then just do it. It’ll take a few events to gather steam, don’t be put off - most people will only pay attention when something is ‘more established’.

If you’re building a new geek event then feel very welcome to post a comment here. We’d especially like to see the £5 Apps syndicated elsewhere

Turning yourself into a freelancer is easy - you probably want a Ltd. company (see Part 1) and you need to know what you are offering, where you are offering it (probably local places that you can travel to) and who you are offering it to.

Articles: Introduction, Successful Freelancing, Talking to People, Making a Sales Call, Books and Resources.

Becoming a successful freelance programmer is harder - you need a constant supply of interesting work which pays well. You also want clients who will recommend you to others as this simplifies the job of finding new work.

You need interesting work else you will get bored. You need well-paying work as you have to cover yourself for holidays, sickness, down-time when you search for new work, accountancy fees and tax.

A simple rule of thumb is that you’ll pay 1/3 of your overall salary to income tax, corporation tax and National Insurance.

Finding new Work

You’ll spend a lot of time finding new work. Sometimes you can start straight away, sometimes you have to arrange a start date up to a month in advance. You don’t want to be free-wheeling without work so you’re probably going to be working for 1 client and searching for new work at the same time.

Searching for new work normally means sending emails, knocking on nearby doors (ideally in places like an Innovation Centre with lots of close and related companies) and talking to friends in the industry.

Remember - if you run out of work then you have to work hard, without getting paid, to find new work. This is an easy way to run out of your savings and get in a panic.

This is not nice, it will happen to you, you will work darn hard at solving the problem and you’ll get out of the mess and learn from it (I did, several times). Try to avoid it though, it really saps your energy and makes life crappy for a while.

Being a good freelancer

I’m going to assume that you’re an honest and reliable person. Your friends can recommend you in a heart-beat, you can honestly say what you are good (and bad) at and you can advise a potential client if you can help them or not.

Be honest and helpful, always recommend other people who might be useful. Help the potential client to understand what needs solving (often they need an outsider to help clarify things), offer to do some free work with them for an hour or two to help get to the root of any problems. Give them confidence that they can trust you to solve their problem.

Don’t be an idiot, never avoid communication, make everything clear (including costs and hours that you’ll work) and clarify what needs delivering and required timescales in writing (e.g. an email or printed document). Life is easier if both parties agree on what need’s doing, why it needs doing and how long it should take and cost.

Showing up

Woody Allen (probably) said “Eighty percent of success is showing up.”. It surprises me how many people avoid contacting a possible client due to their own fears - they literally talk themselves out of a possible contract.

Remember that if you have skills and you potential client might need those skills, they need to get those skills from somewhere! Don’t ignore that client, instead go talk to them. Analyse their problem, you can always advise them that the problem is outside of your skill set (bonus points if you can point them at a more skilled associate).

I’ve found a lot of consulting work comes because I:

1. Talk to someone briefly about what they’re doing
2. Talk some more, helping them understand the problems they’ve expressed and if/how you could help
3. Offer to solve their problem

Lesson - talk to many people frequently, ask them what problems they have, try to help solve the problems. If you know people you can recommend then spread the love and help your associates - what goes around does tend to come around in your favour.

Here’s another article on successful consulting.

Three years ago I dropped out of being a paid-employee and switched to being a consultant. I’ve had a number of people ask about my experiences as they’re interested in following a similar route. I’m going to write a short set of posts on the subject and I welcome questions.

Articles: Introduction, Successful Freelancing, Talking to People, Making a Sales Call, Books and Resources. First I should set the scene.

Why did I quit my job?

For five years I worked at the MASA Group developing A.I. software for ‘big industry’. Our company sat outside of the dot-com boom and bust, none of our products were associated with the web.

I was well-placed in the UK office as Senior Programmer and I ran projects between the UK and French offices, met clients and planned the technical future of our operations. Life was fun. I had however always wanted to be my own boss…

During the last year of my employment the company changed direction and the UK office was bought-out by my direct boss - the new focus wasn’t so much fun for me. The company had a tricky time figuring out who it serviced and what it offered and after a year I chose to resign and start my own consultancy.

The move was somewhat risky as I had no prior experience at being a contractor, no track record for agencies and no private client list for consulting work. I took out a £7,000 loan - enough to cover several months worth of mortgage payments, and resigned. I had no savings as I’d just bought my first property.

Lesson - you need several months worth of living expenses if you’re going to switch to selling your skills. You either want money put aside or a loan which you’ll need to repay. I opted for a 7 year repayment term to give myself plenty of room (I repaid the loan inside of 2 years) .

Freelancing as a Consultant A.I. Researcher

I founded Mor Consulting Ltd. in 2004 as a 1-man company. I needed a limited company as some of my consultancy clients would only want to bill to a Ltd. company rather than a sole-tradership.

Founding the company cost £250 via an accountant, for note my yearly accountancy fees are roughly £500 (paid after year-end accounts are completed).

My accountant (Bristow Still) made the process super-simple, I had no prior experience in founding a company yet the process was painless and completed in a few weeks with just a few things to sign. Having an account in the same town as you is convenient - visiting them to ask questions and sign forms makes life easy.

Spreading your Name (Marketing!)

The hardest things I found were the fact that nobody knew that I was:

1. Available
2. Skilled in certain niches (programming, artificial intelligence, leadership)

The solution was to talk to all of my friends and past associates and let them know about my change in status, my new availability and what I’d be interested in doing. Each email was hand-crafted, targeted towards their business (for past associates) and personal. Never spam your friends.

The response was very helpful and quickly I was offered various pieces of generic contract programming work, often for short term jobs (1-2 months each), all local to Brighton.

