Help, no idea what to charge!

[Balderdabble]

I was made redundant on Monday - totally out of the blue so massive shock to the system and finances! It's all been done legally, properly etc. One of the companies I work with (not for, but was previously based with them) are outraged by it and to help me get by have offered me some freelance work - a couple of days a week and want to know my day rate. And I don't have a clue! I had thought they'd tell me what they were willing to pay. I was previously paid quite well and they know what I was on. They're doing me a favour and prob would have kept the work inhouse so I don't want to take advantage and over charge them but equally, I will be doing good work and it will free up their time for other fee-earning projects. So do I just charge the same hourly rate as I was already on, less as they're being good to me or more as I'll be self employed and got extra expenses etc? I'm thinking the same as before. Thanks!

Is it going to be a stop gap - or are you taking this as an opportunity to go self employed for a while?
If its a stop gap - charge them your normal daily rate.
But if you are going to be self employed, then use today to sit down and work out how much you will be charging as a proper business and charge them that.

I think that's the problem really. I'm going to be looking for a new job but also other freelance work. If the freelance work works out then I might choose to stick with it and go self employed, in which case I'd be charging more as the going rate seems to be higher from the research I've done. I keep changing my mind about what to do, I'm still a bit overwhelmed with it all. Need to get my act together and just talk it through with them maybe.

Some possibilities:

• if you were being contracted out by your old company, charge them what your old company was charging them
• charge them what you guess the going market rate is
• charge them 150% of your current gross salary divided by 240 (working days per year) - i plucked 150% out of the air, if you have no or few costs of work then you may be able to charge less, if you have lots of costs then you may be able to charge more. But many companies charge their employees out at 180% of salary or thereabouts to cover costs of employment.

Do NOT be tempted to go to them with a cheap rate because you are grateful to them. They are a business and this is a business deal. They wouldn't be offering you work if there wasn't something in it for them.

Be prepared to negotiate: the basics of negotiating are

• to get a concession for every concession you give: i.e. if you say £10000 per day and they say 'we can't go above £8000' then you say, Ok I could go to £9000 but I want to work two days a week from home/you to supply me with a laptop /10 days minimum per month or whatever
• have a walk-away point: a price where you just say 'thanks but no thanks'
• when you have agreed a price say 'can we just talk about housekeeping' and talk about terms and conditions: how and when you will get paid, cancellation, notice on either side, references/testimonials. This is CRUCIAL as you don't want to start a freelance career with unpleasantness over payment.

Good luck

in my field (numbers) our chargeout rates were three times our salaries
start at that and be willing to pop a discount for multiple days if they gasp
but DO NOT undervalue yourself (men never would)

Thanks for the replies and help. Hubby has been saying the same - don't undervalue yourself and don't offer less just cause I'm grateful. Really good advice, so thank you. I'll sit down and plan a strategy for handling that conversation with them!

Sorry to hear of your situ, but maybe this is the start of something new and better?

As others have said don't undercharge, this could be an ongoing thing. I have found if people have a need, it generally doesn't go away, and if you are doing a great job of delivering then it may well extend beyond what you ever thought.

Sorry press entered before I said "Good luck".

I think it would also be useful to find out what the industry standard is for the sort of work freelancers in your line of work do - I've been freelance my whole working life and it definitely makes a difference how you pitch yourself against others.

Remember that when you are employed you are getting all your tax sorted out (time you will have to find yourself as a freelancer) as well as lots of other benefits like sick pay, holiday pay, salary sacrifice schemes, pensions etc.

Take your pre-tax pay as a starting point NOT your take-home pay!

Last time I was working two comparable jobs one freelance one self employed my "employed" day rate was about £70 a day (but was on a permanent contract) and my freelance day rate was about £150, that was still V low and negotiated on the basis of a guaranteed amount of work that was very convenient for me!

It would definitely be useful to find out what the "going rate" is.

Undervaluing yourself is a common mistake for people starting out as freelance, don't forget you can always negotiate downwards but you can't change your mind and ask for more!

I'd also recommend a late payment clause in your contract clearly stating that if your invoice isn't paid within 28 days or whatever then you will start charging interest.

Bear in mind that people will always wait until the last possible minute to pay you!

Thanks for all the advice - I appreciate it, I really did not know where to start - getting my head around it all a bit more now!

Give HMRC a call and they'll talk you through registering as self-employed too. You definitely want to keep on top of your NI payments etc!

It seems crazily complicated at first but honestly if I can do it anyone can

Good luck!

DO NOT PHONE HMRC IN JANUARY
they are utterly snowed under (and intermittently on strike)
on my ebay "me" page are all the links you need to register as self employed, register for class 2 NI etc etc

Sorry to hear about your redundancy - it's horrible when it comes as a complete shock... however, silver lining could be better paid Freelance work

Definitely find out what the going rate is and charge that & a tad more (you know them so will hit the ground running).

I don't suppose there's anyone at either end who could tell you what your company were charging them (rather than your rate)?

Can you find out what your previous billing rate was? Did you ever see an invoice or a bid? Becuase ideally you should charge them roughly what you were previously being charged out at.

Don't forget you now have overheads: IT costs, insurance as well as needing to cover your own sick and holiday time.

They didn't actually have anything to do with my work - I worked for the hq of a big plc and happened to be 'housed' with these guys who are just one of many companies owned by the plc. But they're lovely and have essentially found me some work to freelance to me to help me out - but it means I don't have any idea of rates and they're not used to using freelancers either so we're both finding our way. Thanks for the tax advice - i'll definitely look into that side of things asap.