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Freelance vs contractor rates.

  • 25-11-2014 11:01am
    #1
    Registered Users Posts: 30


    Hi Folks,

    So basically, i'm freelancing now. I work on .NET and native Android/iOS.

    I in the past few months I have been working on a day rate of €350 broken down to an hourly rate for estimation/quotation purposes.

    Now, i'm aware that I could probably get that rate as a contractor in a company, it probably wouldn't be easy considering my years experience but close enough to it.

    What would be a comparable rate when working freelance. Considering the fact that I will need to prepare quotes, tender for projects, look over legal contracts (possibly hire lawyer occasionally). The final big one is that for project quotes I may get the work effort estimation wrong.

    Has anybody been in this boat? Should I look at increasing my rate to cater for the above so I don't come out worse off than contracting.

    Thanks


Comments

  • Registered Users Posts: 7,157 ✭✭✭srsly78


    Err what is the difference? Contractors are also freelancers.

    Do you rather mean setting up your own shop?


  • Registered Users Posts: 869 ✭✭✭moycullen14


    I guess you are looking at the difference between having a few clients that you personally nuture - working for them on an 'as-needed' basis - vs working 9-5, week-in, week-out for one client - an employee, if you will, except you're a contractor.

    I've done both over the years and, in my experience, there is no comparison - at least financially. You will almost certainly be better off as a contractor - as defined above.

    I spent 6 months working for an English client on an 'as-needed' basis and at the end of it I would have been better off flipping burgers. The amount of time I wasn't earning or on the clock was staggering. I tried to get them to pay me a retainer, I tried to jack up the rate so that it was financially viable but in the end, their lack of organisation just cost me money. I would reckon your day rate for that sort of work would have to be 2-3 times the contract rate and, at least in my experience, companies won't wear that. And all that isn't taking into account 'business development' time that you won't be paid for.

    Fixed price contracts are even worse because it is very difficult to factor in down-time - waiting for requirements, feedback, rework, etc. One way around it is to have a few clients on the go at the same time so that the slack gets evened out. That has it's own problems with resource clashes and context switching.

    Don't get me wrong - it is doable but you would need to be very organised and hard-nosed. Better, in my experience, to get the guaranteed weekly check.


  • Closed Accounts Posts: 19,777 ✭✭✭✭The Corinthian


    Freelancing and contracting are not the same thing. A contractor does not have to worry about bringing in a client, just going through the much easier process of dealing with a contracting agency, or billing, or pricing. All those headaches are taken away from them. And when they are paid 350E p.d., the final client is going to be charged that plus what the contracting agency is making.

    Freelancers are essentially operating the same way as a normal company does. They bring in their own clients, from first contact, responding to tenders, wining and dining them and drawing up and agreeing to T&C and rates. Billing and getting paid are your problem too, as is ultimately liability.

    So if you are charging the same as a contractor would get, then you're charging less than an agency and thus not getting as much as you should be getting. If you're wasting lots of time because your client's disorganized, then it's because you didn't get the terms you should, that would have said that you get paid for your time, full stop. After all, if you're a contractor and you turn up for your first day of the gig and the client hasn't gotten their shìts together to have your PC set up or access to the source code you'll be working on, do you expect to not get paid? You can be guaranteed the agency is charging for the time regardless.

    Being a freelancer however requires that you portray a more professional image. As a contractor a company is just a financial necessity, as a freelancer it's a brand. So the more you can portray yourself as a professional company, the more you can charge and the better the terms.

    You're not a Freelancer - your're a Consultant.

    Ultimately, if you can't get the rates and terms that make it worthwhile to be a freelancer, then it's probably not for you. In such a case you're probably better off contracting where your corporate image, ability to bring in your own clients and deal with them is not very important.


  • Registered Users Posts: 30 updown123


    Thanks guys definitely some food for thought there.

    I guess it's true that it's easy not to make comparable money in this game. I guess the actual coding will be by easiest part to deal with as a freelancer.

    I find the challenge an interesting one though..

    What is your guys opinion on freelancing as part of career development? One of the reasons i'd give it a run is to develop more skills in more than one area. i.e. Frontend, backend, PM, client mangagment etc. It's early in my career so don't necessarily want to be stuck on one thing.

    Also the idea that I may work on more projects and have a chance to pickup a new skill on each project?

    Just a thought really.


  • Moderators, Home & Garden Moderators, Regional Midwest Moderators, Regional West Moderators Posts: 16,722 Mod ✭✭✭✭yop


    updown123 wrote: »
    Thanks guys definitely some food for thought there.

    I guess it's true that it's easy not to make comparable money in this game. I guess the actual coding will be by easiest part to deal with as a freelancer.

    I find the challenge an interesting one though..

    What is your guys opinion on freelancing as part of career development? One of the reasons i'd give it a run is to develop more skills in more than one area. i.e. Frontend, backend, PM, client mangagment etc. It's early in my career so don't necessarily want to be stuck on one thing.

    Also the idea that I may work on more projects and have a chance to pickup a new skill on each project?

    Just a thought really.


    I do it all the time, it gives me a chance to learn a new skill and use it for a freelance project.


