Managing Two Contracts
dkubb: As a freelancer myself I think it's really important to finish what you start, and keep your promises.Sure, there are times when you have to walk away from a project, such as when there are personality conflicts, or unreasonable expectations.  It doesn't sound like that's the case here.Keep in mind  that most software isn't actually done when you deliver on the initial specs.  Companies will usually expect you to be available for some sort of maintenance phase where bugs fixes and small feature additions are done by you. They'll likely expect you to work at your original rate unless otherwise specified.  Even though you think it's only going to be 200 hours I suspect you will likely be involved with them longer than that.What I would do is finish the contract, but start to set the company's expectations now so there are no surprises at the end.  Tell them honestly that you set your rate lower than your costs, and that after you deliver the project you will need to charge $35/hr or whatever the going rate is for further work.On a side note, while $35 sounds like a great full-time wage when freelancing you'll be lucky if you can get 8 billable hours a day.  Sure, while deep in code it's easy to meet that, but there's the downtime between projects that you have to account for. Also as a freelancer you're expected to be an expert, so learning everything on the job is normally frowned upon -- you don't get paid when you take time off to learn how to use a new tool or technique.I once heard the rule of thumb is that if you'd like to earn the same as you would working full time, but as a freelancer, that your hourly rate should at least be twice your full time wage.  Depending on where you live $35 might be good, but I don't know any experienced freelance developers in North America who charge that.