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Topic: from f/t to freelance: setting pay level
| Author | Message |
| cindeez | Posted – 5/5/2008 10:48:42 PM | show profile | email poster Any magical formulas for determining how to "translate" a fulltime employee salary into a contract pay scale? In other words, let's say you make a salary of $50K as f/t employee, what would be an equivalent contract income? How would you compute it? |
| jonathan.m.northwood | Posted – 5/6/2008 4:00:02 AM | show profile | email poster That's a difficult question to answer, as other factors are involved. - Do you want to work per-hour, per-word, per-minute, per-job, or hold to a variable-scale project list? - Are you going to focus on the technical field (which has been known to pay exceptionally well) or the private sector (which is not always as lucrative, but can be a lot more fun)? - Do you want to figure your taxes and any insurance and/or additional 'benefits' in to your work, or will you be pulling those elements out afterward? - What additional perks do you receive at your current salaried position, and do you want an equivalent financial lift to your income whilst freelancing? And the list goes on. I?m not saying it can?t be done: I?ve worked for $40/hour handling technical editing and $0.03/word working on gaming material. I blog for a specific amount per post, and I?m negotiating a couple of other possibilities that will bring in $0.25/word and $0.15/word respectively. All told, by the end of this year, my freelance and contract work should add up to around $25K/year, and adding my ?day job? brings me into the $45K range. With luck -- and more contracts -- I hope to be freelancing full-time within a couple of years. Right now, though, I?m figuring out what off of that list is important to me, and building my client list and reputation so that I can demand a higher freelance rate. Returning to your question, though, the simplest method of calculation would be to take your salary and divide it by your assumed hours of work. If you want to freelance for (x) time, and you currently make (y) amount, then (z) will be your hourly rate. If you wish to limit yourself to 25 hours/week, assuming you wish to hit $50K/year, that means your rate works out to a touch over $38/hour. Looking at it another way, if you wish to hit $50K/year, and you want to get paid per word, then you?ll need to figure out how many words per day you can comfortably average. To date, the best I?ve managed to put out and have my writing remain coherent was 9,000 words in one day. My hands hated me, but I did it. Since I know I can comfortably manage 2,500 words in a day, and I?d like to take weekends off, I could theoretically charge $0.08/word, assuming I knew that I?d have a consistently steady workflow during the year. In my mind, one of the biggest elements in getting the salary equivalency you?re seeking is getting your name out there and letting yourself become known as a reliable source for quality writing. Once you?ve leapt that hurdle, you should hopefully be able to settle into a steady uphill run for the balance of the race. Good luck! |
| jonathan.m.northwood | Posted – 5/6/2008 4:01:07 AM | show profile Bah. And please ignore the question marks: apparently my text editor and the MediaBistro board don't wish to play nicely together. |
| rhino writer | Posted – 5/6/2008 9:40:18 AM | show profile That isn't quite complete, though. You have to add in the costs previously covered by your employer of health insurance, Social Security, and taxes (state and federal). Plus, if possible, a shelter for sick days and vacation days, since those are unpaid when you're self-employed. I think there is a formula for figuring this out, but I don't know what it is off the top of my head. But if you're making 50K as an employee, I'd figure on ... 65K? to cover it all. |
| editordebit | Posted – 5/6/2008 2:34:28 PM | show profile My rule of thumb (stolen from Hans Wellisch's _Indexing From A to Z_) is that once you add up all the "extras" to pay for and the unlikelihood of getting 100% billable time, you have to figure that it's more like getting 1000 hours of work a year instead of 2000, so you would have to charge at least $50 an hour to get the equivalent of a $50,000/year job. That of course assumes you can actually get close to full employment as a freelancer, which is not the same thing as having 100% billable hours. |
| wineaux | Posted – 5/7/2008 10:31:24 AM | show profile As the other posters mentioned, there are so many personal factors involved. For myself, I am fortunate that I don't need an employer to provide healthcare, as my spouse's company does so. I used that as a marker to shave off what my financial need was, somewhat. Additionally, at my fulltime writing gigs, I had to factor in gas, clothing, lunches and other expenses that my employer didn't cover. I work most often from home, and only a few times a month go out for meetings, conferences, trade shows, interviews, and R and D, which has saved me several hundred dollars a month. And, I am thankful for the small tax writeoff that working from home allows. If I made around 50k inhouse, than I'd say as a freelancer 40k would be sufficient. But, everyone is different. You'll have to factor in your cost or what you will save if you are to freelance. |
| Lula | Posted – 5/9/2008 11:18:44 PM | show profile If you really want to do it right... ...you'll need to do some heavy-duty calculating. The following article is geared toward graphic designers, but really it works for any self-employed person: http://www.creativelatitude.com/neils_newbies/neils_newbies_0206.html Scroll all the way down to download the Excel spreadsheet the author provides. It's pretty darn thorough. |
| Cyrus | Posted – 5/12/2008 5:18:08 PM | show profile As a rule, add in something like 15-20 percent to cover both your overhead and expenses that are traditionally borne by an employer, such as their share of Social Security tax. So I'd say something on the order of $65K will get you to an equivalent point. That said, although there are additional expenses, there are also additional deductions you can take although people often overestimate the positive impact they'll have on your overall net income. Deductions do lower your adjusted gross income, but your effective tax rate will likely not be that high and that also impacts the corresponding credits for the deductions. ------ Cyrus Afzali Astoria Communications www.astoriacomm.com |
| writesonwater | Posted – 5/14/2008 10:40:57 AM | show profile | email poster THere are all kinds of expenses and things to consider when you go from FT to freelance. However, one of the biggest is "what the market will bear." If you're going to contract with your former employer, what will they pay you per hour or project when you're officing on your own? I've noticed a couple companies having it backwards, paying freelancers less than what they'd make to do the same stories, etc. in-house. For me, I freelanced to many different publications and my rate (generally per word, but sometimes per project) varied widely; it took me over a year to get up to a living wage -- at that point, I had several regular clients whose assignments totalled what I needed to live on. Good luck! |
| greatwriting | Posted – 5/15/2008 12:58:03 PM | show profile Pay levels Depending on your level of expertise and years of experience, that will help you set a rate, either by project or by word. If you have a project that is easy to figure out, then by word is best. Often, project rates can be messy as people underestimate the project work, so there you set a rate per word or by hour. I wouldn't ever do a story for less than 25 cents a word, and that would only be when I was starting out. Now, with years under my belt and a finance background, I don't do anything for less than $1 a word, and generally ask for more. Per hour rates should be about $50. |
| greatwriting | Posted – 5/15/2008 12:59:02 PM | show profile pay levels etc Forgot to say that you should make it clear they pay travel expenses, etc. |
