Everyone now a days ask about freelancing. It sounds nice. Freedom, higher income & more places to learn from. Of course freelancing doesn’t only come with benefits, my next article dives into the life of freelancers.
How much do you work?
Most PO’s I know work around 32 hours a week. For PO’s it’s difficult to work less as of their responsibilities and a day a week is nice to be able to do bookkeeping, networking and to regenerate as doing assignments can be intense. Depending on the employer it could be that people expect you to work overtime.
What personality does a freelancer have?
I talked to around 100 freelancers the last couple of years and there is a common thread. Most freelance PO’s are confident about them self and have a strong personality. A feeling of doing things that matter ‘purpose’ and very eager to learn. Getting bored fast is also something that comes back a lot. They like to be flexible and have more freedom. Next to that the ability to push to get things done and expose weak spots, which on the long run can cause annoyance in hierarchal structure under some conditions 😉.
Why do companies hire freelancers?
Hiring a freelancer brings quiet some benefits for the employer. Reasons are:
- Deliver fast ‘we don’t have time to onboard people’;
- Special talent / expected higher quality;
- Easier to find (current supply issue with po’s);
- It’s a temporary project, lower risk then to hire;
- Companies have a % of contracted people to be more flexible;
- Fresh perspective.
- Easier to hire (process)
Costs & benefits
The first 3 years of freelancing are financially beneficial. Because of subsidies to become an entrepreneur the average tax rate of freelancers is around 30%. Next to the fact that everything used to do the job can be deducted as costs. Think about computers, laptops, phones, audio gear, tables, but also coffee, lunch related to work, e.g bike.
What do you make?
Starting as a freelancer with around 2-3 years of experience in a favorable position you could make 100 euro’s an hour. Based upon 32 hours and 4 weeks ’16 days’ of holiday, national holidays and a month without an assignment you will work around 170 days in a year. 170 * 8 * 100 = 136000 euros gross.
What costs do you have and what is left?
- Bookkeeper 600 euros ex p.year
- Office, software tools e.g. miro 360 euros ex p.year
- Liability insurance 800 euros ex p.year
- Unemployment insurance 360 euros ex p.year
- Retirement 15000 p.year
From this calculation your total costs are 17120. This is a rough estimation as some tax rules apply, 118k. 30% will give you NET. € 83.216 = around 7000 net per month. After 3 years ‘benefits’ it will probably be around 10.000 less.
The biggest cons for freelancers are:
- Less stability = more stress;
- Knowledgesharing courses and all are on you;
- Contineously invest in relationships / colleagues, feeling of not being part of something;
- Holidays depending on assignment;
- Insecurity (forced holidays);
- Money management;
- Networking, getting a proper assignment can be challenging.
Conclusion is that if you like flexibility and constant challenges freelancing could be for you. Financially we also realize that if you have a senior position and a lot of experience the difference financially could probably be too small to be worth all the hassle.