By Kristen Harris
Everyone wants to be paid what they’re worth. But what exactly is that? What factors determine your worth? How do companies determine the pay for a role and how can you find that out? People generally don’t like to talk about money so anything related to pay tends to be murky and mysterious.
First, it’s important to keep in mind what type of work you’re considering. There is a big difference between pay rates for freelance or project work as opposed to hourly contract roles or full-time salaries. Let’s break it down.
> People who work on a freelance basis are running their own business, even if it’s a business of one. Generally, you’ll be a 1099 contractor with all of the responsibility of finding your own work, running the business, paying the employer’s portion of payroll taxes, and providing your own healthcare and retirement. You have flexibility, but when you don’t work you’re not paid; there’s no holiday pay or paid time off. Whether you’re paid hourly or by the project, generally freelance rates are higher than contract or full-time because you’re taking on all of the financial risk and responsibility.
> With a full-time position, you’re generally paid the same salary every week, or an hourly rate with a guaranteed number of hours per week. The employer probably also offers benefits like paid time off, holiday pay, healthcare benefits, retirement plans, and maybe even an onsite health coach or foosball table! Plus the employer’s share of your payroll taxes is paid by the company. If you divide the annual salary by 2080 hours (the number of work hours in a year), the hourly rate might actually be lowest of the three but add in an additional 30-40% of your salary for those benefits to get a true picture of your total compensation.
> The pay for an hourly staffing or contract role usually falls somewhere between a freelance rate and full-time salary. Depending on the firm you’re working with, you may have a level of benefits similar to a full-time position (that’s us) or little-to-no benefits provided by the firm. If a lot of benefits are provided, the hourly rate will be more similar to a full-time rate; when no benefits are provided some firms pay a slightly higher hourly rate (although many do not).
So, with the context of whether the position is freelance, staffing/contract or full-time, how do you know if the rate being offered is appropriate?
Pay ranges are a bit of art and science. There are some online resources where you can search by title, experience level, location, and other factors. I always like to look at 3-4 different sources, remove any outliers, then find the average. These resources usually gather their information from individuals self-reporting so this gives you a good idea of the going rate for that type of position. That’s the science. From there you have to consider other factors like your particular experience or level of expertise, your reputation, whether you already have a relationship or have worked together before, and even the company itself. Some places simply pay more than others; every business is structured differently.
Even with all of your research, at some point, it might just come down to whether the pay being offered fits within what you’re willing to accept. If there is a gap, consider other ways to bridge it. What else is important to you? Sometimes it’s easier for a company to provide additional time off, flexibility or other benefits rather than additional pay. Just keep in mind that any negotiations need to happen upfront, before taking the job. Once you agree on a rate, that should be the expectation on both sides.
We all want to feel good about ourselves and that we’re being paid “what we’re worth”. However, there really is no magic formula to come up with that number. Only you know what is most important to you, what you’re willing to compromise on, and what’s a deal-breaker.
Getting “what you’re worth” really means that you feel appropriately compensated for the work you’re doing, and that number is different for everyone. It helps to understand the different types of work arrangements, and the market for your skill set. We work with creatives in this area every day, just let us know how we can help!