Independent Contractor Rate Sheet
“You need to understand what your monthly overhead is when you set your rate,” agrees Jennie L. Phipps, owner and editor of Freelance Success, a subscription newsletter and online community for professional freelance writers. “If you`re a writer who works for a publication, you`ll probably get paid vacation, sick leave, half of your Social Security and Medicare, and more. You have to integrate all of that,” she says. When discussing pricing with an agency, it is best to ask for advice and guidance. A good agency will be honest with you about the client`s maximum rate, but also about how your experience compares to others in the market and which rate you should ideally aim for to stay competitive. The possibility of having a certain degree of flexibility with your rate is the best bet to enter the contract market. One of the most frequently asked questions is, “What should I charge for an hourly rate?” Use the following calculations to determine your prices: A basic rule of thumb that most people suggest would be to set your hourly rate as a permanent employee and then add 50-75%. If you earned $65,000/year, that`s the equivalent of $31.25/hour. If you add 50%, your rate would be $47/hour, and at 75%, your rate would be $55/hour. When working with a domain in mind, you have some flexibility depending on the length of the contract, industry, and location.
So you`ve calculated your prices and start attracting customers. The next step is to make sure that you evaluate each order correctly. For any work you enter, it is very important to inform yourself and fully understand all the work involved. This will help you give your customer the most accurate estimate, and you`re less likely to hit them with an unexpected price increase due to unforeseen extras. Of course, this will happen from time to time, but it is always better to get as much clarity as possible from the beginning. “It all comes down to figuring out how many hours you`ll need to get the job done, so at the end of the day, your hourly rate for the whole project is just for them and just for you and continues to make sense,” Phipps says. If you choose to start a business instead of working as a sole proprietor, you can usually charge a higher rate (since your agency doesn`t have to pay the employer`s share of federal taxes) and you`ll pay less tax, but you`ll also have higher upfront and ongoing costs. Making sure you can live on an entrepreneur`s salary is hard work, but it`s certainly doable with the right plan, and much of that is determined by fluctuations in your industry — and the workforce as a whole. Need help with this? Join Monster for free today.
As a member, you will receive career advice and job search advice directly in your inbox. From trends and reports to leading companies and in-demand skills, Monster can keep your finger on the pulse of the times while your hands are full. (No magic involved.) In 2017, 57.3 million Americans performed this type of work (36% of the U.S. workforce, 29% of whom were full-time), according to the annual “Freelancing in America” study. And if the trend continues to grow, much of the country will be made up of freelancers by 2027. (Want more evidence? Check out the thousands of freelance jobs currently available on Monster.) To increase your hourly rate, you need to do one or more of the following: develop skills or expertise for which employees are willing to pay more, look for clients with larger budgets, or learn how to work faster. In short, your mindset needs to shift from “I`m a consultant” to “I`m a business owner.” How to increase the return on your time investment: As an independent contractor, there are many additional benefits, one of the most important being tax savings. Self-employment allows you to claim all the valid expenses needed to run your business, including telephone, internet, equipment costs, and even meals (considered entertainment).
If you`re just starting out, you may need to estimate some of these expenses or ask other contractors in the same field what they pay in overhead, and then use that amount in your calculations. Here`s a numerical example: If you earned $80,000 in your last job, add 30% more to cover benefits, another $24,000, bringing your contractor`s salary to $104,000. Instead, follow these steps to determine a fair price for your workspace: On the other side of the coin, as a freelancer, you can only charge for the hours you work, so you need to consider the cost of unpaid vacation days, sick days, benefits, public holidays and any free time between contracts. There are also administrative costs to consider, including registering a business and possibly paying for ongoing accounting and legal services. Now you need to calculate how much it costs to run your business. Take stock of all your expenses and calculate their annual amount. The fact is that not everyone does it well the first time. Be sure to keep evaluating your approach and try not to commit to long-term commitments until you find the right combination of price and strategy.
The key is to try to consider all the hours of work needed to land and finish the job. For example, if you create a proposal in advance that takes two hours, or if you have to go to phone meetings every few days (and those 15-20 minute calls add up!), you should get paid for that time. “Once you`ve set a rate, it`s pretty hard to change it, so think about it,” Phipps says. There are several factors to consider, and simply calculating your hourly rate as a permanent employee is certainly not a recommended practice. Once you have a number, you have a good start, but it`s not set in stone. Remember: The above is just a simple calculation that will help you reach your base contract rate. In many cases, companies are willing to pay you a higher value than the market because they don`t subsidize your services. Whatever you sell – whether it`s products or services – when it comes to price, you need to think strategically. Setting a fair rate for entrepreneurs is a business decision that should not be arbitrary. “It`s not enough to accept what someone else wants to pay you,” Phipps says. If you follow the above strategies and consistently do a great job for your customers, they will be more than happy to pay you what you`re worth.
After years of experience in the workforce, you have a valuable knowledge base that companies would like to pay a lot of money for leverage. Consulting jobs, freelancers, and contract work are hot topics and ready to get even hotter. While it`s not a difficult and quick salary for entrepreneurs, you`d better have an answer to the question: “What`s your rate?” Treat yourself to at least 20 days of vacation – you can`t enjoy everything in the first few years after starting your business, but it`s good to err on an over-caution and not underestimate this as it affects your daily/hourly rate. Most of the candidates we work with who work as freelancers enjoy the benefits that boards have to offer and never look back, but contracting isn`t for everyone. Get advice from contractors you know and do some research to make sure contracting is right for you. Refine your craft. The faster and more efficiently you can work, the more you can earn for your contractor`s salary. .