What is the reasonable rate to give a Filipino freelancer?
March 3 at 8:02 pm in Employer Tips, Philippines by Honey Amabelle D. Young (Admin) 34 Comments »
Most employers, especially those new to outsourcing, have this very important question foremost in their minds: “What is the fair rate that I should give my Filipino provider(s)?”
An online freelancer’s rate is determined by a lot of different factors, the most important being: the cost of living in their country, the skills and abilities of the said freelancer, and whether you are hiring for a full time position or a project-based endeavor.
It is a no-brainer that the cost of living in the Philippines is much lower than that of first-world countries like the US and the UK. Consequently, you could get the same quality of work, if not better, from a Filipino provider for a much lower rate than what you would expect to pay providers in your own country. However, contrary to what some people believe, paying a Filipino freelancer $200/month for 40 hours of highly-specialized work per week is hardly enough. Between spending for food, rent, utilities, and expenses necessary for online work – like PC maintenance and internet connection, $200/month is not a livable rate.
The old adage, “You get what you pay for”, is also very much applicable to outsourcing. You may be able to hire somebody for $1/hr, but more often than not, you will get better quality work if you hire someone for a slightly higher rate. If you are willing to pay a reasonable rate, you will easily find an intelligent, hardworking, trustworthy, and loyal contractor that will stay with you and grow with you and your business.
So how much is reasonable? Now, that would really depend on the kind of work you are outsourcing. But before I get to that, let me give you a basis for the rates that I will be suggesting. The minumum wage in the Philippines in the national capital region is roughly P8,000/month. With the current exchange rate of P46.46 per $1 ( with paypal and xoom exchange rates a few points lower than prevailing exchange rates), the minimum wage would come up to $172.20/month. This wage is given to rank and file employees, factory workers, fastfood employees, etc. Naturally, white-collar workers get more than this.
Let me take for example the average salary a call center agent gets per month. Why call centers, you ask? Call centers are the top outsourced industry to the Philippines and since we are talking about outsourcing in general, it would be a good basis in terms of rates. An average call center agent earns P15,000 or $322.86 per month. That is roughly $2/hour for 40 hours of work per week. Call center agents don’t have to buy their own PCs/laptops, pay for an internet subscription, and pay for electricity. Plus, companies spend a lot in training and building facilities.
Below is a table of suggested rates that you may want to pay a Filipino online freelancer based on the kind of work you are outsourcing. I have come up with these rates based on my research on prevailing rates, both for traditional and online jobs. Please note that these are just suggested rates, not absolutes, and you may want to just use this as a guide. These rates assume we’re talking about a worker of average to above average skill and experience.
Note that there is a significant difference between the project-based rates and the full time rates. Full time rates are mostly lower because these jobs, more often than not, are long term as opposed to project-based jobs that are piecemeal. I’ll be writing a post about this later. Also, these rates are given under the assumption that you are to hire average to above average-skilled workers. Less skilled workers will naturally be paid less as you would need to spend time in training and teaching them the skills they will need to do the kind of work you’d want.
At the end of the day, what you decide to pay your worker will ultimately depend upon you and your business – the amount of responsibility you are willing to delegate, the role this worker plays in your administration, and the amount of money you are looking to earn with their help. Whatever you decide, one thing remains certain: outsourcing to the Philippines may just be one of the best things you can do for yourself and your business.
Nice post. Very informative and certainly a great blog for those who wanted to be a freelancer.
Thanks, Ryan! We will have more posts about this topic and we hope that through this blog, we will be able to help guide freelancers and employers alike.
Great post.It could also an eye opener for employer & workers here.
Thanks, Jeanet! Our aim is to help and guide both employers and workers and suggest outsourcing best practices for the benefit of everyone.
The biggest factor I think an employer should factor in is experience.
Most people are brand new, just starting out as freelancers, either still in College or just graduated.
There are the seasoned workers who have been doing this for several years as freelancers and they know what they are worth and they know what they should be paid.
Our general rule when hiring is $75-$150 a month for a Part Timer.
$250 to $400 a month full timer.
