From the Editor’s Desk

Opinion Piece: Why Are Freelancers So Expensive?

1. What you get when you hire a freelancer

People are starting to understand, more and more, what buying local products means for their local economy. Spending money on a shoe doesn’t just get you a shoe, it supports a whole economy of shoemaking. If you’re buying from a massive corporation, you’re supporting that means of making shoes. If you’re buying from a local craftsman, you’re supporting and sustaining local craftsmen. You’re voting for them.

The same applies to spending money on services. By choosing to work independently, freelancers are supporting greater freedom of choice, flexibility, and job security for all Americans. They make their own informed choices about their work environments, health care plans, and retirement savings. The more one group of people does this, the more it becomes possible for others. By choosing to hire a freelancer, you’re supporting the same ideal: an economy that puts more power of choice in the hands of individuals and small business owners. An economy that supports real innovation.

Nevertheless, every freelancer’s gotten the question from time to time: why are your hourly rates so high? For people who are used to the model of salaried employment, it can be difficult to understand how freelance hourly workers make their living. It’s important to know what goes into the rate calculation.

 

2. What freelance rates include

Specialized skills

A skilled freelancer is someone who has put a tremendous amount of time, effort, and expense into her education and training. That’s why you, the customer, get so much value when you put her skills to work. Along with a few hours of the freelancer’s time, you’re getting a lot of priceless intangibles: Greater brand recognition. Mutual understanding between you and a correspondent. The power to make an impact in the world by the strength of well-chosen words.

Taxes

The hourly rate you pay to a freelancer must take into account the fact that at least 30% of that money will be paid back to the government in taxes at the end of the year.

Health Insurance

Independent workers are responsible for their own health insurance costs. With recent changes in federal law, this can be less of a financial burden than it has been in the past. Premiums for individual plans,  however — as compared with employer-sponsored ones — remain astronomical.

Unpaid administrative time

There’s a lot of work involved in running a business: maintaining a website, for example, and keeping the books and doing free consultations and so on. To make a living wage, a freelancer must charge clients a rate that makes this other work possible. Remember, you want a freelancer who is organized and efficient, stays on top of her bookkeeping, etc. The value of the work you get for your money will be that much higher.

Sick leave and vacation time

When a freelancer isn’t working, she doesn’t get paid. Sick days are days with no income. But sometimes sick days and other days off are necessary for staying alive, which of course is a prerequisite for being here to edit your work!

So a freelancer who’s charging you $40/hour for a project is making less than half of that rate, in real dollars. In fact, freelance rates below $25/hour are not likely to yield a living wage.

 

3. Want to pay less for freelance services?

Here are a couple of things you can do:

1. Write to your congressional representatives

Ask them to support changes to the tax and health care laws that unfairly penalize independent workers. Not sure who your representative is? Look it up!

2. Educate yourself

Be informed about the challenges that independent American workers face by following great organizations like the Freelancers Union.

 

Image via Flickr.