Hi Anne,
I developed a website for my day job employer while employed. I am ready to quit them and go totally freelance. I’m anticipating that they will want me to maintain the site after leaving.
My question: how to propose an agreement. I’m doing these web services professionally now. Do I propose it at my hourly wages when I worked with them, or do I propose it as a new provider at freelance wages? FYI: the difference is considerable. Not sure how to approach this.
For my part, I could take it the gig or leave it. I wasn’t super happy at the job, that’s why I’m leaving. Also, I anticipate that they will be a high maintenance, pain-in-the-rear client. Please advise.
Chris
Hi Chris,
First of all, congratulations on going freelance. You’ll love it.
Now, if you really don’t think you will like working freelance for these people, I suggest you skip it entirely. No one needs high maintenance, difficult clients!
If you decide to make a proposal anyway, I suggest you make it at the rate you know you need to get. Sure, they are likely to think you’re way too high. If you get a chance to point out they will be saving money on insurance, retirement and other benefits, they may become a bit more reasonable.
And if you had said you were really hoping to get the gig on a freelance basis I might suggest some sort of a compromise between your hourly wage as an employee and what you plan to get on a freelance basis. But it’s never a good idea to sell yourself short.
Proposals like this can be written or they can be done in person. If you do it in person and for some reason it’s accepted, be sure to reduce your understanding to writing – an email is okay.
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Write well and often,
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Brilliantly put, if I may say so, Anne. I think I’d have said “Charge them your highest rate and, if they don’t like it, laugh.”
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Consultants (such as freelancers) normally charge more than the salaried employee, given that they must pay taxes, health coverage and other incidentals not paid by staffers. I usually have a special pita rate I charge for high maintenance clients.
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A good rule of thumb for the sort of work you likely do for them is as follows:
Annual Salary / ((52 – 4) – 2 – 1) / 40 = Salaried Base Rate /Hour
4 = 4 weeks annual leave
2 = 2 weeks “statutory holidays” (varied per country)
1 = 1 week allowance for being sick
So, if you had a base salary of $30,000 as an employee your base “rate” is $17 rounded up.
It does not stop here. You need to account for your own “equipment”, travel (that you can’t directly charge for), emails, phone calls and incidentals that are very hard to “charge for”. Also, accounting and IRS (IRD in NZ) compliance and what ever other “tax collection” you have to do on behalf of your government(s).
Basically, add 50% to the base. So as per above it would be around $25/hour based on a $30,000 “employee” salary.
This is just rough, and you may need to adjust based on the market in your area.
Once you get to a certain level, assuming you are in ICT, you can charge what it is worth to your client, rather than what you used to get paid. My base rate in New Zealand is $100/hour, much higher than I could get with the above formula based on my previous employment roles.
Hope this is useful to you.
Karl Rohde´s last blog ..White Papers vs. Blogs – Your Opinion?
Excellent Karl – although I suspect our us based folks will be surprised at 7 weeks off… American’s are lucky to get two… here corporations and profit rule, not people
The advantage of being a freelancer is you dictate how many holidays you get
I never actually knew US only get about 2 weeks a year.
If New Zealand workers knew how good they really have it I suspect they would be a little more productive (read “less lazy”). But that’s another topic.
Karl Rohde´s last blog ..White Papers vs. Blogs – Your Opinion?
I’ve sailed with some Kiwis – they weren’t lazy, but hard do-ers
Exceptions. There is a reason New Zealand is in the bottom quartile of productivity per hour in the OECD.
Karl Rohde´s last blog ..White Papers vs. Blogs – Your Opinion?