Freelancer Pay: What Are You Worth? – Forbes - Freelance Rack

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Friday, July 31, 2020

Freelancer Pay: What Are You Worth? – Forbes

Freelancers have more control over their income, but what are the levels of pay across the freelance sector? Will COVID-19 have an impact and, what does the future hold for freelance income?

One of the characteristics of the freelance life is an unpredictable income. Periods of famine and feast are common. When I started freelancing rates of pay varied wildly depending on the job and the company I was working for. Have rates of pay improved over the last few years? And will the current pandemic have a lasting impact on rates of pay across the small business and freelancing communities?

According to IPSE (the Association of Independent Professionals and the Self-Employed) that looked closely at pay the pay levels of the self-employed revealed men earn 43% more than women. Inna Yordanova, the Senior Researcher at IPSE, commented: “Much has been said about the gender pay gap among employees, but the gender pay gap among the self-employed is actually much bigger. This seems to be because self-employed women are undervaluing themselves and not charging the high rates of their male counterparts.”

The fact the gender pay gap is alive and well is also the conclusion of a recent survey from Anna Codrea-Rado who wrote: “In the UK, the gender pay gap is tracked by the government. Since 2017, any organisation that has 250 or more employees must publish and report specific figures about their gender pay gap.

“This mandatory reporting, however, only applies to companies and their full-time staff. So, it will come as little surprise that there’s not a whole lot of data on the freelancer pay gap. The data we do have, however, shows that not only do pay gaps exist for freelancers, they are also wider than for staffers.”

Rates of pay, undervaluing the services on offer, and of course, slow payment have been components of small business and freelance life since I moved into freelancing full-time over 20 years ago. Rates of pay continue to vary wildly with ridiculously low rates still on offer from some employers. Established freelancers, though, do report good levels of sales and, incomes that look set to increase over the short term.

Rates of pay

A comparison of incomes of the self-employed and the employed by the IFS (Institute for Fiscal Studies) is also stark concluding that three years after starting their own business, sole traders earn around a third less than their employed counterparts. The question is the lower-income endemic across the small business and freelance community? And is lower pay offset by the freedom and autonomy freelancing and small business ownership can offer?

Xiaowei Xu, a Senior Research Economist at IFS and an author of the paper, said: “Solo self-employment is often a fall-back option for workers hit by employment shocks – an intermediate state between employment and unemployment. As the COVID-19 crisis increases labour market volatility and creates uncertainty over future employment opportunities in specific sectors and occupations, we may see a further rise in solo self-employment. If so, that would be a group worthy of concern and policy attention alongside the potentially large number of unemployed people.

Xu continued: “At the same time, our research suggests that becoming solo self-employed often increases wellbeing, despite leading to lower earnings. We should try to understand the desirable qualities in solo self-employment – freedom, autonomy and authority, for example – and look for ways to foster them in traditional employment relationships.”

Employment is shifting to remote mass working. And as more people move into self-employment for the first time – figures from the IFS study suggest more than 40% of those moving into solo self-employment were unemployed or inactive in the year before starting self-employment. Many report having been dismissed or made redundant from a previous job – one of the issues newcomers always have is deciding what to charge for their work.

What to charge

I wanted to discover the rates of pay across the freelance and the small business communities, whether rates are challenging to set and, if rates are expected to increase or erode in a post-COVID-19 trading landscape.

“Charging your worth as a freelancer is about knowing your value and balancing what you need to survive with what you need to thrive,” said Helen Dibble. Start by figuring that out.”

Helen continued: “Then understand how and why a client values your work. Know your no-go zone too (the point below which you’ll walk away in terms of money, the scope of work or the agreement) and stick to your boundaries. If a client baulks at your ballpark, “I might not be the right freelancer for you” is the most powerful phrase in your negotiating arsenal. It reminds you that you can walk away. It reminds them you can walk away and that you’re not going to play the price game.”

Looking at many of the freelance job sites reveals rates of pay can vary massively from job-to-job. These sites can’t be used as a benchmark when setting your rates. Freelancers and small business owners need to look closely at all the factors that impact what they need to charge realistically.

“I think starting out it’s harder to set a rate of pay but now with the reviews that I have and the past feedback I have the confidence to set my rates and know that the client is getting good value for money but high-quality work,” explained graphic designer, Heather Metcalfe. “What’s great is that I have been able to increase my rates relative to the demand for my services. I’ve been able to put my prices up every six months as demand is consistently rising which means my pay rate also increases.”

Your pay, today and tomorrow

Setting your rates will be a balance of direct and indirect costs that must be met and your own experience of the markets your business serves. Often, a sector will have well-established rates of pay that are pretty similar across the industry – publishing is a good example. Newcomers need to develop that sense of what general rates of pay are expected to ensure under and overcharging is avoided.

Murray Swift a digital marketing specialist explained: “In my field there’s an unlimited array of services that can be offered. Countless new marketing strategies are being launched daily. In the next six months I have planned to launch more than a dozen new services. Adding new high-ticket gigs will boost my income too. When selling online, it’s important to offer a variety of services at low, mid and high-ticket prices. This way you can earn at every place in the market much like in Monopoly owning property on every side of the board has its advantages!”

Clearly having more control over your working life is a crucial reason to move into self-employment. Whether the gains in wellbeing can offset unpredictable and potentially lower income will be for each individual to decide.

What you charge for your service, of course, can be negotiable to a degree. However, remember your value. If your client isn’t prepared to pay your rate, then move on. Saying no can be the hardest lesson all freelancers and small business owners have to learn, but it’s a vital one to ensure your income remains realistic and grows. The income of freelancers and small business owners seems buoyant, with an expectation this will grow over the next year.

Will COVID-19 have an impact on rates and income? I think it’s certain that in some sectors rates will have to increase if business want to work with the best freelance talent available. Content creation looks set to expand. If you work in this sector, your rates should remain healthy for the foreseeable future.

COVID-19 will, of course, also create large numbers of new freelancers and small business owners who make the transition either because of redundancy, or other factors. To them, remember your value when setting your rates. Newcomers can easily fall into the trap of low pay. Take care when choosing which clients to work with in your early days.

Varying rates of pay and the scourge of late payment are part of the course. All those that employ freelancers and other contingent workers must appreciate the value these workers bring to their businesses and pay them accordingly (no matter their gender) and, on time.



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