This won’t work: £120 day rates.
Somewhere out there is an odd idea. It’s about money.
I keep hearing a particular figure. It must mean something to somebody—I think I hate it.
£120.00 day rates
It sounds like a lot doesn’t it?
Here are a few things that I could spend £120 pounds on—
maybe half of a games console
some really nice trainers
a month or two of design software subscriptions
an annual website plan
Prepare yourself for some dodgy numbers…
If you charge £30 an hour and work 7 hours a day you’ll charge £210 a day.
We’ll work from there. So you’ve hit a living wage income right? Only kind of.
Assuming you work for 250 working day’s in one year (nice one), and every client pays you on time then you have turned over £52,000.
But all you have done is worked.
You have fixed monthly expenses that come out of this fantastical income. Let’s say those expenses total an annual cost of £1200 (£100 month).
Then you have annual renewal fees which also come off. These include your marketing costs, accountancy fees, plus insurances and any professional bodies you’re a member of. You’ll also be putting some money away for captiat expenditure (I’m still saving for a fancy computer moniter).
Say you pay yourself £30,000 and pay the tax man 20% of that.
Around £10k might stay in the bank. We all need a rainy day fund and that’s no different for a business account.
If your take home after tax is around £24,000 then—
Can you afford to thrive?
How will you grow?
How will you find time to promote your work or attract new business?
What if you are sick, or need to support a loved one?
Obviously some people will make do on this kind of income. But those figures assume that you don’t end up coming down on price due to one client buying your time in bulk.
If you start at £30 an hour or £200 a day then you surely have no room to discount further?
None of us set out to work for ourselves expecting to work harder and for less money than in traditional employment.
So, what should you charge?
Probabably a little more than £200 a day.
How much more?
I probably can’t legally say that!
It’s a tough world out there. Don’t make it tougher!
Stew