| First Things First | | | | Less - 5 days allowance for being ill |
| If you are an employee it's easy to get confused | | | | Less - 24 days of non billable time |
| about consultant or freelance rates. The thing to | | | | Less - 10 days for marketing and business |
| remember is freelancers can only charge for the time | | | | development |
| they are actively working for a client. However, they | | | | Total - 72 days |
| are not necessarily active for a client for 40 hours a | | | | Total billable working days in a year = 261 - 72 = 189 |
| week, 52 weeks of the year. Therefore their rates | | | | Days |
| have to take into account all the time they are not | | | | Now the per person costs for running the business |
| billing a client and their running costs. It's all explained | | | | £500 - advertising |
| below. | | | | £500 - Hardware and Software |
| Why Have Freelancers and Consultants? | | | | £1000 - Servers etc |
| Freelancers play a vital role in the economy. Without | | | | £100 - Affiliation costs (professional bodies |
| freelancers companies would have to hire and train all | | | | etc) |
| their own staff. Can you imagine hiring a member of | | | | £2000 - Client visits etc |
| staff to carry out a specific specialised task that only | | | | £150 - Insurances etc |
| needs doing once or twice a year? | | | | £500 - Accountancy fees etc |
| How Day Rates Work | | | | £2000 - Phone/Office etc |
| Companies providing services in many industries such | | | | Total = £6750.00 |
| as web design, SEO, engineering etc base their | | | | This equates to a daily overhead of £35.71 |
| charges on day rates. These can be the source of | | | | (overhead divided by billable days) |
| confusion or contention for the companies who need | | | | Now the required salary including Employers NIC etc |
| to hire firms using day rates as the headline rate can | | | | A well qualified and experienced consultant salary = |
| seem high. | | | | £40k (£44475.52 with NIC etc) |
| Often, when evaluating rates, people will take the | | | | This gives a day rate of £235.32 (salary |
| headline day rate, multiply it by 261 (the number of | | | | divided by billable days) |
| weekdays in a year) and assume they are being | | | | Next comes profit and 20% is an accepted level of |
| ripped off. For example, a day rate of £325.00 | | | | profit = £54.21 |
| is made to look like a salary of - 261 x £325 = | | | | Now add it all up - £35.71 + £235.32 + |
| £85k! Nice money if you can get it. | | | | £54.21 = £325.24 |
| In fact this is a nonsense. In simple terms day rates | | | | So the day rate of £325 gives the consultant |
| are calculated thus. | | | | a salary of £40k and the company a profit of |
| Number of weekdays in a year = 261 | | | | £10k, not what you might call earth shattering |
| Less - 25 Holidays | | | | and this assumes the company don't get thrown a |
| Less - 8 Bank Holidays | | | | curve ball. |