Quick Guide to Making Money on Elance

I read a blog post today on The Simple Dollar that said bidding on projects posted on Elance is a waste of time. While I think the point of the post was good – that people shouldn’t waste time with small money-makers when there are bigger opportunities available – I have to say that I think Elance can be a good way to build a portfolio of clients.

First, for those of you who don’t know, Elance is an online community where freelancers bid on projects posted by anyone who registers as a “buyer.” This work can be writing, coding, web development, public relations, SEO and SEM, etc. – basically anything that can be done virtually. It’s a worldwide marketplace, so people in India can bid for work side by side with people in Indiana. While it might sound like the lowest bidder has the advantage (and thus The Simple Dollar’s recommendation not to mess with bidding on Elance), that’s not always the case. You can win a bid on Elance even if you’re not the lowest bidder. I know because I often choose bidders that don’t offer the best price.

Here’s how to win a bid on Elance and build a business at the same time:

1. Don’t bid on projects that don’t require thought or skill. If the project you’re bidding on is simple and requires nothing more than time and a basic understanding of a computer, don’t bid on the project. Someone in a foreign country with a much lower cost of living will beat you every time. If you do get the project, you’ll be earning $1 an hour (or less). What’s the point of that?
2. Research the person posting the project. Do they post projects and then never choose a bidder? Do they have a lot of negative comments from successful bidders? Look for signs that the person posting the project is more trouble than they’re worth before bidding.
3. Make sure you understand the exact scope of the project. This can be more difficult than it sounds because a lot of Elance projects are posted by people that don’t know exactly what they want. So, you may have to ask quite a few questions to know what’s going on.
4. Bid with profit in mind. A lot of people will tell you that if you bid with the idea of making a profit, you’re going to lose. However, the truth is that every successful Elancer makes profit on every job they take. Remember this old saying when you bid – “If it doesn’t make dollars, it doesn’t make sense.“
5. Build the value in your service by impressing the poster with your bid. When I say “impress,” what I mean is that your bid should demonstrate your skill and understanding. Tell them what you’re going to do and how. Don’t bore them with details, but don’t gloss over your efforts either. It’s important the person choosing the bid understands the time and effort that goes into your work – people always pay more if they understand the value of what it is they’re buying.
6. Follow-up with the bidder. It’s not enough to place a bid and hope for the best – send an email the day the bidding process ends and remind the project poster that you are available to clarify your bid.
7. Negotiate smartly when you can. If you’re contacted by the project poster and asked to lower your bid, it’s time to see if you can extract a concession from the poster. Can you get them to change or eliminate some aspect of the project? Will they agree to send you some additional work? You’re not in a great negotiating position when you’re bidding for a project, but that doesn’t mean you can’t try and negotiate anyways. The worst they can say is ‘No.’
8. Understand that you’re going to lose most of the bids you place. If you’re doing it right and bidding a fair price for your services, you’re still going to miss most of the bids you make. The problem is that a lot of people bidding on Elance don’t understand their own costs. However, if you follow my process, when you do win a bid, you’ll likely win a new client too.

Of course, Elance is just one way to build a client base. The best way to build a client base is thru referrals – so make every job count. The person you’re working for is your best source of new clients.