Salary = what rate/hr?
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- Mick
Any experience freelancers know of a formula to calculate what the equivelant of salary/wage is in freelance dollars/hour.
Example: If someone earns 50K a year, and decides to freelance, and want to live the same life... what rate/hour would they need to charge clients to live the same way.
Keeping in mind that they no longer have medical benefits, have additional tax writeoffs, additional expenses, lots of admin time running a freelance gig, etc.
- niku0
- unknown0
Hi Mick. Think of it this way:
50,000/26(pay periods)=$1923.08
$1923.08 every two weeks /80 hours= $24.04 per hour that of course is before taxes
Tack on an additional 10K for insurance issues and there you go.
However I would charge much more than $25/hr.
It's a little tough to calculate because that would be assuming you are working a full 40 hour week which sometime does or doesn't happen for freelancer based off how much business they have.
if you can consitantly pull 40 hrs/week at $50/hr you'll be making some fat cash for sure.
later dude!
:P
- krts0
I always add up everything I have to pay out every month (home, food, loans, etc....). ANYTHING I pay out every month then I divide that amount down into a 40 hour work week and add 15-30% for profit on top.
You have to figure out how much it costs you to live, before you can figure out how much to charge.
- unknown0
oh yeah, don't forget to save all business expense receipts, including gas and milage and claim that on your taxes. Also don't forget the home office deduction.
:P
- krts0
I own my home so I just charge my business rent. Ask a tax guy about it. : )
- xrusos0
quick an easy way to figure hourly wage is to divide annual salary by 2k. (i.e. 50k / 2k = $25)
this is an approximate.
as for additional costs... it is commonplace to account for 10-15k extra for benefits (insurance, taxes, etc.).
but remember you now have a lot more costs... computers, software, materials, office equipment... so add more for that.
plus you have to account for down time... and time you have to go do free consultations and make cold calls.
all in all i'd estimate double what you were getting paid hourly at your 50k gig. so i'd charge at least $50/hr.
another consideration... try not to charge hourly at all... i mean keep that info in your head, and for extra stuff you do for a project, but instead of charging hourly, charge per project. that will help you stay competitive with the market, as well as make sure you get your cash in solid increments. and usually clients like that better too. (often afraid of what may seem a high hourly rate to them.)
- unknown0
The main problem with charging on a per project basis is that clients with screw you hard, so if you do this be very very careful.
They will want way more work and changes even after you think you've finished the project, so make sure you have documentation on change orders and that the client is aware of what will happen if they start changing the scope of the project and all that.
:P