Going freelance and charge out rates question...

[Mr Whippy]

I handed my notice in at work a few weeks back, so I could move to freelance working.

I have almost 10 years experience there doing my job and am the only person there with the full skill set to cover all their video/animation stuff to a professional level.

Thus they are asking about my availability over the next few months for freelance working, and my day rate.


I've read adding about 30% to annual salary and dividing by 1000 is a good idea... and that is landing me around the £45/hr mark, so about £325 a day.

However, most freelance people are not experts in the business they might go work for (ie, internal knowledge, process, understanding etc)
At the same time, I'll be using their gear and equipment. But I will have to travel there for all the work I do too.

I also know I get charged out at over £150/hr (don't ask).


I just don't know what to charge as a day rate in this case. I have a rough range for general freelance working but these circumstances are somewhat different I think.

I'm fairly easy going but don't want to get taken advantage of from the word go. I also don't want to offend them with a silly high rate because it would be nice to maintain a reasonable relationship with them.


Any advice from seasoned freelancers would be really greatly appreciated!

Many thanks

Dave

[STW2010]

You would need to be looking at overheads for this too. Do you need to buy and maintain equipment? Will you be paying for phone calls? Will you need to buy specialist equipment? Extra electricity by working from home?

If so, add the annual cost of those together and divide it by the number of working days in a year (252, not including annual leave).

If they charge you out £150/hr then that will include their overheads (which you might now have to cover). So their costs are your current hourly rate which is not what you're paid, this is the cost to them (so include pension, national insurance etc), plus the overheads (my company uses between 80 and 120%, but there is a good reason for this).

So, taking in to account the above and what you have said I would be thinking more along the lines of £60-75 per hour. BUT this does depend on their actual costs (i.e. if they are covering the costs mentioned above by you working in their office- though you can now charge them per mile travelled).

Don't forget that sick and holiday pay is down to you if you are freelance (this is another cost to them that you are saving them).

[Mr Whippy]

The costs they incur due to the work they do, they will still maintain, as they will be hiring replacement employees. I guess I'll just be covering gaps when work turns up where it needs me there, and they have no replacements in place. Ie, render boxes, big data server and associated IT, software, cameras, studio gear etc etc.
I have the bits I need for freelance but due to the nature of their clients and contracts, I would need to use their gear anyway, with no off-site working possible.



Generally on the rates, I just need to come up with a range of figures and go from there... in this sector international work is quite likely and so I need to be happy to be fairly flexible, especially with currencies bouncing all over right now.

I have a fair bit of cash saved and can get by on relatively little, so ready for potentially rocky first six months if needed, while I get into the groove

Thanks for the breakdown. It's fairly similar to what I've read elsewhere which is good

I'm generally happy to work more hours in a year than many might, but of course I don't want to do that to make ends meat, but to make more money and buy a 911

Dave

Edited by Mr Whippy on Sunday 29th January 12:57

[Eric Mc]

If you are aiming high, you should think of working through your own limited company rather than as a simple sole-trader. If your net taxable profits from trading are going to exceed £45,000 or so then a limited company is worth looking at.

[Mr Whippy]

I really need to take advice for what I do in 12/13 in that regard, ie, liability insurances and all that jazz, along with accountancy and business advice (sole vs ltd) which I plan to do once I get the pile of other stuff done that needs doing over the coming week or two.

I'll be finishing up this year as a sole trader for now.

£45,000 net profit would be lovely for 12/13, but I'll be realistic and think that gross might be that, based on my sums.

Lots of learning for me to do in the coming year


Ultimately though I'll happily dump all the accounting on someone else, I don't mind learning some stuff, but it seems that, as I suspected, tax IS bloody taxing, and the man on that advert is a lying bugger


Many thanks for your help today Eric

Dave

Edited by Mr Whippy on Sunday 29th January 14:20