Unfortunately, the answer to the question of whether freelancers get paid more than employees isn’t a simple yes or no. There are a whole host of different factors and variables that can come into play to sway the verdict one way or another.
So, if you’re wondering whether making the switch to self-employment from employment would be a good move for your bank balance, keep reading.
We’ll take you through some of the different scenarios and highlight some recent facts and figures to help you build a better picture of the current freelance vs full-time income landscape.
The growing freelance population
There are now currently more than 2 million freelancers in the UK alone – a statistic that has been climbing consistently over recent years.
Not only does this demonstrate that more and more professionals are turning to self-employment, but it also shows that, for the freelance population to carry on growing in such a way, there is clearly significant demand for this ‘gig’-style work.
Global marketing community, The Work Crowd, which connects freelancers with customers, saw a 61% increase in new clients joining the platform from 2021 to 2022. This proves that there is an increasing appetite for outsourcing to freelancers and that the gig economy is very much alive and well.
Surely this suggests, then, that freelancing is a lucrative and financially appealing way to earn a living… but do freelancers make more money than employees on the payroll?
The answer to this is in a constant state of change. What could be the case now might not be the same in 10, 5, or even just one year’s time.
Let’s take a look at the financial benefits of being a freelancer right now before we compare this to the financial advantages of being an employee.
What the average UK freelancer is earning right now
It seems that the current stats are in the freelance population’s favour and not just financially. There are plenty of reasons why self-employment might be the best way for you to make an income.
The facts and figures
In a recent survey comparing freelance and employee earnings, 59% of freelancers said they make more money than their counterpart working a full-time job.
Employment platform Indeed says that the current average salary for a freelancer is £18.16 per hour in the United Kingdom. The highest earnings are in East London, where the average hourly rate is £22.30.
Meanwhile, numbers from digital salary benchmarking tool, Figures show that the average hourly wage for UK employees is £16.60, based on a 41.8-hour working week.
The financial benefits of being a freelancer
So, right now it seems that many UK freelancers are in fact earning more than employees on the payroll. Other advantages of being self-employed include:
- The money you earn is yours to keep – Any profit you make is yours for the taking, rather than going straight to your employer.
- More control over your own time – Your working hours are normally dictated by your employer, making it difficult to work more (and therefore earn more), or to choose your own working pattern. Freelancing gives you more autonomy, putting you in charge of when and how you work.
- You’re in charge of what you get paid – As an employee, what you earn is entirely controlled by someone else (your employer). As a freelancer, you can decide what you charge and when you want to increase these prices without having to jump through HR hoops for a pay rise.
Some advice on how to price your freelance services
Setting your prices can be one of the trickiest parts of being self-employed. Here are some quick tips to steer you in the right direction:
- Do some digging to see what the current industry standards and averages are, then decide where you want to position yourself
- Make sure you consider all of your expenses to cover things like insurance, accounting fees and home office running costs
- Don’t undercharge as this runs the risk of damaging your reputation
- Don’t overcharge as this will only send potential clients to cheaper competitors instead
- Review your prices regularly with all of the above in mind
- And remember that you don’t get paid holiday leave or sick pay!
The benefits of being an employee
As we mentioned earlier, although the current financial landscape generally shows that freelancers are earning more than employees, this isn’t necessarily permanent and could change over time.
Plus, it’s important to remember that these averages can vary depending on things like experience and location. The £22.30 per hour that freelancers in East London are earning, according to Indeed, drops to £12.17 per hour for freelancers in Glasgow, for example.
It’s also worth keeping in mind the following pros that employees benefit from that freelancers don’t:
- Paid sick leave
- Paid maternity leave
- Employer pension contributions
- Regular, stable income
- Dependable work with no gaps in earnings
- No need to spend valuable time chasing things like new work and late payments
Our advice? Start small with a side hustle
These days, employment and freelancing doesn’t have to be a choice. You can do both by setting up a freelance side hustle to supplement your PAYE salary. This means you can generate a secondary income stream to earn more money and protect yourself with a financial security net.
Starting out with a side hustle, rather than taking the leap and cutting ties with employment, means you can do all of the following with the stability of your regular salary to support you:
- Establish the scale of demand for your skill or offering
- Scope out the competition
- Start building client relationships and a network of contacts
- Grow your portfolio so that you can eventually charge more for what you do
If full-time freelancing is still something you want to do further down the line, you’ve then stood yourself in great stead for success.
Done here? Head over to our Freelancer Hub where we have a whole host of handy guides and resources to dive into.
