The world of marketing management and execution is evolving quickly. One trend that’s becoming more and more prominent across the professional world is the increase of non-traditional work.
Marketers are no strangers to unconventional work arrangements. Our field has been full of agency partners, contract staffing, freelancers, and more for decades now. But these kinds of non full-time or third-party work arrangements are becoming more and more common.
The jury is still out as to whether or not this is a good thing. But the reality is that your marketing career might well benefit from taking a job in the growing gig economy. And if a great opportunity comes along, it pays to have an idea of what you’re worth and how much you should charge.
How to Calculate an Hourly Rate
Say you found an awesome job with an amazing company, but they want to work with you on a contract/freelance basis. If you’ve never done this kind of work before, you likely have no idea what to ask for when they ask for a quote of your hourly rate.
Fortunately, it’s fairly easy to get a rough idea of a fair rate using a single, simple formula:
Hourly Rate = Yearly Income ÷ Hours Worked in the Year
In this case, Yearly Income is the amount of money you expect or need to make in a year. This is a personal number that will depend on a variety of factors. But in general it’s not unreasonable to start with your annual salary now and add a modest amount to that.
Hours Worked in the Year can also vary somewhat. But if you assume you’ll be working more or less full time with a couple of weeks of time off and holiday, you’d end up with 40 hours a week for 50 weeks, or 2000 hours per year.
From here it’s a simple matter of plugging in the numbers.
Say you were offered a long-term contract with a major Fortune 500 firm for a year or more and need to know where to set your hourly rate. You make $45,000 now, but think you’re worth a modest raise to $50,000. In that case, the formula would like this:
Hourly Rate = $50,000 ÷ 2000 hours = $25/hour.
Pretty simple, right?
The above situation is a common one, but not all interim and alternative work arrangements are quite so clean and simple.
For instance, imagine you decide to move to freelancing or consulting in your field full-time. Say you want to make $60,000 a year–but without a full-time salary, there will likely be some downtime in between gigs where you’re stuck looking for new work.
Maybe you’re only able to work an average of 1500 paid hours per year–that’s something you need to anticipate and compensate for in your calculations.
Additionally, remember that if you’re an independent contractor or freelancer, you’ll be responsible for your own taxes, healthcare, time off, and other benefits. They are not cheap, and you’ll certainly want to factor them into your wage and lifestyle!
Note that if you’re working through a consulting agency or marketing staffing firm, you’ll often be able to operate as a contractor on an hourly basis but still get healthcare and other coverage typically covered by an employer.