As a freelancer, preparing for time off – especially around the Christmas period – requires careful planning.

Unlike employees with paid holiday leave, freelancers don’t earn when they are not working.

That is why setting your rates correctly from the start is essential to ensure you can afford to take time off without compromising your income.

One often-overlooked aspect of freelancing is adjusting your rates, not only to reflect your experience and expertise but also to cover your time off.

The hidden cost of time off

Many freelancers focus on their day rate when calculating income, but the reality is you are unlikely to work every day.

Holidays, sick leave, and time spent on non-billable tasks like admin can quickly eat into your earnings.

Here is a breakdown of what you should consider when setting your rates:

• Annual leave: The UK statutory minimum for holiday entitlement is 28 days, and this should be factored into your calculations.
• Sickness: Everyone gets ill occasionally, so realistically plan for at least five days off during your contract due to sickness or adjust based on your own health.
• Admin: Whether it is chasing invoices, managing clients, or marketing yourself, non-billable tasks take time. It is reasonable to assume you will spend at least one day per week on these tasks, which is time that must be accounted for.

When you consider these factors, your day rate may not seem as generous as it first appeared.

Accounting for time off at Christmas

The Christmas season often sees an increase in time off, whether for personal holidays or slower work schedules.

If you know you will need extra time off during the festive period, factor this into your rate calculations.

For example, if you are likely to work fewer days in December, reduce the number of working days in your calculation to ensure you are still hitting your target income.

Setting rates with clients

If adjusting your rates for the new year or upcoming holidays, transparency with your clients is crucial. Make sure you:

• Give notice: Let your clients know about rate changes in advance, ideally a month or more, to give them time to adjust their budgets.
• Be clear: Explain the reasons behind the increase, such as accounting for time off or reflecting your growing expertise.
• Offer flexibility: For long-term clients, consider offering package deals or retainers to soften the impact of a rate increase.

By setting your rates correctly at the start of your contract, you can comfortably take time off at Christmas without worrying about lost income.

Properly accounting for holidays, sick leave, and non-billable tasks ensures that your rates are sustainable, and you will not have to play financial catch-up during the festive season.

Start planning now, and you will be able to enjoy the holidays with peace of mind, knowing your finances are in good shape come the new year.