For quite some time now I’ve been putting together, in my mind, what I think are the four distinct levels that software developers can go through in trying to gain their “freedom.”
For most of my software development career, when I worked for a company, as an employee, I had the dream of someday being free. I wanted to be able to work for myself. To me, that was the ultimate freedom.
But, being naive, as I was, I didn’t realize that there were actually different levels of “working for yourself.” I just assumed that if you were self-employed, you were self-employed. It turns out most software developers I have talked to about this topic have the same views I did – before I knew better.
I’ve written in the past about how to quit your job, but this post is a bit different. This post is not really about how to quit your job, but the different levels of self-employment you can attain, after you do so.
The four levels
The four levels I am about to describe are based on the level of freedom you experience in your work; they have nothing to do with skill level. But, generally we progress up these levels as we seek to, and hopefully succeed, in gaining more freedom. So, most software developers start at level one, and the first time they become self-employed, it is usually at level three – although it is possible to skip straight to three.
Here is a quick definition of the levels (I’ll cover them each in detail next.)
- Employed – you work for someone else
- Freelancer – you are your boss, but you work for many someone elses
- Product creator – you are your own boss, but your customers determine what you work on
- Financially free – you work on what you want when you want; you don’t need to make money
I started my career at level one and bounced back and forth between level two and level one for quite awhile before I finally broke through to level three. I’m currently working on reaching level four – although, I’ve found that it is easy to stay at level three even though you could move to four.
Along the way, I’ve found that at each level I was at, I assumed I would feel completely free when I reached the level above. But, each time I turned out to be wrong. While each level afforded me more general freedom, each level also seemed to not be what I imagined it would be.
Level one: employed
Like I said, most software developers start out at this level. To be honest, most software developers stay at this level – and don’t get me wrong, there is nothing wrong with staying there – as long as you are happy.
At this level, you don’t have much freedom at all, because you basically have to work on what you are told to work on, you have to work when you are told and you are typically tied to a physical location. (Throughout this post, you’ll see references to these three degrees of freedom.)
Working for someone else isn’t all that bad. You can have a really good job that pays really well, but in most cases you are trading some amount of security for a certain amount of bondage. You are getting a stable paycheck on a regular interval, but at the cost of a large portion of your freedom.
Now, that doesn’t mean that you can’t have various levels of traditional employment. I think there are mini-levels of freedom that exist even when you are employed by someone else. For example, you are likely to be afforded more freedom about when you start and leave work as you move up and become more senior at a job. You are also likely to be given a bit more autonomy over what you do – although Agile methodologies may have moved us back in that regard.
You might even find freedom from location if you are able to find a job that allows you to telecommute. In my quest for more freedom, I actually made a trade of a considerable amount of pay in order to accept a job where I would have the freedom of working from home. I erroneously imagined that working from home would be the ultimate freedom and that I would be content working for someone else the rest of my career, so long as I could do it from home. (Don’t get me wrong, working from home has its perks, but it also has its disadvantages as well. When I worked from home, I felt more obligated to get more work done to prove that I wasn’t just goofing off. I also felt that my work was never done.)
Now, like I said before, more people will stay at level one and perhaps move around, gaining more freedom through things like autonomy and a flexible working schedule, but there are definite caps on freedom at this level. No one is going to pay you to do what you want and tell you that you can disappear whenever you want to. You are also going to have your income capped. You can only make so much money working for someone else and that amount is mostly fixed ahead of time.
Level two: freelancer
So, this is the only other level that I had really imagined existed for a software developer, for most of my career. I remember thinking about how wonderful it would be to work on my own projects with my own clients. I imagined that as a freelancer I could bid on government contracts and spend a couple of years doing a contract before moving on to the next. I also imagined an alternative where I worked for many different clients, working on different jobs at different times – all from the comfort of my PJs.
When most software developers talk about quitting their jobs and becoming self-employed, I think this is what they imagine. They think, I like I did, that this is the ultimate level of freedom.
