Before I went solo, I thought about how my compensation would look after making “the jump”. I almost sunk my new business clinging to that idea. Today, I’d like to share how to avoid it:
I thought “I know my work is charged at a premium to the employer’s clients. I’ll simply do the same work, and since I don’t have all those overhead costs if I can make 30% more than what I’m paid while employed, I’ll be in great shape.” Sounds logical, doesn’t it? Well, it’s a trap.
As a solo operator, I cannot have all of my hours billable anymore. In fact, I’m lucky if I can get half of my working time to be billable. All that research, content creation, sales, administration, compliance (hello GDPR), etc keeps me pretty busy.
Any useful calculation should include how much I have to make in a year, how many weeks in a year would I like to work (as opposed to being on vacation), and finally how many billable hours can I expect in a normal week.
[(yearly income goal/(#of working weeks*#of billable hours per week)]
I’m not saying the result of this should be your final price or even the asking price – those have to be higher so you have room to negotiate. But you should always be aware of what your lowest limit is. If you go under that, you are effectively choosing to lose the income you need. It’s ok if you do it on purpose, but not ok if you offer that kind of price by mistake.