How to Price Your Services to Allow You to Take Time Off as a Freelancer
Especially during the holiday seasons, we often find ourselves getting ready for some time away from our desks as freelancers and small business owners.
Since we work for ourselves, this can feel both exciting and worrying in equal measure. On the one hand, we’ve worked really hard and are looking forward to some well-deserved rest and relaxation. On the other hand, besides hoping that our clients will be able to manage without us, we’re unlikely to be earning much (if anything!) while we’re away. And unfortunately, if we’re worrying about making ends meet at the end of the month, we’re unlikely to have a very relaxing break!
The good news is that if we adjust our prices to take into account the time we’re going to have off, we don’t need to worry about our finances.
In this blog post, I’m explaining the benefits of building an allowance for time off into your prices. I’m then going to run through how to set your allowance and what you should be considering when putting it together.
The benefits of pricing your services to allow for time off
As freelancers and small business owners, it’s really important for us to make provisions for time off work. We all need it for one reason or another, whether it’s time off for holidays, for family commitments, or to look after our physical and mental health. Below are some of the benefits of including a holiday/sick leave allowance in your pricing.
1) You’re giving yourself the same rights you’d get from paid employment
If you were in paid employment, you’d get holiday and sick leave as standard. These are basic rights that are seen as essential for your mental and physical well-being. You should be making sure you’re giving yourself the same rights you would give an employee now that you’re working for yourself.
I’m guessing one of the reasons you became self-employed was to enjoy the freedom it gave you. But this doesn’t mean you have to sacrifice all the benefits that came alongside being in paid employment. It just means you have to account for holiday and sick leave in your pricing strategy.
2) You’re relieving financial stress
When you know that you’ve accounted for holiday or sick leave in your pricing calculations, you can take time off without any financial pressure. You don’t have to worry about making ends meet or making up for the time you’re taking away from your desk. You know instead that what you earn when you are working is enough, meaning that you can properly rest and either enjoy your time off or use it to get better when you’re ill.
3) You might even earn some extra income
If you’re lucky and you don’t get sick one year, or if you don’t need the whole allowance you’ve built in and end up working instead, you’ll earn more income than you’d anticipated.
Extra income is always nice to have, and you can use it any way you like. You might decide to treat yourself to something you’ve always wanted, or you might choose to invest in an area of your business you’d like to develop.
How to price your services as a freelancer to allow for time off
When setting your prices, you should always be taking into account your unique financial requirements. These include your business expenses, your personal outgoings, tax payments, savings for retirement, and anything else you might need or want money for.
In Charge with Confidence, I show you how to use your financial requirements to calculate your hourly rate while considering how much time you have available for paid client work. Your allowance for time off comes from your capacity, so you take the days you want to set aside for holiday and sick leave from the time you have available for paid client work. You then divide your financial requirements by your capacity to get your minimum hourly rate, which will allow you to take time off without worrying about the financial repercussions.
When building your allowance for time off into your pricing calculations, here are some things you might want to consider:
1) National holidays
My mentees often forget to account for national holidays in their availability for paid client work. However, if you want to enjoy bank holidays with your friends and family, it makes sense to include them in your allowance for time off.
Even if you intend to work during national holidays, depending on the type of services you provide, you might find that you struggle to do any paid work on these days as your clients might be away too.
Don’t forget to consider national holidays in other countries if you work with clients abroad as well.
2) Holiday periods
Freelancers and small business owners often want to take time off to spend with family and friends during holiday seasons such as Christmas and Easter. You might not have considered this in your holiday allowance, but even if you’re staying at home and aren’t going anywhere, it’s still time away from your desk when you won’t be working.
3) Holidays away from home
Holidays where you travel and go far away from home are the easy ones to remember when it comes to setting your allowance. Whether you’re spending a couple of weeks on the beach during the summer months or going skiing in winter, these always need to be taken into account when you’re considering how much time you’ll have available during the year for paid client work.
4) School holidays
When thinking about your availability, you might also want to account for school holidays. If you have children to look after, your capacity is likely to be reduced when they’re home from school and are demanding your time and attention!
5) Childcare
Similarly, the likelihood is that your child will be off sick for several days over the course of the year. This is hard to plan for as it can often be very last minute. But if you’ve built some days where you know you’re going to have to care for your child into your pricing calculations, this can take away the financial strain of not being able to work.
6) Sick leave
Of course, you also need to account for your own physical health. Make sure you allow for enough days to rest and take care of yourself when you need them. This is especially true if you suffer from a chronic illness.
When you know you don’t need to work to make ends meet at the end of the month, you’ll be more likely to take time off when it would be beneficial to you.
7) Mental health days
Besides looking after your physical health, it’s also a good idea to care for your mental health. Including mental health days in your allowance for time off is a great way to ensure you’re able to look after your own well-being.
Running a small business is hard, and you might feel a lot of pressure. Taking time off when it gets a bit much is just one way to safeguard your mental health.
8) Time for volunteering/unpaid work
You might also want to make sure you have time for volunteering and any unpaid work that you decide to take on. Setting aside days for this will allow you to dedicate time to unpaid projects and causes that matter to you without worrying or feeling guilty that you’re not earning any money in exchange for your efforts.
9) Your values and priorities
Personally, in my pricing calculations, I allow for a day out in nature every month. I find getting outdoors really beneficial for my mental health, so I make sure I consider 12 of these days each year as part of my financial self-care.
You can consider as many days as you want to support your values and priorities in your allowance for time off. Perhaps you need to take care of an elderly relative or want to set time aside for something that’s important to you.
Whatever you want or need time for, accounting for days off work is essential if you want to take advantage of them without feeling financial strain. By considering all the above and calculating your prices accordingly, you’ll be able to maintain a sustainable business while still taking time off for the things in life that matter to you.
If you’d like some support to calculate your prices so that you’re accounting for enough time off in your capacity, I can help you through Charge with Confidence. During the programme, we’ll look at your individual financial requirements as well as the days you need to consider personally for time off work. Knowing that you’re earning enough even when you’re not working can relieve the financial pressure, allowing you to make the most of the days you decide not to spend at your desk.