Thread: Any Self-employed Consultants Out There?

Hi Lionel
will you be a contractor or consultant who is delivering specialist expertise, acquired after many years of experience and education?
If it is the latter, feel free to charge as high as “the market will tolerate.” Your client is buying your valuable knowledge and your systematic approach to deliver it to them.
the rate you decide upon will need to cover all your costs of funding all your own support mechanisms in:

• Leave -all categories
• income protection
• professional association fees
• Further education and knowledge base.
• IT and communications
• home office
• Vehicle costs
• periods between assignments. This is reasonable. If the client wants expertise”on tap” they need to pay a premium to have it available when they need it.

Any travel you make for the client should be billed at cost. Allow for travel insurance.

Best wishes to you.
exciting times.
jeff

Don't forget superannuation, workcover, public liability insurance, and possibly home office expenses and licence fees.

Also take the contract to a lawyer.

My rule of thumb is that you have to be taking home about 30% more than an employee to be on the same as the employee. Any uplift above that is a reflection of your skills and their desperation for your skills

Originally Posted by 3toes

My rule of thumb is that you have to be taking home about 30% more than an employee to be on the same as the employee. Any uplift above that is a reflection of your skills and their desperation for your skills

In Aus that is believed to be 25% hence the casual loading of that value is widespread in the economy, but I obviously like your figure more.

In the rarified climes of the national capital IT industry the rule of thumb that I use to convert salary to $per hour is if the permanent job has a salary of $200K then you need an hourly rate of $200 per hour. Bearing in mind also that most permanent jobs will have 15% super on top of the salary and your pimp will take up to 10% of the hourly rate. This measure has held true for as long as I have been in Canberra and since I was earning $30 per hour, and takes into account leave, sick leave, training etc.


Regards,
Tote

Tote, I think your figure makes sense, largely.

I jumped on the self employed wagon a bit late (almost a decade now) but in the socialist "paradise" that is the low countries where they tax you into oblivion 30% on top of a regular yearly income is "adequate" if you have year round jobs and will cost the employer the same as if he would hire someone as employee, to put things into perspective. In order for you as self employed professional to have some spare cash for all the previously mentioned reasons, you need to up that with some more of course. So as Tote mentioned, yearly income converted to hourly rate is what you end up with.

I have found however that in my neck of the woods at least large companies are usually the only one who can afford those rates and they have all started to employ a purchaser ie. a person that does all the purchasing/hiring for the company to make sure the rates are as low as possible. In the past when you could install word perfect 5.0 on a dos machine you drove a big BMW and has cash for days. Those days are over and with the shortage of skilled builders a brick layer can now make more money than I can charge at some positions. Hilarious, especially since in IT I need to keep up every day and a brick layer as far as I can tell never needs to learn anything new after learning his trade.

In any case, I have found going solo to be a wonderful choice. Would I do it till my pension? I am not sure. It has enabled me to be more flexible and more happy in a field of work that certainly is no longer the hobby it once was for me (that happens a lot when turning a hobby into a job it seems) and reap the fruits of my labour, at least a lot more than when I did exactly the same job as an employee.

I wish you well and let us know how you fared mate

Cheers,
-P

I went out on my own in 2005 in Dubai. When I came back to Aus in 2009 I simply "relocated" the business. My overheads are SFA, I get to choose my clients, choose my jobs and choose my hours.

That brings challenges in that right now I'm juggling about 15 projects, but it also means provided I get off my backside and get them out, there's always an invoice waiting to be paid somewhere. It afforded me the flexibility to manage my sons treatment, although that ate considerably into my "super" savings, but we made it out the other end.

I have a couple of clients that I detest working for, but they keep contracting me. For them I reserve a super special "***** tax" on top of my normal hourly rate, and if they're happy to pay it I'm content to put up with their crap.

I'm not sure I'll do this until I retire, but only because I'd like to be able to help teach this stuff also, raise the level of the industry (which is universally crap) and encourage the next generation or two. Being self employed affords me the ability to have it both ways, and when I'm on big government jobs my tax pays my fees, so I revel in being a self-employed civil servant.

What ever you do, as long as you wake up in the morning wanting to do it, then do it. People ask me what I'd do if I won lotto. I'd do exactly what I do now, I just wouldn't bother charging for it. I hate invoicing.

Some people who do contracting forget that the first extra is to cover the ‘extras’ that come with being a full time employee. Then there is the extra up lift to cover the flexibility that not being an employee provides the employer. This last extra had to factor in an element of down time when you are not being paid think holiday, sick or between contracts. The between contracts bit is not always recognised and have seen contractors who do not factor this into their cash flow in real financial trouble