When you first take the leap into self-employment, one of the most daunting things can be setting and negotiating your freelancer or contractor rates. Your rates are a bold statement of what you’re worth, and that totally goes against the traditional British psyche.
However, setting your rates needn’t be a terrifying prospect. Here are our top tips for making it easy.
Work out what you want to be paid
For this, you need to balance your desires with a touch of realism. Do some research into what others, doing the same role as you charge per hour or day and then adjust for region and experience. For instance, if you’re based in London, you’ll probably charge a much higher rate than someone in Manchester. And if you have ten years of experience, you should be charging more than someone with only four.
This should give you a rough figure which you’ll want to check is enough for you. For instance, what are you left with once you’ve shaved off deductions such as tax, National Insurance and any student loan or pension contributions? Do you have any fees to pay to umbrella companies or agencies? Once you’ve deducted everything you need to, ascertain if you’re left with enough. If not, re-evaluate your proposed rate, so you are left with enough money after deductions.
Be confident in negotiations
Even though you’ve set your fees, some clients may try to get you to reduce them. Be confident, strong and stick to your guns, and don’t let them blindside you with irrelevant arguments. For example, a lot of clients like to point out that they pay less than £100 per day for someone doing the equivalent role on a full-time salary. Remember that, while that may be the case, that employee would get other benefits such as holiday pay, sick pay and a variety of optional perks – none of which you, as a self-employed person are entitled to.
So, be polite, calm and know all your facts about your rates before entering into negotiations.
Review your rates every year
The cost of living tends to rise every year and so keeping your rates the same year in, year out may not work for you. Instead, you should review your income every year and decide if you need to increase your rates to keep earning.
Don’t be afraid to do this, although be prepared to explain the rate-change to existing clients. You don’t need anything elaborate or to ply them with excuses, but you should be honest and unapologetic. After all, why shouldn’t you have a pay review every year?
Once you’re happy with your rates, you’re all set to start earning as a freelancer or contractor. Well, almost. Before you do anything else, make sure you have adequate contractor insurance in place, so you are covered no matter what happens. Contact the expert team at Kingsbridge to discuss your requirements and get a quote.
Contributor Ross Pounds, Digital Marketing Executive at Kingsbridge
Content and Engagement at Kingsbridge Contractor Insurance