The US Economy is killing me

Things have not been going well since George W. Bush decided to leave the US government's MasterCard at the bar. Especially not for people like me - who doesn't even live in the US.

My hourly rate is about DKK 900 (Danish Kroner) per hour (it varies depending on the type of work - strategic help costs more, simple concepts costs less). My rate is not that expensive. It is cheaper than the amount expensive consultants take, but also expensive enough to only get serious requests.

But my prices has gone through the roof ever since George W. Bush decided to see if he could bankrupt a country:

In 2002 my hourly rate of DKK 900 would amount to USD 105
Today DKK 900 is a whopping USD 166, due to the downward slide of the exchange rates between the USD and DKK (and USD vs. EUR).

I have gone from having a fair price, to being overly greedy - without ever changing my rates. The result is noticeable. US Companies can no longer afford my services - and 39% of my visitors come from the US.

Ads revenue dropping

Another problem is my Google Advertisements. I do not make that much from ads (read: very little actually), but I lost 9% of my ad revenue within the last 12 month alone - due to unfavorable exchanges rates.

Only 5-10% of my annual income is from freelance work, and only 0.5% is from my ads revenue. I am not going bankrupt. It is just annoying!

A two way street

Of course, buying products in the US is now insanely cheap. I recently bought "The Art of Cars, by Pixar" from Amazon - and the price difference between Amazon.com (USA) vs. Amazon.co.uk (Europe) is huge:

Amazon.co.uk sells it for GBP 20.99 = DKK 230
Amazon.com sells it for USD 26.40 = DKK 142

I can almost buy two books from the US store for the same price as the one in England - and this is true for every product.

Although it's fun that I can buy US products for almost no money at all, it is disastrous for US as a country.

BTW: Didn't George W. Bush bankrupt his last company too? The congress should put him under financial administration before China starts to outsource to the US because "it is cheaper that way"...

Comments

Ivan Vega - Jul. 18, 2007

That's eerly hilarious (regarding Bush). In my country it's just the opposite. The exchange rate benefits me, and now actually I earn more from Google than from my day job.

David - Jul. 18, 2007

I have written posts about the same problem. It has cut into my income as I set my rate in USD and have to convert to CDN dollars. :( Not fun.

Thomas Baekdal - Jul. 19, 2007

David, I just visited your site and read your post about it.

I also set my rates in USD (if the client is from the US), but I base it on my base price of DKK 900. In the past have made varies adjustments when converting the price. Sometimes offering a lower price.

I am deciding my price on a job-to-job basis. If it is a short project, and fun to do - then I might offer a much lower price than what I usually take. But, in most cases I will not.

The last time I went as low as USD 135 (that is 20% off my base price), and that was still too expensive for them to accept it.

The problem is not when working with strategic or high-end projects. In those case my price is high, but still acceptable. The problem is when a small company or a single induvidual wants help to make his or her product better.

I am currently in the "wait-and-see" mode :)

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BTW: You can see what price people usually get (full-time jobs, not freelance) here:

http://www.payscale.com/index/US/Job

And, you can calculate what your minimum rate should be with FreelanceSwitch's hourly rate calculator:

http://freelanceswitch.com/rates/

Thomas Baekdal - Jul. 19, 2007

BTW: Multiply full-time salaries by 1.5 to 2.5 to get sensible freelance rates.

A lot of freelancers set their prices to a ridicules low price - sometimes lower than what you would get if you were employed full-time.

This is just stupid! As a freelancer, you do not get paid for overhead, medical insurance, vacation, office supplies, technical equipment - well anything

David - Jul. 19, 2007

Hey,

Thanks for checking out my post. I don't really get to set my rates with Bloggy Network. I am pretty much their employee more than a freelancer, though in reality, I guess I am still a freelancer. I asked them what we could do about such shifts in the dollar, and really, it is a wait and see thing. If I raise my rates, I price myself outside what they can afford, and honestly, I can't afford to lose a full time job that pays fairly well (though less and less each day).

It is nice to know though that others are noticing this horrible trend, and watching what each person does to rectify it. Right now, I am just finding some side work that doesn't take up too much time or energy to make up the difference.

Katy - Jul. 20, 2007

I know what you mean - a friend in London commented yesterday that he would save sooo much money by flying to the States to buy his new laptop - a ridiculous situation!

And its hitting me too - my website income keeps rising... until it gets converted to my currency, when I find that I have made less than last month. I feel so cheated ;) (Seriously, I am living off ads, so it is a problem :( )

Thomas Baekdal - Jul. 20, 2007

Katy, I just checked - I recently bought a Dell Inspiron (in Denmark) for the price of USD 2,640. The same computer costs USD 1,389 from Dell USA - Half price!

And, I can buy a plane ticket for a weekend in New York (from Denmark and back again) for the price of USD 1,459.

Soo....

Buying a new computer in Denmark = USD 2,640
Flying to New York (from Denmark, Europe), spending a weekend there, buying a new computer, and flying back again = USD 2,848

Amazing! :)

Peter - Dec. 28, 2007

Hi Thomas,

I very much enjoy your site.

However as for the US economy you better get adjusted as fast as possible to the fact that the US is bankrupt. Seriously! (And this has little to do with W. although he accelerated this with his wars!)

And Google is trying to rip off European customers paying them in worthless US $s but charging in Euros.

Keep up your good work.

Peter

Thomas Baekdal - Dec. 28, 2007

Hi Peter, I didn't know that Google charged European customers in Euros. Not that I am suprised...

Apple is doing the same thing. While a song costs $0.99 in the US, the same song cost 0.99 EUR in france ($1.44), 8.00 DKK in Denmark ($1.56), and 0.79 GBP in the UK ($1.57) - i.e. about 50% higher prices in Europe.