Daily freelance rate for previous full-time/permanent employer

Question

I am leaving the company that I am currently employed by (permanent member of staff). I am going to freelance for them once I have left and want to know what to charge per day.

Long story short:

• I work there as an analyst, writing up reports based on my findings;
• I have built a custom Microsoft Access database for the team;
• I am leaving (for personal reasons); and
• they want me to do my analysis work on a freelance basis.

At present I earn around £40,000 (not the actual amount - this is for the purpose of this example) as a full-time permanent member of staff.

The reason I have been asked to work freelance is simply because I am an expert in my field. My work was initially going to be divided between the team members, but nobody there has skills that are advanced enough to do what I do to the level and standard that I complete it to.

Further to this, I have built an Access database from the ground up and it has now been used by the team for a number of years - as with before, nobody is knowledgeable enough to be able to take up the database administration once I leave.

Based on that, what would be an acceptable daily rate to charge instead? My thoughts were that I would charge £400 per day (example figure).

EDIT: (29/09/2016):

• The work will be carried out off-site; and
• I will not be working full-time - it will be on an ad-hoc basis only, I imagine perhaps around 25 days per year.

EDIT: (30/09/2016):

• I have also dabbled in the idea of charging them per report as I am, in reality, going to be producing a product for them. Therefore, my idea was £2,000 per report as each report will take approximately five days to complete.

Answer 1

nice job on getting this organised! Freelancing for your previous employer is a great way to get started.

I've done a lot of IT contracting in the UK and £400 sounds fairly normal. You can also get good UK info from http://www.itjobswatch.co.uk/contracts/uk/vba.do. The median rate they quote is £364.

Now, you are actually an expert for this particular role. They have zero training costs and you can get stuck in straight away. That deserves a premium. An oft-quoted rule of negotiation states that it's easier to drop your prices than raise them. So start out significantly higher than your actual rate. You might find that they are willing to pay £650 or more. Who knows! There is no 'real' rate, only the rate your client is willing to pay.

Finally, I'd go for a shorter contract, perhaps 3 months. Don't get locked in for longer. That gives you room to renegotiate the rate or take other more interesting freelance projects once you've tasted the freedom and have seen what else is out there!

Good luck!

Answer 2

Figure your overhead.....

If the work is on-site for them, your overhead may only include transportation to and from. In which case, a fee close to your salary, perhaps slightly higher to cover lost "employee" benefits, would be appropriate. If you are working remotely, then your overhead would include anything and everything required to complete the work - electricity, heat, equipment, software, internet service, phone service, etc. Generally these are all things covered by employers but are all overhead for freelancers. So the previous salary may have no bearing whatsoever.

Calculate your hourly rate...

Remember, that as a freelancer, you have to cover things like sick days, healthcare, vacations, etc. Clients don't provide these items so you have to factor those into hourly rate calculations.

See Here:

Struggling to come up with an estimation of the value of my work

How do I calculate pay rate if I've never freelanced before?

From Agency to Freelance - What Should I Charge?

How much should I charge for graphic design and how?

Then multiply your hourly rate by the amount of hours they want you to work in a day.

Previous salaries really mean very little to a freelancer other than... well, you don't want to make less at any time. You can use the previous salary as a general guideline, but until you calculate your overhead... and subsequent hourly rate, there's no telling if that salary comes close to what you need to make as a freelancer. And again, no clue if the work is on or off-site and that may be a large contributing factor.

Answer 3

Scott is on the right track!!! I didn't click on the links, but suspect they are a great place to start. The only think I didn't see is accounting just for taxes (at least in US) is a MIN 15%. ... and that's AFTER "grossing up" for sick time / healthcare / vacations / bench time etc.