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Freelancing: How much should you charge?

I was deep in the sleep of the dog-tired when the geologist woke me just after 3.00am. Still half-asleep I followed him wordlessly along the cramped corridors of the oil rig accommodation block. We exited the block into the teeth of a full-blown North Sea storm. An icy blast in the face slapped me awake, and the noise of the wind was deafening after the sanctuary of the accommodation block. Leaning into the wind, we made our way over to the logging unit in the dark. Slamming the door behind me on the malevolence of the storm, quietness returned, save for the muffled whistling of the wind and the hum of electronics. The atmosphere inside the logging unit was humid and pungent with the smell of oil and sweat. The geologist, fresh off the chopper the previous day, announced the problem - "gas chromatograph's not working". I nodded, headed over to the chromatograph, and pulled the unit from its rack. Silver tubes and electronics lay exposed. I pulled out an insulated screwdriver and rapped smartly on a piece of machined metal deep in the guts of the instrument. I slammed the unit back into the rack and tweaked some of the dial positions on the front panel. Satisfied, I said my first words to the geologist - "check your charts". The geologist looked sceptical but went over to the chart recorder and his mouth dropped open. Puzzled, he turned to me - "it's working". I checked my watch. It was nearly the start of my next shift - no point in going back to the accommodation block now. The humidity in the unit was starting to give me a headache. I wandered over to the coffee machine and poured myself a brew and one for the geologist. I passed him the coffee and slumped into the engineer's chair and took a sip. The geologist spoke - "what just happened?". I grinned - "Sticky solenoid valve on the gas inlet. Had the same problem couple days ago. Still waiting for the new valve to arrive though." We both laughed. Suddenly an alarm sounded - looked like the pit level in one of the mud pits was too high - or it could just be a dodgy float sensor. I slurped down some more coffee, pulled up the hood of my rain jacket, and then headed off into the storm for the pit room on the other side of the rig...

Knowing where to tap

There's the old joke about the engineer who sends in an itemised invoice for repairing a machine with one tap of a hammer. Tapping machine with hammer - $1. Knowing where to tap - $999. The old one's are still the best aren't they? The thing is charging for freelancing work often resembles the old joke. You are not necessarily charging for what you do, but the value of the work to the customer. Often it is your experience, won over many long years, that dictates your solution. As technical people we sometimes forget the value of those many years at the "coal face". On occasion we may make decisions on gut-feeling based on those years of experience, and sometimes we can't even argue cogently for why we think things should be done a certain way. We just know. It feels right.

Never underestimate the value of your experience

After you've been working in a trade or profession for a few years, you get a feel for the work that's to be done. You've been assigned tasks, solved problems, worked with various technologies and tools. You've put up with the usual corporate BS. In short you've been there, done that, and earned the t-shirt. What may seem like a trivial thing to you may seem like pure magic to a client. You might be tempted to think that charging a client £250 for 30 minutes work is a rip off - but if you stop to consider all the hard-won knowledge that went into creating that fix you would realize you are actually worth it - and more so if the client is delighted. Remember that the client, especially if their core competency is not IT, will only care about the results - not the machinations you went through to achieve them.

So how much should you charge?

This also comes with experience and especially knowledge of the client and their market segment. The cynical might say charge what you can get away with. That is probably too draconian an approach for me. I generally think that if you charge your time out at £500 a day, you can't go too far wrong. There are individuals charging a lot more than this, and others charging a lot less. But remember, really you are charging for your knowledge and experience, not your time. If you're in the UK take a look at Contractor Calculator - this allows you to compare between a salaried role and a contract role quite easily. This could make for a good starting point.

Maybe you should consider working for free

Hear me out on this one. If you already have a full-time job, especially one that has a salary attracting the high rates of tax in the UK (say 40% or even 45%) then you are going to get blasted by HMRC for any additional paid work you do. In such cases you might consider doing little bits and pieces of work for free. Sometimes just for the knowledge gained from tackling a specific probem, or sometimes to help out a friend. Further down the line you'll be able to call on people you've helped to return favours - perhaps a heads-up on new work for example, or access to well-placed connections. Be wary of benefits in-kind though - they are taxable. If you are going to be paid you should work through a limited company, or through an umbrella company. Figure out the best approach for you with the help of a professional lawyer or accountant.

Don't dismiss agencies

I know quite a few tech people who won't even take the call of most agencies. I think this is a mistake. While much of my past freelancing/contract work has been through word of mouth, some decent gigs have come from agencies. It costs you nothing to take their call and be polite and could result in a superb opportunity - you just never know. By the way, you don't need to accept the offered rate unless you think it's more than fair. Often agencies come in with a low rate and pocket the difference from what they are charging the client. I learned that one the hard way. Have an idea of the minimum rate you'll accept given the location and duration of the gig, and don't be scared to pass if the rate won't work for you.

Closing words

At the end of the day you will learn how to charge customers through experience. In this article I wanted to raise a few pointers. Namely - be aware of your real value, and also be aware of tax implications of freelance or contract work. Hope this helps and good luck with your own freelancing and contracting gigs.