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Please help me work out what I should charge and should I be freelance or staff?

(6 Posts)
fruitstick Wed 30-Sep-09 10:03:49

I'm on maternity leave at the moment and looking at giving up my staff post to go Freelance.

I was originally talking to a company about working for them 2-3 days a week. They can't afford that and have suggested 1 day per week.

My original fee was £350 for freelance but they have come back with an offer of £250 for a staff post.

They are a small company and it's for a 3 month trial so I can see no benefits of being staff.

What should my counter offer be? How much will they save if I am not staff? Also I will be working from home so will have to cover all my office expenses etc.

What would you suggest?

flowerybeanbag Wed 30-Sep-09 10:11:15

Impossible to say without knowing what you do - by the sounds of it it's something pretty well-paid. £250 for 7 hours a day works out as a full time equivalent salary of £65,000. (£250 x 5 days a week x 52 weeks a year). £350 a day works out as £91,000. Obviously for working on a self-employed basis you should be paid a bit more that an employee would for doing the same thing, but only you can research and demonstrate the going rate for whatever it is you do.

In terms of benefits of being staff, you get holiday pay, they will obviously have to pay NI for you, and if the 3 month trial is successful and you end up staying for a while you will get all sorts of employment rights, bit more security and if the company is 5 or more employees, access to a pension scheme.

If you are an employee, why would you have to cover all your office costs? Why would you not be able to claim these on expenses?

fruitstick Wed 30-Sep-09 10:17:44

Sorry, beanbag, I meant if I was freelance I would be covering my office costs.

I know that £350 is the going rate, I'm just to work out how it equates in terms of take home salary to a staff job.

If I offer to be Freelance, how much more than the £250 they are offering can I ask for?

It's probably a tax question really.

flowerybeanbag Wed 30-Sep-09 10:29:05

Well, it's difficult to say really. I think basically it's a negotiation, you know the going rate for what you do, they know what they can afford/are prepared to pay and it's about negotiating something all are happy with. Obviously to what extent they really want you as opposed to you really wanting this piece of work is also crucial!

In terms of how much they'd save by you being freelance, well there's employers NI which I think is around 11% or something, so that would bump the daily rate they are actually paying up to £277.50. Then there's holiday pay, which I work out to be £1,387.5 a year they'd save. If they are a small company they probably don't make any pension contributions so they wouldn't be saving that. They save a little bit on office expenses, but not a lot really, possibly £30-odd a month on phone rental or something, stationery etc. Other benefits like maternity pay etc are all hypothetical anyway, and assuming they offer nothing above SMP, won't cost them anything to provide but would in theory benefit you.

So in terms of how much they would save by you being freelance, in monetary terms, not an awful lot really. You probably benefit more than they do from being freelance tbh depending on how important employment benefits/protection is to you and whether they offer decent benefits which they probably don't.

Why don't you make an offer of half way between the two figures?

fruitstick Wed 30-Sep-09 10:36:00

Thanks beanbag - you have been most helpful.

flowerybeanbag Wed 30-Sep-09 10:59:45

Just musing on this a bit more in terms of what I would do.

I have a basic hourly rate for me sitting here working in my office, which is somewhere between the two figures you mention.

It's not something I negotiate on per se, that's my rate and if people want me that's the deal.

However one of the reasons you charge more than you'd earn as a salary when you are self-employed is for the lack of a continuous stream of money, to compensate for lack of benefits and to allow more flexibility on both sides. You don't have a regular commitment from clients.

As I say my hourly rate isn't something I negotiate on, however what I tend to do with big pieces of work is quote a job-rate that will usually cost the client slightly less per hour than they'd pay for ad-hoc work. This reflects the fact that I am getting a reliable stream of money or a big chunk of money. Similarly for clients I have on retainer for a year, the amount I charge works out cheaper than the normal hourly rate for the client to reflect that they are making a commitment and I am benefiting from a guaranteed amount of money.

On the other hand, for things like bespoke training courses which I do for some clients, my hourly rate works out as a quite a lot more to reflect time spent designing the courses, and the benefit the delegates get from course notes etc

I'm waffling now, but what I'm basically thinking is that in your place I would offer a discount because they are making a commitment to regular work. But to make that discount I'd probably ask them to commit to a longer contract than 3 months, as on the basis of one day a week that is only 12 days work. I'd get them to commit to a longer contract if possible, obviously emphasising that they will have the right to terminate during that time (in line with whatever terms of business you have) should they not be happy.

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