It didn’t take me very long as a freelancer to realize that there really wasn’t much more freedom, working as a freelancer, than there was working for someone else. First of all, if you have just one big client, like most starting freelancers do, you are basically in a similar situation as what you are when you are employed – the big difference is that now you can’t bill for those hours you were goofing off. You will likely have more freedom about your working hours and days, but you’ll be confined to the project your client has hired you to work on and you might even have to come into their office to do the work.
This doesn’t mean that you don’t have more freedom though, it is just a different kind. If you have multiple clients, you have more control over your life and what you work on. You can set your own rate, you can set your own hours and you can potentially turn down work that you don’t want to do – although, in reality, you probably won’t be turning down anything – especially if you are just starting out.
Don’t get me wrong, it is nice to have your own company and to be able to bill your clients, instead of being compelled to work for one boss who has ultimate control over your life, but freelancing is a lot of work and on a daily basis it may be difficult to actually feel more free than you would working for someone else.
Given the choice of just doing freelancing work or working for someone else, I’d rather just take the steady paycheck. I wouldn’t have said this five years ago, but I know now that freelancing is difficult and stressful. I really wouldn’t go down this road unless you know this is what you want to do or you are using it as a stepping stone to get to somewhere else.
From a pay perspective, a freelancer can make a lot more money than most employees. I currently do freelance work and I don’t accept any work for less than $300 an hour. Now, I didn’t start at that rate – when I first started out $100 an hour was an incredible rate – but, I eventually worked my way up to it. (If you want to find out how, check out my How to Market Yourself as a Software Developer package.) The big thing though, is that your pay is not capped. The more you charge and the more hours you work, the more you make. You are only limited by the limits of those two things combined.
Level three: product creator
This level is where things get interesting. When I was mostly doing freelancing, I realized that my key mistake was not in working for someone else, but in trading dollars for hours. I realized that as a freelancer my life was not as beautiful as I had imagined it. I was not really free, because if I wasn’t working I wasn’t getting paid.
I actually ended up going back to fulltime employment in order to rethink my strategy. The more and more I thought about it, the more I realized that in order to really gain the kind of freedom I wanted, I would need to create some kind of product that I could sell or some kind of service that would generate me income all the time without me having to work all the time.
There are many ways to reach this level, but perhaps the most common is to build some kind of software or software as a service (SASS) that generates income for you. You can then make money from selling that product and you get to work on that product when and how you see fit.
You can also reach this level by selling digital products of some sort. I was able to reach this level through a combination of this blog, mobile apps I built, creating royalty generating courses for Pluralsight and my own How to Market Yourself as a Software Developer package. (Yes, I have plugged it twice now, but hey this is my blog – and this is how I make money.)
You have quite a bit of freedom at this level. You no longer have any real boss. There is no pointy-haired boss telling you what to work on and you don’t have clients telling you what projects to work on either. You most likely can work from anywhere you want and whenever you want. You can even disappear for months at a time – so long as you figure out a way to handle support.
Now, that doesn’t mean that everything is peaches and roses at this level either. For one thing, I imagined that if I was creating products, that I would get to work on exactly what I wanted to work on. This is far from the truth. I have a large degree of control over what I choose to work on and create, but because I am bound by the need to make money, I have to give a large portion of that control over to the market. I have to build what my customers will pay for.
This might not seem like a big deal, but it is. I’ve always had the dream of writing code and working on my own projects. I dreamed that being a product creator and making money from my own products would give me that freedom. To some degree it does, but I also have to pay careful attention to what my audience and customers want and I have to put my primary focus on building those things.
This level is also quite stressful, because everything depends on you. You have to be successful to get paid. When you are an employee, all you have to do is show up. When you are a freelancer, you just have to get clients and do the work – you get paid for the work you put in, not the results. When you are a product creator, you might spend three months working on something and not make a dime. No one cares how much work you did, only results count.
