*almost* full-time freelance/contractor rate suggestions, please?
I need ideas as to how other editors deal with clients that are almost full-time, but not quite.
I was asked by a client yesterday to quote them a price as to how much it would cost to have them make me an "almost" full-time contract employee. They are trying to figure out their budget for next year and would rather have a fixed expense for accounting reasons rather than have me bill for each and every little project. The plus side is I'd make more money. Downside is that I could lose out on other jobs. I would normally figure out this salary based on how many days, or hours, per week on average they need me for and bill my normal rate. But I see a problem with this strategy. First, let's say we agree that they need me 3 days per week and we agree on a set price (salary). In that case some weeks I'll be paid for 3 days but only end up working 1 day (not fair to them). Other weeks I might get stuck working 5 days and only get paid for 3 days (not fair for me).
To complicate matters they are a long distance client, so keeping of track of hours billed is always a matter honesty and my word. Is there no way to make a salary arrangement work under these circumstances? I'd hate to keep billing per project and risk not making more money from them next year. Yet at the same time I don't want to get myself wrapped up in a situation where someone is getting screwed.
Any thoughts are appreciated as always.
Jeff, you are faced with a wonderful problem, my friend.
The answer depends on how busy you are and how musy you'd otherwise be... without this client.
What I do is just add up the hours or days I'd otherwise bill. They are looking for convenience paperwork-wise more than a price break, I imagine. I wouldn't gravitate toward a price break right off the bat. Have a rounded off price in mind after you lay your first big on em. Don't round much, just enough they feel the love and keep ya busy.
How busy I am? I have one client, client #1, offering me a steady amount of work editing at the client's facility 2-3 times per week. The client that wants to "put me on the payroll", client #2, is an on/off again client that gives me work in waves. They are a fun client to work for and I like working on their material. Plus, I get to work at the home studio which is always a bonus.
I think the key will be to figure out how much work they need done and figure out how many days per week we think it will take. Example: If next year they want 12 1-hour programs cut, with graphics, sound, and DVD authoring, then perhaps I can do that working 1 day per week as long as there is no set-in-stone deadlines. If they need the program done by so-and-so date, then I'll need as much heads up as possible to make arrangements with client #1 to get enough time booked back-to-back to finish client #2. Yikes. Sounds confusing.
You're very much on the right track. Whatever terms you come to, be sure that you've both had input, that you're both comfortable, and that you're both flexible.
I had a similar situation back in the day, Maybe sounds like you, but for me, client #1 was who I wanted to work with most. :-) They eventually became the biggest client, but that took a while.
Things were also a little tighter for me -- it was a weekly TV show, so I DID have tight deadlines. Client #2 ALSO had a TV show, and BOTH were shot on location.
The opening bid for Client #1 was, you can have me all day Monday if it's multiple locations. Tuesday is okay ONLY if we're doing one location.
I gave 'em a heads up when the review copy was coming, they had half a day to review and give comments. (It was a 30 min. show. The whole team usually reviewed at lunch if they knew it was coming.)
If they miss the deadline, I ship anyway and they live with it...unless they tell me it's too important to ship without review. In that case, we slip in a re-run, and they pay me half anyway. I'd still get the full payment when the review was complete. That is, non-emergency re-runs were otherwise free (except for duplication and shipping costs), but an emergency re-run cost money, because I'd spent time regardless...and used up time that I could have billed someone else.
BTW, it only happened twice -- I suspect because they knew the cost. And the two times they had to do it, the first thing they said was, "We know we need to pay you half the rate of a new show, but we need to do it anyway." No hard feelings. Done.
This is oversimplifying, and was a bit more flexible than it sounds. For example, if there was something special that needed to be shot at one time and one time only, I did it without hesitation...but if they threw out the schedule, it was OUT. We'd have to figure out together when I might be able to finish the project. Stuff like that happened all the time, and it was never a crisis because we'd gotten in the habit of talking it through.
Implied in all this is that we set a minimum and a maximum together, for both my time and their money, that served as a framework. We could both see when one was running against the other, and we figured out how to deal with it.
It helped to have plenty of good faith on both sides -- and plenty of good cheer. Many of the discussions took place in bars. Highly recommended. :-)
Keep talking. Keep adjusting. Don't let bad feelings accumulate.
You get the idea. Something like this isn't JUST a firm business contract. You're also talking about a relationship. It will help if you both treat it like that. You know, in ADDITION to the business part. :-)
Their is no such classification as a almost full time freelancer/contractor as that would be defined as a part time employee. The IRS will not see you as a freelancer and even in your case where you are steadily working for the client weekly you may have already lost your contractor status depending on certain criteria.
In your case you will most likely get screwed setting yourself up as a "salaried" employee working for days in which you are not paid for your time.
