What are the risk coverage scores? (Expense handling for freelancers etc)

Salary Confidential uses risk coverage scores to describe how financial risk is distributed between the independent professional and the client.

These scores are designed to capture a simple idea:

who is exposed to costs, and how much protection exists against those costs increasing or not being paid

Risk coverage scores are expressed on a 0 to 100 scale:

Lower values mean the freelancer carries more of the financial risk
Higher values mean the client carries more of the financial responsibility

Expense risk coverage

The first risk coverage metric currently available is Expense risk coverage.

This score reflects how expenses (materials, travel, subcontractors, etc.) are handled:

whether they are included in the freelancer’s pricing
billed back to the client
or handled directly by the client

How to interpret the scale

Lower scores
Expenses are absorbed into the freelancer’s rates
→ higher exposure to cost overruns and unpaid invoices
Mid-range scores
Expenses are billed separately to the client
→ some protection, but the freelancer may still front costs
Higher scores (up to 100)
Expenses are handled directly by the client
→ minimal exposure; the freelancer’s risk is limited to their service fee

Important: this is not “good vs bad”

A higher risk coverage score does not mean a better business model.

Many independent professionals intentionally choose lower coverage approaches, such as all-inclusive pricing, for valid reasons:

capturing margin by controlling costs efficiently
simplifying pricing for clients
improving competitiveness or conversion

For example:

An exam prep tutor may include all costs because expenses are minimal and predictable. And they get operational simplicity, as well as simpler commercial terms with clients.
A wedding caterer may face significant risk doing the same, due to variable and potentially high-cost inputs

Risk depends on context

In practice, financial risk is shaped by more than pricing structure alone.

It depends on:

the type of service
how variable or controllable expenses are
the profile of the client (e.g. reliability of payment)
the ability to manage scope and cost creep

Our risk coverage scores are designed from an “everything else being equal” perspective.

They provide a consistent way to compare how risk is structured, even though real-world situations may vary.

Why we use this model

Abstractly, the highest exposure to both cost overruns and cash flow risk occurs when:

expenses are included in pricing
and not itemized or controlled separately

This is what the risk coverage scale captures.

Evolving the model

We recognize that some industries have well-established practices that may not fit perfectly within a single model.

We are open to refining or extending risk coverage metrics based on real-world feedback.

If you have a use case or perspective to share, we encourage you to reach out to us on Reddit. We actively use user feedback to improve how Salary Confidential models real-world pricing and risk.