Ask FreelanceSwitch: Moving from Full-time to Freelancing

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In this issue of Ask FreelanceSwitch, we look at moving from full-time to freelance. Ask FreelanceSwitch is a regular column here that allows us to help beginners get a grip on freelancing. If you have a question about freelancing that you want answered, send an email to askfreelanceswitch@gmail.com.

The Question

I currently serve as web and social media coordinator for a regional health club chain. I recently informed my boss that due to family and health issues my family will be moving back to my wife’s hometown to be closer to her family and get some assistance due to her health issues. The initial response was rather favorable – I REALLY love my job and the company I work for and leaving this job would be extremely difficult for me (I’ve been an employee here 10 months now). The company I work for is open to me staying on as an independent contractor at the very least for a trial period which would be a perfect solution for us.

In my current responsibilities I manage a Drupal 6 site completely on my own (though my boss will make periodic quick content additions/updates) that gets approximately 6000 unique visitors per week and manage 10 Facebook Fan Pages with a total of more than 6500 fans in total. I handle web graphics work and I’m in the middle of creating a new site design and support ticket management tool using Drupal as well. There is plenty of work for me in the 40 hours per week in which I currently serve.

I know currently that we use a graphic design contractor for a LOT of our marketing work and I’ve learned that it’s actually quite expensive to the company, but we use this contractor constantly – weekly, even daily. They’ve asked for me to present a proposal with details on money, capabilities, hours, responsibilities, etc. I envision no part of my responsibilities changing or reducing. It’s my goal to continue to provide them 40 hours per week as I am now and I would happily make bi-weekly or monthly visits as needed (we will still be close enough for me to drive – about 3-4 hours) to address any needs that should arise and make myself available via Skype and conference call etc. as needed. This is a huge opportunity and I want to make a good proposal and get paid what I believe someone with my KSA’s would be worth, but I don’t want to make it more expensive than they’re willing to pay hence my dilemma.

There is no one – including the company who built it – who knows our site & plans better than I do. I’ve done quite a bit of collaboration with my boss on social media initiatives and other projects that I initiated that couldn’t be better executed by anyone other than myself as I already know what’s going on and everything we want to do. I am the only web/social media person on staff here at this company. I’ve made several substantial improvements to the site and have been a key factor in working on social media initiatives and future plans. Though losing me would be painful in the short term they’d eventually find someone to fill the position, but my first and only review was a tremendous success and I know that they value me as an employee. I know that no one is indefensible, but I also like to think that I’m a bit of a linchpin for my company; It would take several weeks providing they could find the right person just for them to get up to speed on our approach and philosophy towards our site.

Despite the fact that I love my job, I’m paid far below what comparable people are paid for the same kinds of expertise and skills in similar size companies. If it can be trusted for accurate information Salary.com says that someone with my background and experience (designer II – web) should be making somewhere between $52k and $65 not including benefits – I’m currently making $35k with health care benefits partially paid.

I was hoping that you might be able to help me think through how I can handle this issue, and present a proposal for which they’ll have no choice but to say yes to, and “make them an offer they can’t refuse”. I really need some advice on what would be reasonable to ask for in terms of pricing, and how to do it. I’ve always done client work on the side, but this would mean making my employer one of my clients. I’ve never presented a proposal for anything related to this kind of detail/size with so much riding on it in terms of being a “contractor”. I really think this could be a huge boon for my family and my future as a business (they’d be my biggest client by far!). So – any help or guidance that you might have would be much appreciated!

In putting together the type of proposal you’re talking about, I’d start with the bottom line and work backwards. The simple truth is that, as a freelancer, you’re probably going to lose your benefits and you will certainly be responsible for paying your own taxes.

So add up exactly what you need to live comfortably: how much you’ll need to cover your living expenses, pay for a health insurance policy and so on. On top of that number, you’ll need to add how much you’ll need to be able to actually do the work — the amount you’ll need to be able to drive in when necessary, the money to cover the high-speed internet connection you’ll need to do your work and so on. That number may be starting to look pretty intimidating. It’s certainly well over what you’ve been making as a full-time employee.

But it’s going to get even bigger. You need to figure out how much more you need to earn to cover the tax bill so that you’ll actually take home enough to cover your expenses. I suggest going through the Rates Calculator so that you can be sure that you’re not missing anything.

Once you’ve got the numbers in place, you need to put them in terms that your soon-to-be-ex-employer will understand. Break it down into a specific period of time: what you expect to make in a month, for instance. Describe what you expect you will be doing — exactly what they’ll be getting for paying you.

It may be worth adding an appendix or an addendum that lays out some of the math for them, like how much it will cost for you to do that several hours drive to the office.

Don’t be surprised if the company in question expects to be able to pay you something close to what you’re making now, though. You’re going to have to be able to explain (not just write out math on paper) why you need to be earning more to cover taxes, health insurance and so on. You should also be able to make a point of how the change will benefit your employer — after all, they will no longer have to handle payroll for you or pay your health insurance themselves.