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  • Closed Accounts Posts: 19,777 ✭✭✭✭The Corinthian


    updown123 wrote: »
    What is your guys opinion on freelancing as part of career development?
    It's a double edged sword. It can be a very useful route, especially if you're looking at management roles in the long term. At the same time HR departments and employers dislike candidates who've freelanced too long - for example, one area of career development where freelancing is poor, is working in teams, because as a freelancer, you're on your own most of the time.
    One of the reasons i'd give it a run is to develop more skills in more than one area. i.e. Frontend, backend, PM, client mangagment etc. It's early in my career so don't necessarily want to be stuck on one thing.
    Freelancing is very good for this, but on the flip side there's also the danger of becoming a Jack of all trades and master of none. I've spent as much time freelancing as being employed or contracting. As a result, I can professionally code in over a dozen languages, for example. However, I would not consider myself at 'guru' level in perhaps any of them, even though someone with my level of experience should be at this stage.
    Also the idea that I may work on more projects and have a chance to pickup a new skill on each project?
    Good luck with that. Unless you're swamped with work to the point that you need to farm out the excess or turn gigs down, you're not going to be able to pick and choose.

    Additionally, you'll find that doing the same type of work will become more attractive as it will be possible to reuse code and deliver it faster, thus making you more efficient and thus profitable. At the end of the day, it's a business.


  • Registered Users Posts: 9,555 ✭✭✭DublinWriter


    updown123 wrote: »
    What is your guys opinion on freelancing as part of career development?
    In the short term no client will pay you to learn anything new on their time.

    Longer term, you're always the 'hired-gun' and the perms will always keep the shiny-new projects for themselves.

    Very easy to get stale if you've been contract for a long period.

    Key is to skill up on a niche area - go deep and narrow instead of broad and shallow.


  • Closed Accounts Posts: 19,777 ✭✭✭✭The Corinthian


    In the short term no client will pay you to learn anything new on their time.
    Depends on the client. If what you say were true, consultancies would not front load a project with senior consultants then send in the interns and graduates when it comes to actually do the work.
    Longer term, you're always the 'hired-gun' and the perms will always keep the shiny-new projects for themselves.
    Again depends on the client. There are other types of clients than IT firms for freelancers.
    Very easy to get stale if you've been contract for a long period.
    He's asking about freelancing, not contracting.
    Key is to skill up on a niche area - go deep and narrow instead of broad and shallow.
    Again, more true of contracting than freelancing.


  • Closed Accounts Posts: 18,056 ✭✭✭✭BostonB


    In the short term no client will pay you to learn anything new on their time.

    Longer term, you're always the 'hired-gun' and the perms will always keep the shiny-new projects for themselves.

    Very easy to get stale if you've been contract for a long period.

    Key is to skill up on a niche area - go deep and narrow instead of broad and shallow.

    Have to say I've always found the opposite. Contractor come in, do all the new stuff, the perm guys keep the old stuff ticking over. Probably varies on the culture of the specific organisation/company.


  • Moderators, Home & Garden Moderators, Regional Midwest Moderators, Regional West Moderators Posts: 16,722 Mod ✭✭✭✭yop


    In the short term no client will pay you to learn anything new on their time.

    Longer term, you're always the 'hired-gun' and the perms will always keep the shiny-new projects for themselves.

    Very easy to get stale if you've been contract for a long period.

    Key is to skill up on a niche area - go deep and narrow instead of broad and shallow.

    Definitely not the case in any of the contracts I've been on in nearly 5 years contracting.
    As said freelancing is a different kettle of fish.


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  • Closed Accounts Posts: 18,056 ✭✭✭✭BostonB


    I never found freelancing that great.
    Contracting is vastly better IMO.


  • Moderators, Home & Garden Moderators, Regional Midwest Moderators, Regional West Moderators Posts: 16,722 Mod ✭✭✭✭yop


    BostonB wrote: »
    I never found freelancing that great.
    Contracting is vastly better IMO.

    Agreed without a doubt. Less hassle.


  • Closed Accounts Posts: 19,777 ✭✭✭✭The Corinthian


    BostonB wrote: »
    I never found freelancing that great.
    Contracting is vastly better IMO.
    yop wrote: »
    Agreed without a doubt. Less hassle.
    Freelancing is a lot more hassle, but so are the potential rewards.

    Contracting is essentially a mid-way point between being an employee and an entrepreneur, with freelancing being the first rung in the ladder of the latter. And the reality is that not everyone is suited to being an entrepreneur - especially a lot of those who are entrepreneurs.


  • Registered Users Posts: 9,555 ✭✭✭DublinWriter


    Biggest issue you'll face with freelancing is credit control. Irish SME's are a complete nightmare to chase up in relation to invoices and payment.

    Secondly, a lot of the bigger corporates won't entertain freelancers. You'll need to be on their PSL (Preferred Supplier List) before you can even tender. They'll only deal with the 'Big-Six' because they perceive that it gives them some degree of insulation.


  • Registered Users Posts: 869 ✭✭✭moycullen14


    BostonB wrote: »
    I never found freelancing that great.
    Contracting is vastly better IMO.

    I'd agree. For the vast majority of people and skillsets, a dependable pay-check will be more lucrative.

    It may work if you want to work 'part-time', perhaps concentrating on starting a business - I've done this in the past with limited success or if you have a really niche skill that people will pay top dollar (>1000 / day) for or if you are trying to set-up a consultancy/service business. Otherwise, IMO, you'd be better off as a contractor.


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