As far as income potential, there is no cap here. You might struggle to just make enough to live, but if you are successful, there is no limit to how much you could earn, since you are not bound by time. At this level you are no longer trading hours for dollars.
To me, it isn’t worth striving for level two, it is better to just work for someone else until you can reach level three, because this level of freedom is one that actually makes a big difference in your life. You still may not be able to work on just what you want to work on, but at least at this point – once you are successful – all the other areas of your life start to become much more free.
Level four: financially free
I couldn’t come up with a good name for this level, but this is the level where you no longer have to worry about making money. One thing I noticed when I finally reached level three was that a large portion of what was holding me back from potentially doing exactly what I wanted to do was the need to generate income.
Now, it’s true that you can work on what you want to work on and make money doing it, but often the need to generate income tends to influence what you work on and how you work on it. For example, I’d really like to create a video game. I’ve always dreamed of doing a large game development project. But, I know it isn’t likely to be profitable. As long as I am worrying about income, my freedom is going to be limited to some degree. If I don’t have passive income coming in that is more than enough to sustain me, I can’t just quit doing the projects that do make me money and start writing code for a video game – well, I could, but it wouldn’t be smart, and I’d feel pretty guilty about it.
So, in my opinion, the highest form of freedom a software developer can achieve is when they are financially free. What do I mean by financially free though? It basically means that you don’t have to worry about cash. Perhaps you sold your startup for several millions of dollars or you have passive income coming in from real estate or other investments that more than provides for your daily living needs. (For some good information on how to do this or how this might work, I recommend starting with the book “Rich Dad Poor Dad”.)
At this level of freedom, you can basically do what you want. You can create software that interests you, because it interests you—you aren’t worried about profitability. Want to create an Android app, just because, go ahead. Want to learn a new programming language, because you think it would be fun – go for it.
This has always been the level of freedom I have secretly wanted. I never wanted to sit back and not do anything, but I’ve always wanted to work on what interested me and only what interested me. Every other level that I thought would have this freedom, I realized didn’t. I realized that there was always something else that was controlling what I worked on, be it my boss, my clients or my customers.
Now, this doesn’t mean that you can’t still make money from your projects. In fact, paradoxically, I believe, if you can get to this stage, you have the potential to make the most money. Once you start working on what you want to work on, you are more likely to put much more passionate work into it and it is very likely that it will be of high value. This is where programming becomes more like art. I don’t have any proof of this, of course, but I suspect that when you don’t care about making money, because you are just doing what you love, that is when you make the most of it.
Don’t get me wrong, you might be able to focus on doing what you love, even if you aren’t making any money. I know plenty of starving artists do – or at least they tell themselves they do – but, I can’t do it. I’ve tried it, but I always feel guilty and stressed about the fact that what I am working on isn’t profitable. In my opinion, you really have to be financially free to experience true creative freedom.
I’m actually working on getting to this level. Technically, I could say I am there now, but I am still influenced greatly by profitability. Although, now, I am not choosing my projects solely on the criteria of what will make the most amount of money. I am turning down more and more projects and opportunities that don’t align with what I want to do as I am trying to transition to working on only what interests me as my passive income is increasing.
What can you gather from all this?
Well, the biggest thing is that freedom has different levels and that, perhaps, you don’t want to be a freelancer, after all. I think many software developers assume working for themselves by freelancing will give them the ultimate freedom. They don’t realize that they’ll only be able to work on exactly what they want to work on when they are actually financially free.
So, my advice to you is that if you want to have full creative control over your life and what you work on, work on becoming financially free. If you want a high degree of autonomy in most of the areas of your life, you should try to develop and sell products. If you are happy just being your own boss, even if you have to essentially take orders from clients, freelancing might be the road for you. And, if all of this just seems like too high of a price to pay, you might want to just stay where you are at and keep collecting your weekly paychecks – nothing wrong with that.