Lloyds TSB just announced they're shutting down all C&G branches with loads of job losses. Though they said they were hoping to avoid compulsory redundancies with early retirement and by hiring less contractors. So they're not cutting jobs, except for contractors. Which is too bad for the contractors but brings up an important point if you are a contractor and you're setting your rates. You are responsible for your own job security and you have to charge for it. You don't get holiday pay, you need to spend some of your time on the non billables that need to be done to operate, you won't get a redundancy payment if through no fault of your own the company cuts your role in a cost savings exercise. You just don't have a job. There are various ways to mitigate the disaster and the best is probably to have as many customers as possible. The more you have the less the loss of one matters. But you also need to be aware of the reality that you may lose customers when you set your rates. You need to bill for your desired salary + operating costs + expenses + some headroom for the time you aren't doing billable work. Here's an example. Let's say you want a £30,000 salary. You have operating costs for equipment, software, travel, expenses, taxes, accountants, rent, phones, internet etc; say £15,000/ year. Given 45 working weeks in a year, because you deserve holidays like everyone else and you'll no doubt catch a cold or two at some point. 30,000 + 15,000 = £45,000/year MINIMUM turnover. 45,000/45 working weeks / 5 working days = £200/day So if you want to earn a £30,000/year salary and you have enough work to keep you occupied every single day - you can afford to do it for about £200/day. Let's for a moment say you spend just one day a week on things you need to do, but you can't bill a customer for directly - your accounts, taxes, your website, finding new customers, writing proposals, travelling to and from meetings, meetings, professional development. That's a rate £250/day and you still have absolutely no cushion. Lose a customer and even if it's one day a month you're not at capacity and you lose £3000 from your salary. If you lose a few or a big one and you're idle a day a week - you're out over £11,000! Now if you want to build yourself in a cushion so that if you lose some work you've got money to eat while you spend time trying to get more customers, you need to up the rate. For the sake of argument let's say you want to be able to eat working at 75% capacity if the times get lean and stay that way for a while. That means you need to be able to survive billing for 3 working days every week, so with the numbers above we get. £45,000 / 45 working weeks / 3 working days = £333.33/day Now in theory, working at capacity that would give you enough to pay yourself almost £45,000/year - but if you were smart and like the C&G contractors a major client suddenly pulled the rug out from under your feet, you've saved that and now have a good cushion going forward to find new customers. If they were 100% of your work, it could take sometime to build up that client base from scratch so the £15,000 really isn't that much when you start to eat through it - literally.