How on earth does a new freelancer know what rate to ask for?

[Lewis]

£500 per day is more than £100K per year.

£500 per day * 5 days a week * 45 weeks (average) * 70% (typical take home) = £78,750 after all taxes. Perm would need to earn about £125,000 to get that. (see www.i-resign.com salary calculator).

[Lewis]

I see in a few places contractors talking about rates of £400-500 a day, and I'm sitting here thinking "that's like £100K a year"!

£400-£500 per day is easily achievable in investment banking for a good C++/Java/C# developer with at least 3 years experience. In fact you can get more ... I'm not sure about outside banking though.

[Bright Spark]

There is a contractor calculator that is a bit more accurate to compare
permanent to contractor, and gives a detail breakdown of the taxes on
when you click the links on results page.

HTH

[Spacecadet]

I see in a few places contractors talking about rates of £400-500 a day, and I'm sitting here thinking "that's like £100K a year"!
I'm working as a freelancer (as of about a fortnight ago) and my contracts pay hourly at a rate around half that.

£200 - £250 per day for a first contract isn't too shoddy.
Next contract, quote them something you think they will need to haggle you down from, don't be shy, he who dares wins etc...

[Dow Jones]

Are you from Mars?

It's like saying: 'I like this house (worth £ x m) - why can't I have a similar one!'
If you can't place a value on your skills, find someone else that'll do it for you (called an agent). Probably worth his cut - in your case, anyway.

[dude69]

£200 - £250 per day for a first contract isn't too shoddy.
Next contract, quote them something you think they will need to haggle you down from, don't be shy, he who dares wins etc...

I wouldn't have touched it for mine.

Certainly not in London.

[backgetyou]

I see in a few places contractors talking about rates of £400-500 a day, and I'm sitting here thinking "that's like £100K a year"!
I'm working as a freelancer (as of about a fortnight ago) and my contracts pay hourly at a rate around half that. Seeing as how that is around twice the salary I got in my 9-5 job, I was quite pleased. But now I wonder if I could have asked for substantially more...
For background I expect my work to be mostly development work in Java/C++/C#/etc as well as some design work with UML, DB design and so on. I didn't want to ask for what seemed a very high figure when getting my first contracts and in fact I had no idea what rate TO ask for - I essentially plucked a number from the air.

Does this site have any advice in articles or "classic threads" I can refer to about picking a rate, renegotiating a rate, etc? As a freelancer I have no agency fees (or even travel expenses) so my rate and gross profit will be pretty similar, but still I'd obviously like to get what I can!

Thanks

400-500 a day is quite easy to get. Its really up to you what are willing to do for the money. I earned a lot of money a few years ago through working for investment banks but this involved up at crack of dawn, late nights over crowded trains etc. I now choose to take more local work with no commute have a good social life better health etc. I have no mortgage or debts and we are finanically sound so I would not change the longs days I did but you have to decide what is important to you.

You also need a good accountant not one of these online types. Find a chartered accountant locally and negotiate £100 a month all in is fair - you should save more than this in tax and hence silence to some degree those saying 1k a week is not 52k a year. This is true but you can earn quite close to this if you dont take leave certainly more than you would as a permie.

Your rate is determined by how well you sell yourself. Qualifications help with some jobs, experience with others but at the end of the day if you cant sell yourself at interview then your stuffed. Once you have been contracting long enough you get your circle and for me 5 years without interview now. Getting home by 16.30 each night is more important to me than earning mega bucks.

The best advice is to get a broad skill base then find a niche market where you dictate the rate.

[d000hg]

Interesting responses.

Firstly, I am freelancing not contracting. I work 100% from home mainly for clients in the US.
Secondly I find my own work through communities of developers I'm part of. I can't see any benefit to an agent when I have more work than I could do already available. And if agents are anything like recruiters, I certainly don't want to spend time or money on them!
Finally, I charge hourly rather than daily/weekly.

Does any of this change what kind of numbers I might ask? Since I already have work, is it worth just asking 2X my current rate on new opportunities and seeing what happens?

[dude69]

You also need a good accountant not one of these online types. Find a chartered accountant locally and negotiate £100 a month all in is fair - you should save more than this in tax and hence silence to some degree those saying 1k a week is not 52k a year. This is true but you can earn quite close to this if you dont take leave certainly more than you would as a permie.

How much do you save in tax?

I pay about 17% of gross on >£100k, £1200/year is a lot of money for a £200/day contractor - the accountant cannot increase your basic.

[Cowboy Bob]

Firstly, I am freelancing not contracting. I work 100% from home mainly for clients in the US.

That's your problem right there. The US$ is worth naff all these days. Look for work in Europe, the Euro/Sterling is quite strong so rates will more likely reflect the £400 per day mark.