The Sussex Innovation Centre is a great example of a useful hub - 70 tech companies, all small, most hungry for extra resources. You can visit lots of related companies and obtain friendly referrals with a minimum of effort - maximising your ability to search for new work.

Spreading your name and skills around is likely to be the most important thing that you do whilst you get established (which could take a year). It is also the most time-costly - I spent 2 months spreading word around before interesting A.I.-related things came my way.

At first I had to be liberal in what I accepted - anything coding related that paid the bills was useful. Quickly I worked to accept only A.I.-related work as that would help to build my reputation, from there I never looked back.

Right now I’m going through a similar exercise with my second start-up and our new professional screencasting arm, a new part of business inside ShowMeDo.

What do you want to know?

If you’ve read this far then you probably have specific questions in mind. Do leave me a comment, I’m interested in answering questions.

Two months back Ivan and I started the Brighton Digital mail list for tech companies here in Brighton. We wanted to build a list which local companies can use to discuss their services and talk more openly about business.

To join - email ‘brightondigital-subscribe@yahoogroups.com‘ and you can find the archives here. Anyone in a small/mid-sized company with some some relation to technology is very welcome to come and introduce themselves on the list.

The list has been growing nicely over the past 2 months and now we’re at 51 members. We’ve had a bunch of interesting posts including:

• Introductions from new members, e.g. Nathan introducing his Latitude Hosting and Bruce introducing Madgex
• A discussion on the benefits of the New Product Network from the Innovation Centre
• Examples of how Wired Sussex has helped local companies
• Announces for events like the bi-weekly OpenCoffee at the Innovation Centre (all welcome!)
• An offer for desk-space in Brighton

Great stuff! Our first £5 App night ran smoothly, we had 22 people listening to our two £5 App talks. We’ve been planning this for exactly a month now and it was great to see it run so well. It seems that the free beer was a hit and the building itself lent itself beautifully to the event

John spoke for 30 minutes on Chrss (html slides) and fielded questions on TurboGears. I spoke on ShowMeDo (html slides)- the latter half of my talk was a reflection on our experiences aimed at others who want to build their own £5 App.

Matthew kicked off an interesting thread - should you run lots of £5 Apps in parallel or just concentrate on the one? Kyran and I say Stick With The One That Works lest you split your time too many ways and you become ineffective. Matthew suggested building lots of apps and letting time work in your favour - one of them is bound to win out. Interesting thoughts…anyone care to comment?

Great to see John, Jane, Richard, Simon, Matt, Kev, Colin, Kyran, Manuela, Dan, Emmet and the usual suspects. Thanks to Danny and Ben at HoboInternet for the great venue. ShardCore brought along 4 pieces of neat geek art, you’ll see them in the photos (to come).

Danny and I got talking in the pub about running a workshop on this - more of an interactive session (and less presentational) where those-that-have-done-it can talk to those-that-want-to-do-it. More on this once we’ve had a think about it.

Pictures and presentations to follow. Two more events are planned, a fourth is tentative, we’re open to suggestions for speakers. Note - the slides for both presentations were made with the excellent and free S5.

[Update - John has photos and Danny has a whole stack in Flickr.]

[Update - Jane has a whole set of photos over at Flickr.]

We have a new release of ShowMeDo on-line! We’re receiving some amazing feedback on our market-test with offers of new videos ranging from language tuition through knitting and on to car servicing. We’d love for these new videos to compliment our current 10 videos.

Our 10 videos are free to access (and always will be), we’ll be adding more of our own over the coming weeks. Our first video had Kyran filming me making a perfect cup of coffee, shortly I’ll be filming Kyran make Excellent Tea. These go alongside our other short tuition pieces on the Python programming language, IPython, ScummVM (with Flight of the Amazon Queen) and one on using HyperCam to make your own videos.

Kyran and I would love to receive your feedback, would you take a look and get in contact?

I’m seeing an increase in on-line services that let users earn money from their efforts. Many people like the idea of supplementing their incomes by doing something that they enjoy. Some examples:

• eBay - become a retailer selling whatever you choose
• Professional blogging - e.g. ProBlogger, write about what you enjoy and earn money through sponsorship, Google Adsense and affiliate programmes (e.g. Amazon’s)
• iStockPhoto - submit your own photos and take a cut of sales of your images
• eLance - offer yourself as a freelancer, from software development to brochure design

Umair Haque links to a good example - a woman’s new career as The Virtual Rockefeller (via this), buying and developing real-estate inside the Second Life game (reportedly for a very nice salary).

Kyran and I are aiming to give our users the option of earning money from their knowledge inside ShowMeDo. More on that in the future.

Two good entrepreneurial articles, first Paul Graham’s How To Make Wealth, previously only available in Hackers and Painters is now on-line.

If you wanted to get rich, how would you do it? I think your best bet would be to start or join a startup. That’s been a reliable way to get rich for hundreds of years. The word “startup” dates from the 1960s, but what happens in one is very similar to the venture-backed trading voyages of the Middle Ages.

Up second, Ian Landsman writes an interesting piece on 4 Rules for the Practical Entrepreneur. I’m not sure I agree with all of Ian’s points, perhaps I’m not the practical entrepreneur that he discusses, but the advice is good. Preferring B2B over B2C sounds rather like a personal preference (and has its own challenges, as mentioned in the comments), but each to his own.

I’d like to say a huge thank-you to John to helping ShowMeDo take a step forward, we’ve now got a daemonised TurboGears server that runs 24/7 (woot!).

There’s nothing to see yet (really, there’s just a blank page) as I haven’t yet put up any content or the real server…but we’re getting there. Fingers crossed we’ll have the demo site up before Christmas.