Freelance charging

I’ve been doing a spot of freelance webmonkeying at Syzygy where everyone seems to work, rather than have fun. No wonder they’re still in business five and a half years after I was last there. It’s no way to run a dotcom I tell ya!

Anyway, with my current search for freelancing gigs I was thinking about how much a freelancer needs to charge per day to equal certain full-time salaries. Let’s say the freelancer would naively still like his five weeks’ holiday a year (which is what every company I’ve worked for has offered). And that there are around ten weekdays a year taken up by Christmas, Easter, bank holidays, etc. And let’s assume our freelancer is going to be ill for, on average, five weekdays a year. Out of a year’s 52 weeks we’re left with 44 weeks during which the freelancer has to make up a yearly income. We’ll assume his income tax and National Insurance will be the same as if he were employed full-time, because it’s simpler and I’ve no idea what the difference actually is (I’d like to know… anyone?).

Therefore, to make the following annual salaries, the freelancer needs to charge these amounts per day:

  • £30,000: £136 per day
  • £40,000: £182 per day
  • £50,000: £227 per day

Of course, this assumes the freelancer will be working five days a week which is more than unlikely. So he should charge more to make up for the time when he’s looking for work, promoting himself, doing his own admin, etc. And I’m ignoring the question of whether the freelancer wants to work 44 weeks per year and how much of a drop in income he’s prepared to accept in exchange for more free time. I’m also ignoring the costs of possibly paying for his own equipment versus the benefits of claiming the cost of said equipment back against tax.

I’d appreciate any thoughts from anyone who’s got more than, er, three days’ experience of this lark.

Comments

  • The rule of thumb I have heard used by freelance journalists is basically to divide your target salary into the appropriate weekly or daily chunks then add 1/3 to compensate for loss of pension, need to market yourself, uncertainty of income etc.

    Then hold your head in your hands and weep at the impossibility of earning a reasonable income.

  • Heh… of the four full-time jobs I’ve had, only one offered a contributary pension scheme, so I’ve already factored that into my personal depressing calculations!

  • I was made redundant, at the end of March this year, after 11 years with the same employer. “Darling I’ve decided to go out on my own”. To borrow a phrase from an old Renault 25 advert. Unlike the advert I did’t get to keep the car. Its a long an interesting tale.

    To answer your questions, I’m wary about giving financial advice but here goes.

    Other costs you may incur as an independent include, Professional Indemnity Insurance, the costs of things like death in service benefit which many employers offer, not such a big issue if you have no dependants. If you are going to work from home you will have to pay more for heating, telephone and house insurance.

    I took a 3 day,local authority sponsored, free, business start up course which was invaluable. I wrote a business plan and got marketting advice. The business plan was used to secure a 500 pound grant towards the cost of new equipment (notebook,phone, printer). Business plans are a great aid to lateral thinking and exploring your opportunities and skills.

    I then went about making myself accessible. From a technological perspective this included call divert from land line to mobile, blue tooth GPRS connectivity for the notebook. This way you can move about, work from anywhere, access the Internet and be easily contactable whereever you are. Cafes are my favourite work environment. Catch me now at Costa Newcastle Airport.

    The amount of tax and national insurance you pay. Ask an accountant, you will of heard of IR35. You will need advice before signing and agreeing contracts with future clients. You need to be as unlike an employee as you can. This will lead you into odd working environments and hours.

    If you have time try reading Soloing by Harriet Rubin, it helped me change my way of thinking when migrating from paid full time employment.

    The other thing is cash flow. Get used to the gap between doing the work and getting paid for it and don’t underestimate how long it is going to be.

  • Good to hear you’re freelancing. From my own experience (writing) I’d say it’s essential not to underestimate the days when you won’t be working when you do the maths. Having said that most of my work is paid by word count rather than days. I’ve set myself a target amount each month that represents my break even point (ie I won’t slip into the red at the end of the month) which doesn’t necessarily translate into a set number of days. It could be three or four features which would be about the same dosh as 10 days working somewhere like TimeOut but might take more (or less) time.

  • Charging has always been a tricky one for me. I’ve got a tendency to charge based upon who I’m working for, working out to an average income per day which is reasonable. I try to work with different ranges of people to get different influence and input in what I do, and so managing the rate for the client is important. It’s something I did back at Kleber as well, pricing out work based upon how useful it was to the company. Or how much we liked the client. It’s no way to run a business though…. it screws with the cashflow something rotten!

  • My suggestion is to get a wife who has a steady, fulltime job! (Factor in the time you feel bad/made to feel bad about this…)

  • Heh, I like Ted’s idea. But also, good post. I’m also thinking of freelancing and have recently been asked how much I charge per hour or project. Its like how long is a piece of string.. And also, if you’ve not done much before should you charge less until you build up a showcase of sites.. hm..

  • To respond to Thayer, I would make a long list of things you can do (not just by project). How long would it take to write code, design Flash rollover, etc. etc. Then take that time and double it. It will always take longer.

    Then when you do get it done under the time you said it would take, you’ll look efficient.

    I mean, you wouldn’t want to say “I’ll design a website for $500” and then get stuck with someone who want numerous redesigns and all sorts of web trickery. If you can present a menu of options for them to choose—you want more? it’ll cost more—they can then decide what they want.

    If you haven’t got too much experience, what you can offer is low costs and speediness. But first you gotta know what they want.

    Jeez, does that help or hinder?

  • I’ve varied my rates a lot, depending on what I reckon the company paying them can afford. GlobalMegaCorp gets charged top whack, and they never seem to blink. LocalFriendlyMart gets me a lot cheaper. GreenHippyCharityCooperative usually gets me for free. It seems to work.

    I still don’t have any money, mind you.

  • With clients as varied as GlobalMegaCorp and CharityCollective, there’s also the consideration of how much you’re going to like the project/client, so set your price so that you won’t regret it either way (ie whether you do the work or not).

    Spend enough time with the potential client that you know if you can do a fixed-fee quote without the risk of it ballooning into an endless redesign. Otherwise, daily rates or put a price against a clearly-written spec. (Whether you’re the one writing the spec, and whether you’re doing it for free or not, is another matter…)

    Paul Murphy and David Brake are spot on when they say you shouldn’t underestimate the amount of time you’ll spending not working, marketing yourself, doing new business etc. I think that this, more than compensation for the lack of pension-like benefits, is the primary reason that many freelancers who want an effective salary of X, add 33-50% to it.

  • Good posting from Giles. It’s important to approach it from the correct direction, i.e. charge as high as the market will bear, rather than get by on the bare minimum.

    I don’t know about computer people, but an increasingly large number of newspapers (such as the Independent) and magazines are being sub-edited by freelancers with just a core staff who are basically administrators.

    To give an example: a freelance sub-editor at “Computer Weekly” gets

  • In translation we have a very competitive field. Too many translators compete for only a few jobs. I was lucky with larger companies charging my rate of US $0.12 per word or $ 45.00 per hour. The problem are agencies who sub out the work and try to get my work for almost nothing.