#9 The difference between short term and long term freelancing contracts and how to charge for them (part 4)

This is the fourth and final of a 4-part series on freelancing vs part-time salaried work. Up to now, we’ve discussed:

PART 1: Why women who are returning to work following a career break should be seeking a part time salaried role vs becoming a freelancer

PART 2: The 4 benefits of returning to part-time salaried work vs freelancing

PART 3: If you really want to become a freelancer, set yourself up as a business. Here are the 9 things you need to make sure you do (and 3 of my mistakes!)

Throughout this whole series, we’ve also given you a FREE DOWNLOAD of a Pro Rata Calculator to help you work out what to charge as a freelancer vs. what to ask for in a part-time salaried role.

In this post, I want to dive deeper on the different type of work you might do for a client.

There are basically two types of freelancing contracts: short term and long term.

Short term contracts are things like one to one training for a client or consulting on a campaign. Long term contracts might be regular tasks you do for a client with a contract that will roll over month to month.

Here is the difference between steady and long term vs short term:

  • Steady and long term – If you have a steady, long term contract with a client there are a couple key distinctions as to whether or not you are an employee. You have to answer YES to all the questions below to truly qualify as a freelancer.
    • Can you set your hours?
    • Can you employ someone else to do the work on your behalf?
    • Can you work from where ever and whenever you want?
    • Do you have 2 or more clients?
  • Short term – Short term contracts allow you to charge more (because you are doing a very specific thing that usually requires expertise) but they churn more (meaning you are constantly having to get new clients).

In part 3, I told you about a few of the mistakes I made with regards to setting up as a freelancer. I’ve made a ton of mistakes with regards to short term vs long term contracts too… so let’s take a look:

Let’s talk about that time I had a steady and long term contract with a single client. I never asked, but I suspect that no one could have done the work on my behalf – which meant that for an 18 month period of time, I never had a single week off. I was allowed to work from home, which was great BUT, I had a 60% contract and with a 2 and 4 year old who were still home a couple of days a week, I had no time to take on additional clients, so the one contract I had was the ONLY contract I had.

Technically… I should have been an employee.

And they knew it too. When I was made redundant, they said ‘We’ve spoken to the lawyers and they have advised us to give you 1 month paid even though we technically don’t have to’. Wasn’t that nice of them! In reality, I could have fought it and I probably would have won a settlement. But I’m not litigious – most women aren’t. If I had fought it, I would have potentially received back pay for 18 months unpaid holiday as well as back pay for pension payments.

Let’s talk about the mistakes I’ve made with short term contracts.

When you have zero clients, you pretty much say yes to everything and if you say yes to too many things to fast, you then have to bring other people in to do the work (remember – you are freelance – you have the right to do this). If you didn’t get the pricing right, you’ll end up paying your subcontractors the same amount you’d pay yourself or WORSE YET – you may have to pay your subcontractors more than you’d pay yourself because they wouldn’t do the kind of work you’d offer to do at less than the market rate.

Another mistake I made with short term contracts was that I didn’t realise how much work I personally was going to have to do in order to actually get (and benefit) from having clients in the first place. Here are just a few things you need to do in order to get clients:

  • Network – in order to get clients, you will need to network, there really isn’t any other way to get clients in the early days.
  • Admin – I don’t know a single client who doesn’t expect to receive updates on how their work is going and they often don’t consider this ‘billable work’ unless you are a lawyer
  • Invoicing – If you want to get paid, you will need to invoice.
  • Chasing Invoices – Many clients sadly don’t pay on time, so unless they are paying in advance, you’ll likely have to chase (I’ve waiting up to 9 months for payment sometimes! No lie!)

In reality, when you are just starting out, you’ll spend about 50% of your time on networking, admin, invoicing and chasing invoices and 50% of your time on actually doing the work. The more work you get, the less networking you do, but all the admin, invoicing and invoice chasing remains, so even if it shifts to 25% admin/invoicing/invoice chasing and 75% actual work, you must take the ‘unpaid’ work into account.

Here’s the bottom line…

Many women we work with still have a lot of family obligations which means that they don’t have 40 hours in a week to work. In reality, most women only have 20-30 hours per week.

If that is the case, than as a freelancer, you can only do about 10-15 hours of actual work per week with the remaining 10-15 hours networking – especially in the early days.

It is for this reason that I am adamant that women should seriously consider getting a flexible salaried part-time job when they are looking to go back to work rather than just go freelance.

I am not against freelancing – and if you are an entrepreneurial person, this is exactly the kind of thing you should be doing as it will teach you a lot about the fundamentals of a business. I just want you going in eyes wide open so you are aware of the really important side of freelancing that people don’t always talk about.

TOP TIP: If you are really set on Freelancing, make sure you read this great post by Hannah Martin of the Talented Ladies Club about the TWO WORDS you need to know how to use to land freelance clients.

FREE DOWNLOAD

Want to know what to charge?

If you do decide that freelancing is the way to go, I know it is tricky to try and do the calculations yourself when it comes to how much you should charge in the context of a full time or part time salary – so I’ve made it easy for you and created the TechPixies Pro Rata Calculator which tells you exactly what the hourly rate equivalent should be for the various salary levels. I hope you find it super useful and will also consider receiving our weekly tips if you aren’t already.