This workshop is in response to the first workshop, where we worked out the cost of living. We used this cost, which I rounded down to £23,000, to work out what we would need to charge to make a living and cover the overhead costs of running a business.
We started out by working out our employment costs, by adding my required income, to the cost of my pension contribution and my national insurance. If you are self-employed, you have to pay your own national insurance.
To fill in this form, we needed to decide if we were filling it in as if we were a freelance worker or as if we were working in a small business of about four people. Working on your own would save money as you wouldn't have to pay rent, but then it would make some things more expensive as you wouldn't be able to share the costs with others. Working with others allows you to inspire each other too. Realistically, I think I will be probably want to work as a freelance graphic designer/illustrator, so I filled the form in as if this was the case.
If I was working in a group and needed somewhere to work, it would have to have a good address so that clients could easily come and visit, such as holdback urban village, which is a creative hub. A small space would cost about £500 a month, so if there were four of you working, you would divide by four.
Business rates are the same as council tax, based on the approximate value of the place, however, these may be included in the rent.
Electricity is about £1000 a year, if you are working from home, you can charge a 1/3 of the electricity and gas bill to the business.
Business calls cost more than with a normal phone, so need an expensive contract, as well as a good broadband.
You can't charge promotional materials to clients, so need to set aside some money for this. No more than 10% of your turnover should be spent on marketing.
Need a spare computer with all software on it, because you cannot afford to lose a day with a client if something should happen to one computer. These need insuring. Need a good computer, and consider they may only last about four years.
Need to find yourself a solicitor as you may need their advice, you need an accountant and they will generally save you as much money as they cost.
Need to take trips such as to D&AD to inspire you and for research.
Copyrighting your designs costs money.
Can rent a car if you live in the city centre as this may be cheaper and easier or use public transport.
Business insurance covers office equipment in case of fire/theft/flood.
Professional and product liability - if someone might get injured by something you make or if you design something that might offend someone.
Public liability insurance - incase someone injures themselves on your property. If you work freelance don't invite people back to your place, meet them somewhere neutral.
After filling everything in and doing the calculations, I worked out that I need to earn £176.58 a day to cover my cost of living and business overhead costs. If I was to work five days a week for 8 hours, 181 days a year, my rate of charge would be £22.07 an hour, which seems quite reasonable for a graphic designer. However this would be assuming I have work to do all the time, which I doubt I will. So in some ways this workshop has put my mind at ease thinking it is possible to earn a living as a freelance graphic designer, however in some ways I now feel more worried, because it seems more real, and I have learnt that running your own business is an expensive and time consuming venture. I think I will end up having to work longer hours and more days of the week that I thought I needed to!
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