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  1. #1
    busy Steelsun's Avatar
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    How to set an hourly rate

    An associate sent me this article on how to figure out what to charge as a free agent (I.E. freelancer, independant contractor, etc). It may be helpful to some of you out there that are always asking "What should I charge?"


    How Much Should Free Agents Charge?
    by John Rossheim

    It's the would-be free agent's $64,000 question: How much do I have to
    charge per hour to make a go of it as an independent professional? And the
    pundits are ready with a pat answer: Divide your employment salary by 1,000,
    and that's your hourly rate. So if you make $50,000 as a wage slave, you
    need to bill at $50 an hour to make it as an independent.

    Is it really that simple? Hardly. You have dozens of factors to consider,
    and you'll need at least a bit of professional help to come up with your
    final answer. But if you bear with us for a few paragraphs, we'll break the
    problem down for you and help you set fees that make sense for your
    situation.

    You Will Pay More Taxes

    When you work for yourself, you double the fun of paying the FICA tax. "You'
    re paying the employer's share of Social Security -- that's the big
    difference," says Dorothy Rosen, a CPA who offers advice on theWhiz.com as
    the Dollar Diva. You pay the employee's half of the tax -- 7.65 percent,
    plus the employer's half -- another 7.65 percent.

    As an independent professional, you may have to pay other taxes and fees.
    For many free agents, these additional burdens are minimal, but be sure to
    ask your state and local authorities or your accountant about these levies:

    State and local taxes on business income.
    Business property and inventory taxes.
    Fees for business licenses.
    "Bear in mind that half of your income is going to go away" to taxes,
    advises Rosen.

    You Will Need to Buy Benefits

    If you're like most employees, your company has provided you with a number
    of valuable benefits, especially insurance. If, as a free agent, you can't
    hitch a ride on your employed spouse's plan, it's crucial that you figure in
    the cost of buying these services. Your fiscal and physical health depend on
    them. And being in business for yourself, you may need professional
    insurance. Add these items to your master checklist:

    Health insurance
    Dental insurance
    Life insurance
    Disability insurance
    Professional/business liability insurance
    Retirement savings
    And don't forget about time off. Many a free agent concedes every weekend to
    the business and doesn't even entertain the idea of a vacation. But if you
    take this road, you will burn out faster than a middle manager in an
    8-by-8-foot cubicle. Face the music: You will need to take time off, and
    this will reduce your billable hours. To save your sanity as well as your
    bottom line, budget for all of these kinds of time off:

    Vacations
    Holidays
    Sick days
    Personal days
    Medical/parental leave

    You Will Incur Business Expenses

    Most business expenses are deductible, but they do cut into your bottom
    line. Before you make the leap to free agency, do your best to estimate
    expenses that will ultimately come out of your hourly rate. The variety of
    business expenses is limitless; we cover the basics here.

    First, consider business start up expenses:

    Computer hardware and software.
    Office equipment and furniture.
    Business stationery and marketing materials.
    Web site programming and design.
    Initial inventory, if applicable.
    Second, try to gauge your ongoing expenses, such as:

    Marketing and advertising.
    Car and other business travel.
    Business entertainment.
    Telecommunications services.
    Accounting, legal and other professional services.
    Professional books, subscriptions, memberships.
    Payments on business debt.
    What Do You Do Now? Go Figure

    Once you've done your homework and made your best estimates of all the
    applicable items above, it's time to get some professional help to put it
    all in perspective. See an accountant or financial planner specializing in
    helping small businesses. Let your advisor crunch the numbers and come up
    with an hourly rate that you should charge, based on your estimate of
    billable hours per year.

    Then compare this hypothetical rate to the going rates on the open market.
    "You need to charge what the market will bear," says CPA Rosen. "If you're
    going to make a mistake, err on the side of charging too much."

    Wiser words were never spoken.
    [Source: http://ct.monster.com/articles/howmuch/]
    Brian Poirier
    SunStockPhoto: Stock Photos, Fine Art Photos, Event Photography

  2. #2
    Chikin Choker Hellbent's Avatar
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    Thats very informative I have been known to make sites for friends for pizza and beer . Ill send them a bill with the appropriate adjustments.
    Straight from the TP! And I don't mean the Trailer Park.

  3. #3
    Wanna-be Apple nut silver trophy M. Johansson's Avatar
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    Originally posted by Hellbent
    Thats very informative I have been known to make sites for friends for pizza and beer . Ill send them a bill with the appropriate adjustments.
    AHAHAHHAAHAHhaHAaahgs hshdgdsahxasdfds s

    You made my day, sir!

    We will charge you...
    4 Pizzas
    5 sixpacks
    68 litres of Coke
    Mattias Johansson
    Short, Swedish, Web Developer

    Buttons and Dog Tags with your custom design:
    FatStatement.com

  4. #4
    SitePoint Wizard silver trophy Jeremy W.'s Avatar
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    68? Sorry I won't work for less then a year's supply of coke.

    After all, I am a professional and you wouldn't expect an architecht to work for that little would you?
    SVP Marketing, SoCast SRM
    Personal blog: Strategerize
    Twitter: @jeremywright

  5. #5
    What's HTML?
    Join Date
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    Now there's a good idea Hellbent! I should start charging like that for my students... mmm, beer.
    Ryan Kuhle - A Proud Advisor - Got Questions? Just Ask!
    Get your website started for less than $20! Click Here

  6. #6
    Chikin Choker Hellbent's Avatar
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    Heh the funny part is some of you think im kidding .
    Straight from the TP! And I don't mean the Trailer Park.


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