It is quite simple because a freelancer has one simple commodity to sell "TIME!!" henceforth anytime regardless of the amount when you are working for the benefit of the client this is to be considered "billable" time.
Why should you allow your client's accounting department inability to plan ahead and budget correctly effect you in a negative way?
Tell them to create an estimated budget based on the prior year and if the workload increases then use the f@#$%ing contigency which should have been factored into the budget per project.
Now instruct me on where to mail my consulting invoice to so I can get paid for my valuable advice.
It only took me two minutes to write it but twenty plus years to experience it.
[tony salgado] "Their is no such classification as a almost full time freelancer/contractor as that would be defined as a part time employee. The IRS will not see you as a freelancer..."
The person spending the money is either the boss or the client. You two agree to that. You, taking the money, are either an employee or a contracor. You two agree to that. As a result of that agreement, there are specific implications, including the reporting of that agreement to the IRS by which forms are filled out and which are not.
The IRS only steps in if either party breaks the rules for the relationship they've described. But once you've made the choice and follow it through, the IRS just collects the money. It's as clear to them as it is to you.
For example, if you're an employee, then the employer has to do withholding, they have to provide certain benefits, etc.
If you're a freelancer, YOU do the withholding on form 505, not the client. You have to fill out schedule C and schedule SE on your 1040, neither of which is required if you're an employee. As a contractor, there are benefits that YOU decide to pay for or not, with no contribution from the client.
Paid vacation? Paid holidays? Yes if you're an employee, no if you're a contractor. The list goes on.
There's a long, long heritage of companies taking on full-time workers (even workers who are expected to work MORE than full-time) as contractors rather than employees. They specifically do it to save on insurance, benefits, and certain tax reporting burdens that contractors simply don't require. You see it a lot in the software biz, where I was on both sides of the fence -- I was a contractor, and later, as an employee, I hired contractors.
That's a little oversimplified...but only a little. Everthing was crystal clear. The one time we got audited (my wife and I ran the business together), the IRS owed US money.
To have things super-duper clear, we incorporated and I paid myself a salary --in which case *I'm* the employee, and the client is the contractee.
Jeffrey, there are plenty of threads about the benefits of incorporating (or forming a partnership, or whatever kind of entity you choose to create) and paying yourself the salary in this forum. That's obviously a different topic, and one worth looking into.
Having been both a contractor and an employee, there are plusses and minuses to both. My favorite plusses as an employee were having benefits including health insurance, paid time off, matching contributions to my IRA, discounted stock, and other things simply not available to contractors. I liked the predictability of checks. I liked the support that came from being part of a team.
As a contractor, I loved being in charge of projects. I loved being in charge of my time, saying yes to some jobs and no to others. The power to say no was sometimes even better than the power to say yes. I certainly TRIED to do that as an employee -- and was shot down.
I was never confused where I stood. Neither was the person giving me money. In one case, they had to live with my decision, and in the other got to slap me into submission.
Guess which I liked better. That too is another thread. :-)
The IRS has very detailed rules outlining the guidelines which define contractor versus employee.
Paramount to all the guidelines is the concept of how much control the contractor or employee has over each other.
The majority of freelancers who think they are contractors would not qualify under these guidelines due to the fact they are told were to be, a specific time to show up (or else the entire production schedule is thrown off whereas contractor defines when they will show up and how long they will work).
To better understand what category "you" might fit into one needs to read the guidelines and see if they can pass or fail the "test" to determine if they are an employee or contractor.
An easy example is a plumber (you the client hire him and he shows up based on his schedule, does the work without input or control by you, could tell you it should take one day but later finds out it will take longer and not face dire consequences due to the schedule change, could leave your work site to deal with another job and then return to finish you job at his availability.)
Whereas an employee (is told where to be, at what exact time, the exact numbers of hours they must work before they can go home, when they can punch out for lunch how long they can be gone for lunch, all items produced are the property and copyright of the employer etc.
The majority of production companies I work for have decided to follow the IRS rules and now hire all temporary employees via a payroll company instead of dealing with the problems of hiring a independent contractor who clearly does not meet the guidelines.
This thread should be turned into an article, there is a lot of useful information in it.
What about being on a retainer?
Good idea Mark,
Except the IRS will take it as a reason to crack down on all the freelancers on the Cow and then everyone will be screwed.
Name withheld to protect the innocent.
Thanks for the input and advice--It's always wonderful to get feedback and different perspectives. I ended up telling them my hourly/day-rate and advised them to figure out how many projects they'll need me on and to base how many days per week on that. If they are willing to "put me on the pay-roll" for 1/2 days per week, with flexible deadlines then everything should work out. If they pay me my rate for that day or two, then I'll wash and wax their car if there isn't any video to cut that week, as long as they allow time on the weeks that get busy or allow me some "comp time" to deal with other clients that have more pressing/dead-line specific projects. I'm waiting to see what they say.