Cost of employment

Sometimes, potential customers ask freelance technical writers to explain their apparently high rates. Typically, the person who asks the question is not an accountant, and compares only the salary of an employed person with the freelance technical writers's day rate. This page and the related spreadsheet help to show the true cost of employing someone, and put freelancers' fees into perspective.

A problem with comparing our fees to the cost of employing someone is that possible customers then think of freelancers as equivalent to employees. That is not correct, because freelancers and employees solve different problems for customers and for employers.

Calculating employment costs

Different websites suggest that the full cost of employing someone is between approximately 40% and 100% of an employee's salary, plus the salary itself.

How are the numbers calculated? We did not find a detailed cost model that is accepted by professional organizations or HM Government. Therefore, we designed a cost model (cost-of-employment-calculator.xls), with the help of people from UKBF (www.ukbusinessforums.co.uk) and PCG (www.ipse.co.uk).

Costs vary by employment sector. The spreadsheet is for office-based work. It is not perfect. As far as we know, there is no one correct method of calculating employee costs. For example, the marginal costs of a new employee do not increase the infrastructure cost. Therefore, do you apportion infrastructure cost to the new employee?