Costs of freelancing to soar, freelancers warn
Almost all freelancers are braced for an increase in the costs of running their one-person operation, a second quarter report shows.
Under its Freelancer Confidence Index published yesterday, freelance body IPSE said that between April and June, the chunk of freelancers predicting higher costs for their business leapt to an unprecedented 92 per cent.
“It is likely that the biggest factor behind this is the increase in the cost of imported goods and services following the post-Brexit drop in the value of sterling,” IPSE wrote, in a report on the index.
The one bright spot about costs, it seems, is that when asked, “input costs” was not one of the top three factors that played a part in what the report calls a “significant decline” in the freelancers’ business performance.
However, reading between the lines of why freelancers’ confidence in their performance is so low (only 19% were positive for Q3), IPSE said it may be “because of their expectation that higher business costs will squeeze profit margins.”
In the report, the extent to which freelancers predict the price tag of doing business to inflate does not feature, but it does say which type of freelancers are most expectant of increases.
In fact, almost all freelance managers, directors and senior officials are planning for hikes in the prices they pay, as are the vast majority of technical freelancers and those working at associate professional level.
Freelancers trained to at least degree level and who work in professional sectors like Research, Business or Media were the least likely to anticipate their costs going up.
But only marginally more so -- more than eight in 10 of this less affected group still said they foresee extra expense for their freelance business.
“Unlike employees, freelancers are responsible for purchasing the goods and services that enable their businesses to run,” the Association of Independent Professionals and the Self-Employed (IPSE) said.
“Day rates have hit a peak of £525, which shows the considerable earning power of freelancers compared to employees. However, if inflation continues to climb, it will erode earnings right across the sector."