Interviewing for a new job can be very exciting, but if you are interested in a contract or freelance opportunity, it can also be confusing to figure out how much money you should ask for.
As a recruiter staffing for creative, IT and marketing employment, I am often asked how I calculate freelance/contract rates for a variety of positions I fill. Well, there is a very simple formula that all companies use, and I’m happy to share this with you. Use this tool to adjust your financial perceptions, and propel your professional growth by remaining informed about what you should be earning when interviewing for jobs.
First, let’s review some basic terms:
- 2080 – the amount of hours an employee is paid for in a year (52 weeks X 40 hrs/week)
- W2 – an employee that works for a specific employer as full time staff
- 1099 – independent contractor that doesn’t work for an employer as full time staff
- Corp to Corp – an independent contractor that has their own company that works for another company
- Burden – costs a company incurs to employ a person (unemployment, payroll, taxes, etc)
Now, let’s do some calculations:
For a long term contract, working 40 hrs per week on W2 status:
- Full time salary / 2080 = contract hourly rate
- Therefore, if you make $80,000 salary, your hourly rate is $38.46/hr
For a long term contract, working 40 hrs per week on 1099 or Corp/Corp status:
- Full time salary / 2080 + 20% = contract hourly rate
- Therefore, if you make $80,000 salary, your hourly rate is $46.15
- The 20% is your burden
It’s that simple! Using this formula will help you calculate your financial needs, and increase the quality of conversations with your hiring manager or recruiter.
Profiles is a unique staffing firm specializing in marketing employment, creative, and interactive (IT) jobs. Since 1998, we have served the needs of our Clients and Talent by matching the best candidates with the best companies in the Mid-Atlantic region.
Author Name – Elissa Barnes
Title – Senior Account Manager
Location – Washington, DC
Twitter – @EBProfiles
Byline – In 2005, Elissa joined Profiles, the premier and number one staffing firm in the mid-Atlantic for the Communications industry, as an Account Manager. Today she manages over 30 accounts and hundreds of the mid-Atlantic’s top talent. Specializing in marketing, design and web talent, Elissa truly thrives in today’s competitive talent market.
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