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Self Employed Rates is Pay

5 replies

Thisismyusernamefornow · 11/09/2019 11:50

How do I work out how much I charge for my time versus that of an employed colleague doing similar role.

my hourly rate seems considerably more than my colleague but it doesn't take into account what the company have to pay on top of the hourly rate for an employee.

I have to deduct national insurance and tax obviously.

How do I work out what my holiday pay andNI and employer contributions are so I can deduct them from my hourly rate to try and compare?

If that makes sense?

OP posts:
flowery · 11/09/2019 12:46

Two points immediately leap to mind. Firstly if you have a colleague doing a similar role, how are you self-employed? Are you certain you are genuinely self-employed, ie have other clients, have control over your work, can substitute someone else if necessary, etc etc etc?

Second point is why do you need to compare?

If there is a reason to compare, you need to take into account lack of job security, not working all year round, no pension, no paid holiday, no paid sick pay, maternity pay, employer NI contributions etc. But a comparison will never be exact, and will depend on a variety of factors such as industry.

Setting your rates as a self-employed consultant or similar is a commercial decision, based on the value you add, the marketplace you work in. Not on comparisons to employed staff. One rule I've seen though, which may provide a starting point, is to assume that you work 100 days a year as a self-employed person, the rest of the time spend marketing, managing your business, administering the business, and not working due to fluctuating demand.

That may or may not be the case for you.

Thisismyusernamefornow · 11/09/2019 14:21

I am asking purely to form an argument for me increasing my charges to the business I work in.

I am self employed - I do have more than one business/client that I work with.

I now want to increase my charge and thought having a comparison to show the business Owner would help my case.

Thanks for your input.

OP posts:
flowery · 11/09/2019 15:52

Ok well in that case I think don't bother. You don't need to form an argument if you decide to raise your rates, or to make a case. It's a commercial negotiation, not asking a favour. I would just notify your client that your rates will be going up to £x from whatever date.

If you issue them terms of business/engagement letter, then update those. If you are on a consultancy agreement/similar issued by them, then check the relevant clauses in terms of variation/notice to terminate to make sure you are acting within the agreement you have signed up to.

Thisismyusernamefornow · 11/09/2019 16:13

It's kind of like a reverse exercise to be honest. I would like to know how much I can realistically increase without pricing myself out.

I need some sort of formula to do this.

I don't know how to work out what I am effectively being paid after expenses etc

OP posts:
EBearhug · 12/09/2019 02:33

Find Radio 4's Moneybox on iPlayer for Wednesday 11th September - it was all about asking for payrises and talked quite a lot about freelancers.

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