By Christina Payne
The trickiest thing about working as an independent contractor is determining how much you are worth to the clients. If you price your service too high, you’ll quickly lose business. If you price your service too low, insufficient money will be the death of your business. This blog will discuss some variables you can take in consideration as you determine the value of your service, and some resources you can utilize as you make your decision.
The first, and perhaps most frequently overlooked step is accounting for the costs of providing service. Covering the costs of providing services will make it possible for you to barely break even without losses. These costs are:
- Overhead Costs. You need to factor in the costs of your office rent or mortgage, other loans, health insurance, office supplies, mileage and car maintenance, cell phone or pager, computer, computer programs, internet costs, and most importantly: the cost of CEUs to maintain your certification. Add up all these, and any other additional bills you will need to pay, this will be a start.
- Material Costs. When you find you will need to purchase equipment, specific clothing, or anything that helps you perform your job, these are included in material costs. It is strongly recommended that you, as an interpreter, anticipate these costs and include the cost in your final service price. Bear in mind that most of the time, the equipment or clothing can be purchased once and used frequently for other types of assignments. The final value should not be too great to make a difference in total annual costs.
- Plan For the Unexpected. Never, never, never assume you can work every single hour of your workday for the entire year. You are human, and you will get sick. You’ll want to take a week off for your vacation on a cruise. You’ll find a day without any assignment. You’ll want to enjoy the Holidays with your family and/or friends. Take a look back in the previous year, how many days did you call in sick or go without an assignment? Take a look forward in the future, will you want to take a vacation? How often (be reasonable!) do you like going on vacation? Plan for the unexpected by putting aside a little extra money to tide you over during these rainy days.
You may want to consider visiting the Freelancer site to utilize a helpful tool called “FreelanceSwitch Hourly Rates Calculator“, which provides guidance and helps calculate the cost of providing service, and it’s been said that the resulting costs are fairly accurate. However, be sure to vouch for the resulting number by personally double-checking on the calculations and include some costs that may not have been included in the tool.
Now you have your baseline to begin with. This is a bare minimum – if you do not make more than the total sum of costs of providing service, you’ll break even. However, the reason why you’re an independent contractor is because you want to independently conduct your own small business, and all healthy businesses should garner some profit. Aiming for profits brings us to the next step – determining how much you are worth. We will discuss the last step in the next blog, coming soon!