If you find an exceptional worker with several life skills many years out of college and you are not sure where to begin…. Begin at $400 the first month and call it a trial.
See if they are faster, more knowledgeable, and less hands on for you to micromanage. After 30 days, if you find they are certainly the top of their game, give them more money and continue on. How much? $100-$200 max for the exceptional worker, which brings them to $500-$600 a month.
In my experience, never start people at $500 or $600, but allow them to work into it quickly, if they show you over time, they have the talent to quickly provide a return on that investment for you, as the contractor.
Keep in mind, these are NOT EMPLOYEES. They are independent contractors, paid as CONSULTANTS to your international companies. With that comes some great benefits for USA Entrepreneurs, as you will not pay any taxes, sick pay, vacation pay or time spend when brownouts or monsoons disrupt power or ISP services.
But these can also be negotiated into the consulting fees, on a case per case basis.
Jeff Mills
http://freeoutsourcingcd.com
Attempting to live the 4 hr work week
Thank you very much for your input, Jeff
We really appreciate your comment as it is very useful for employers/buyers to help them determine correct rates to give their providers/contractors.
Any current employee perspectives?
This is one of my biggest struggles.. Some Freelancers “dive” the rate just to get the job. I used to have an hourly rate of $5-$6 in GAF and Odesk but had to lower it down to get clients. Anyhow, I got most of my clients from personal contacts and not from those sites I mentioned.
It’s good to have a “basis” of the pricing. Employers have to keep this in mind, ” You get what you pay for”. If you are looking for quality outputs, dont look for the cheapest on the list of freelancers, look for those who have the skills and experience and weigh if he has the price tag worth the skills and experience that the freelancer has. By doing this, you’ll never regret every buck you spend on a Freelancer. ^_^
Anyhow, 2 days in EasyOut and no luck yet. teehee
i surely love your own writing way, very useful,
don’t give up as well as keep writing simply because it simply just worth to follow it.
excited to see more of your current well written articles, cheers
@usalomiarma: Thanks!
Thank you for this post. Contains good information and very reliable.
Hi – Jeff Mills summed up my expectations on hiring -… NOT EMPLOYEE – but they are independent contractors, paid as CONSULTANTS to your international companies. With that comes some great benefits for USA Entrepreneurs, as you will not pay any taxes, sick pay, vacation pay or time spend when brownouts or monsoons disrupt power or ISP services.
I too am not hiring an employee – but seeking an independent contractor to assist with data entry type work – and I understand that to mean the SS and benefits (and tax reporting) required by the Philippine government are not required for me to pay ??
Want to make certain of the wording and requirements before I determine a salary offer. Thanks!
@Cheryl: I updated the post to replace where I referred to contractors as “employees” to “contractors” or “workers”.
Hiring Filipino online contractors doesn’t bind you with Philippine labor and tax laws. Only physical, brick & mortar companies located in the Philippines are bound to follow these laws.
I cited the employee benefits in our country on a separate post to serve as a guide to foreign buyers who wish to outsource to the Philippines on the rates they may want to offer their Filipino contractors.
I hope this helps. Thanks!
@Joyce: Thanks! Do continue to read our blog as I will be posting more articles relevant to outsourcing and working online.
Very informative!=)
This is a well written article. I sure am eager to read all of your articles.
@Nine: Thanks! Do check out our blog often for more useful and informative articles.
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@Jaypee: Thanks!
Your comment on Yaro’s blog on his post, “Is Outsourcing Exploitation?”, is something to really give value in behalf of freelancers here in the Philippines.
I was about to write a blog post on my insight in parallel with ( and skewed with) Yaro’s. But before going further with my blog post, this post has really aroused my interest about the same plight as you have with regards to freelancer’s pay.
Freelancers should be provided “real” value with their work. But on the matter of outsourcing, it should be even more. Although the average monthly pay for Filipinos here even me in Cebu is now between 7k-8.5K , this salary is not sufficient enough to cover all the basic needs for a month. And most of the freelancers might even complain for even $400 a month or roughly 17,600 in pesos based on US-Peso exchange. Because really, this monthly earning is not enough to grow a family of 3 or 4.
