How Much Do Contractors Make?
One big question, when starting out as a contractor in the digital learning industry, is how much can you make for digital learning jobs.
If you’re just starting out as a contractor in the digital learning industry, you probably have one big question on your mind: how much do contractors make for digital learning jobs? The answer to this question is difficult to pin down, because there is no standard pay scale for digital learning contractors.
How much you make depends on three factors:
- Industry & Job Title
- Experience & Education
- Contract Type
The last one is the most complex, but don’t worry, we’ll walk you through all three.
Industry & Job Title
Almost every industry needs digital learning professionals. Some work in the education space, contracting with education publishers or directly with institutions of higher ed. Others take the corporate route, helping to develop courses for employee training or certification. You may even take a mix of contracts, spanning both categories in your career.
Within each of these categories you’ll find startups and established businesses. Big organizations and small but mighty teams. Each one needs contractors for different roles and levels of responsibility.
Unsurprisingly, more senior and more specialized roles make more: think manager of elearning production or learning and workforce analyst. Junior or less specialized roles make less: think script writer or video editor.
In general, corporate organizations have larger budgets than the education industry, so you can expect higher pay from corporate contracts. Still, you may see wide variation depending on your experience and contract type.
Experience & Education
More experience gives you more negotiating power. Most organizations see a contractor who can jump right in with minimal direction as more valuable than one who needs a lot of training to get started. If you can prove experience, you may have more room to negotiate on pay.
That’s why a portfolio is so important. Potential employers will look at your work samples, work history, and recommendations to decide whether they want to hire you.
Keep in mind that in many of these roles, teaching experience is not necessarily an asset. Employers are being inundated with former teachers who are trying to position themselves as instructional designers. The skill sets for these roles are very different, so if you’re hoping to transition from teacher to instructional designer, you probably need more than a resume refresh.
Degrees and certifications can help here. A contractor certified in eLearning Instructional Design and Development can likely leverage that credential into a few extra dollars per hour or hundreds more per project.
The 2 Main Contract Types
This is where things can get confusing. There are two main types of contractors. You can be an independent contractor or an agency contractor. Understanding the difference can help you understand how much digital learning contractors make.
Independent contractors file a 1099. No taxes are withheld from their pay so they are responsible for paying either annual or quarterly self-employment tax.
Agency contractors are usually contracted through a staffing agency and receive a W2 similar to the one you’d get as a standard employee. Taxes are withheld and you can claim deductions up front.
You might think that being an independent contractor is a better deal. Getting all of your money up front sounds pretty great. Not so fast, it turns out, when you compare them head-to-head independent contracting may not be as superior as it first appears.
Independent Contractors vs. Agency Contractors
Independent contractors are responsible for self-employment tax at a rate of 15.3% in 2022. This includes 12.4% for social security and 2.9% for Medicare. This is calculated in addition to income tax. However, you can deduct the “employer-equivalent” portion of your self-employment tax from your overall income.
Don’t get too lost in the details here. The important point is that your tax burden is a little higher as an independent contractor.
Expenses can make this even murkier.
If you’re working from your home office, as many contractors do, you probably bought your own computer, desk, and supplies. You may set aside a certain space in your house for work, and that space uses utilities that may add to your overall cost of living.
An independent contractor gets a tax writeoff for their office supplies. You can get deductions for your home office and work-related mileage.
None of those deductions apply if you’re a W2 contractor working from home. However, you might get help with benefits like health insurance that 1099 contractors have to pay for out of pocket.
It’s okay if your head is spinning right now. There’s a reason tax accountants need so much training to do their job well. Let’s simplify this.
Take Home Pay for Contractors in Digital Learning
If we have two digital learning contractors who both receive $75,000 of pay per year, generally speaking, the W2 employee will get to keep slightly more of that income.
However, most employers know that the burden of taxes falls on contractors. They’re often willing to increase hourly or per-project compensation if they don’t have to deal with taxes. Even if you’re contracting through an agency, you can sometimes still be paid as an independent contractor.
So the best thing you can do as a contractor is know which type of contractor you are, and negotiate with that in mind. An independent contractor will need to negotiate a higher rate in order to match the take-home pay of a W2 employee.
How Much Do Contractors Make in Digital Learning Roles?
You may have noticed we haven’t given you a firm number for how much contractors make in digital learning roles. That’s because there are a lot of variables. It’s difficult to give a reliable, precise number. Each job is different and compensation varies based on experience, education, job title, and contractor type.
From our experience, working across industries, we typically see Instructional Designer hourly rates that fit into these bands:
- Early Career: $30 – $40
- Mid Career: $35 – $60
- Senior Level: $50 – $75
- Early Career: $40 – $55
- Mid Career: $50 – $75
- Senior Level: $65 – $100
Keep in mind that non-profits tend to have budgets similar to the education industry. Across all industries, larger organizations often have larger budgets. Be prepared to adjust your expectations and rates according to some of these factors.
How to Maximize Your Income as a Contractor
What we can tell you for certain is how to maximize your income as a contractor. To do that, follow these four steps:
- Understand the scope of the job and the time and effort involved.
- Determine whether you’ll be an independent or agency contractor. Don’t be afraid to ask what their rate range or budget is!
- Negotiate the best rate you can based on your needs, contractor type, and qualifications.
- Use what you’ve learned to inform your next contract search.
If you’re working with a staffing agency, like Teamed, they can help guide you on the rate range.
If you follow these four steps for every job you consider, you’ll always get the best rate. For help finding contracts, part-time and full-time work in digital learning, reach out to Teamed or visit our job board today.