Why are programmers paid so much
Salary and prospects as a freelancer in the IT industry
Part 4 of our freelancer series: This is how much you can earn as a freelancer in IT!
Have you already acquired a broad knowledge when it comes to IT and are you considering whether you should work as a freelancer in this area? In this guide, we explain to you what salary and what working hours you can expect, what gross and net earnings are, how you can calculate your wages, what hourly wages are possible and how you can influence them.
What salary and working hours are common?
Various studies have shown that IT freelancers across Germany earn an average salary of 83 euros per hour. This means that their earnings are in an upscale range, which is why around 95 percent are satisfied with their salary. Still 87 percent say that their current economic situation is very good or good.
The exact wages for IT freelancers are between 50 and 130 euros, the net income is around 4,700 euros per month. Most IT freelancers also see their future as rosy, because around 50 percent believe that the order situation will remain good, 39 percent think that the work situation will even be very good. A full 75 percent chose self-employment because they want to work independently.
For the most part, this domain is occupied by male IT freelancers. Starting from the usual 40 hours, IT freelancers even work up to 70 hours a week. However, there are also IT freelancers who work less than salaried employees, but usually IT freelancers work a little longer than normal employees.
How much can I earn gross, what is left over net? How can I calculate my wages?
Tax brackets and duties
First of all, it depends on the individual tax class assigned to the IT freelancer. This depends on whether he is single, single or married. As I said, the net income averages around 4,700 euros.
The duties differ from those of a conventional employee. Freelancers do not pay wage tax and, as a rule, no compulsory contributions to statutory health insurance are due. Nevertheless, IT freelancers also have to pay fees, of course. In principle, it is not possible to determine exactly how high the gross earnings are, as each freelancer fulfills individual requirements. These then determine the amount of the levy.
Calculate hourly wages
If you want to work as an IT freelancer, it makes sense to calculate your hourly wage. Of course, this should be in such a way that self-employment is worthwhile for you and you can cover more of your costs. The daily rate and the usual hourly wage for IT freelancers play an important role. Therefore, you should inform yourself in advance about the average hourly wage and take a look at the market for it. Take a look at the average income of people who are permanently employed in the industry on career portals and use it to calculate your hourly wage.
But you can also work with empirical values and bill on a project-based basis. So this means that you will not be paid by the hour, but instead negotiate an offer with a fixed framework agreement and set a project budget here, for which you will be paid in the end. You should also include your personal costs in the calculation of your hourly wage. You will have to pay additional costs, some of which are not payable by employees or which are already part of wage tax.
Costs and taxes
These costs include health insurance, unemployment and pension insurance that you have to pay. In addition, there may be additional costs, for example for legal protection insurance, so that any liability claims that are possible with difficult customers are covered. You also have to include costs for a tax advisor and travel expenses.
You should also be aware that you will not receive any money for administrative work and order acquisition. At the beginning of your self-employment you need equipment, office equipment and of course you also have to pay your rent. These costs must also flow into the hourly wage. Also keep in mind that in the best case scenario you have to make a profit in order to finance your life.
Paid vs. unpaid activities
At the beginning of your job, you should expect a proportion of paid jobs of 25 and 50 percent. Every hour that you work must cover around one to two hours in which you do not earn any money. Only established IT freelancers are 75 percent or more busy. You should also not count on more than 300 working days per year, because weekends, vacation days and sick days that accrue every year must be deducted from this. The realistic number of working days is closer to 220.
Of course, you can of course also work on the weekend if you want to or if it is necessary. Which hourly wage is realistic in the end also depends on the industry in which you work. Furthermore, the available services, the order situation on site and the amount of your costs influence the hourly wage.
However, you should assume that an hourly wage below 40 euros has a permanent negative effect. Especially in light of the fact that every now and then a little time will pass before you receive new assignments. There are good times and bad times everywhere. Therefore, you should prepare yourself early enough for such lulls.
What hourly wage is possible? How can I influence the hourly wage?
At the beginning of your career as an IT freelancer, your hourly wage is around 23 euros. Keep in mind, however, that there are additional expenses such as living expenses. You should therefore save money for bottlenecks. On average, the hourly wage for IT freelancers is around 83 euros. In 2017, the hourly wage for freelancers was around 88 euros.
Increase hourly wages
Would you like to positively influence the amount of your hourly wage? If you work satisfactorily for your customers, you can confidently increase your hourly wage. In addition, you should also consider and also realize a steady increase. In times of low work, it is necessary that you have to close gaps. You should also save money for your retirement.
Your website also has a significant impact on your hourly wage. Therefore, you should get yourself a professional website that you update every six months. Add your commissioned work and references. In this way you create a good basis for a higher hourly wage. This also shows your customers that you are not dependent on them, but that there are enough inquiries.
If you also set up a blog on your site, you can inform your customers about your job once a week. Explain details from the IT area and provide them with useful tips. Your blogs are also used by customers as references that influence the amount of your hourly wage. In general, it is important that you have a good public image so that you have a good basis for negotiating with potential clients and can expect a higher hourly wage.
With our guide we have now informed you about the salary of an IT freelancer. Furthermore, you now know the usual hourly wages, know more about the average gross and net salary and how to correctly calculate your personal hourly wage.
We also explained to you which taxes you have to include and how you can positively influence the amount of your hourly wage. You should also build up reserves in case the project or order situation does not fully utilize you.
It continues with the 5th part: What skills does a freelancer in the IT industry need? (Part 5)
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