Getting your contractor/freelance hourly rate correct?

August 20, 2015

It’s fun becoming a contractor/freelancer.

The freedom from employment, bosses, HR, appraisals, office politics. I know, 10 years ago, I did it myself.

You can also get paid much more as a contractor/freelancer than you can as an employee. You probably have thought about it because you know someone who has already doing it.

So here’s the warning….

Just because the offer on the table is more than you are getting from your current employer, make sure your hourly rate is what you are worth – you have to get the hourly rate correct since it is fairly difficult changing it once it is agreed.

So to make sure you do get it correct, here are a few considerations:

1. Your employer will now not need to pay Employers NI. This is 13.8% on top of your current salary (less the first £8,000). They are a getting a big tax saving by you becoming a freelancer/contractor

2. You will not be getting any holiday pay or sick pay – this is worth about a month + (depending on your holiday entitlement)

3. You will not receive any training or management support. This costs the company something, they are now going to save this cost. Effectively, they are going to have an experienced person in their team that they do not need to manage

4. Potentially, you will have to pay for your own computer, phone, internet and other resources.

So when you look at your hourly rate, you have to take into account all these things.

If you need help with this, email me at

0113 337 2130

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