Though I am thankful for being single but still I have wants and needs to meet. The $500/month is, I think, reasonable enough even for entry-level freelancer, but when standard of living rises, the desire for more also drives up proportionately.
I am back from freelancing after almost a year of temporary retirement (I went back to offline business but found it very stressful). I have had experiences in web content writing for over 4 years now. However, I was appalled looking at freelancers.com and even at ODesk for having rates as low as $1.25 for 400-word article on their posted ads. Looking at it has been my reason not to pursue with freelancing for five months and just wait for someone to recognize my works ( I have created a portfolio fortunately but still I’m looking for more with good-paying prospects). And luckily I’ve been contacted and have started writing for a client but still looking for more.
I consider my freelancing endeavour as supplemental income for my blogging and Internet marketing career but I still treat it as my primary income source.
Saying “great post” or “this article is great” has become a cliche so I refrain using it to appreciate this noteworthy post.
And btw, whenever you need a signature or something to bring this to a new level of activism, you may contact me. I am really with you on this.
PS
My blog post as a response to Yaro’s post will be postponed tomorrow. It’s late now and I need to say adieu to the world for a fresher mind tomorrow.
And I apologize for the long comment… got carried away.
Hi Bjorn,
I totally agree with you and seeing these really low rates posted by workers really is devastating. It would really be nice if there are standards set for certain online work and certain skill levels.
What’s your blog? I would love to check it out. Thanks.
This is a great article. I would just like to add that the best freelancers respect their employer’s deadlines. Thus, we submit our work right on time. However, employers should also do their share by paying their writers/programmers/virtual assistants on time. I have been a freelancer for quite some time and I have friends who are also into this career path. I have heard stories of employers suddenly disappearing when the freelancers are asking them for feedback regarding payments.
@Rica:
You are right. While there are “disappearing” freelancers, there are also “disappearing” employers. There are always flakers at opposite ends of the spectrum.
All we can do is hope and pray that we don’t encounter such employers
This is a nice article but I would disagree on a few factors as to why I do not limit myself to companies who can offer as much as $5/hr based on the services I offer as I know i later will be maximized based on what my capabilities are… one day you’ll be doing SEO, the next thing you know, you’re doing a lot more than what you both have discussed as to how far your work coverage is. One thing that I also put to consideration is the fact that most lowballers are high maintenance and can take so much of your time with less profit. I also put to consideration the fact that most of the software that they’d be needing are readily available for them to invest any further for these things. And lastly, a $5 per hour may be reasonable for freelancers who live with their families, but if you’re on your own and having the need to pay your monthly rent, electricity, internet connection etc… I don’t think $5/hour specially for VA-SEO jobs would be a reasonable amount of service fee… but of course, with the rate I ask, follows the continuous proving that I am able to deliver far better.
@Jefferson:
Thanks. The rates I suggested in the post above is just a starting point for online workers with average skills. Of course, rates vary according to a freelancer’s skills set and experience and the scope of work that the project entails.
For more experienced and highly-skilled workers, it follows that they should be given higher rates. Of course, the rates will be agreed upon by the employer and worker and it is at the employer’s discretion to offer a higher or lower rate based on his evaluation of a worker’s skills.
I have a private client who contacted me and offered $150 a month for 40 hours of work each week. In other words, a full time job at less than $1 an hour.
FYI, just the internet connection for one hour using wireless prepaid is already roughly half that amount (P20/hour). Add in the electricity and costs of setting up a workplace at home with a computer and furnishing and you might as well not be working.
@Mei Li:
There are really clients out there who do not take into consideration other factors that affect a freelancer’s rate. Just explain to this client that the rate he is offering you is too low and explain to him the overhead expenses involved in working online. Suggest to him a reasonable rate for the kind of work that he is asking you to do. If he doesn’t agree, it will be best not to take the offer at all. Just my thoughts.
This is a great article that can really enlighten employers to the situation of Filipino freelancers and, from the replies, remind us that when we continue to deliver excellent work on time, we can reap greater rewards.
@Miguel:
You are right. With hard work always comes great rewards