Independent Contractor Hourly Rates [modified]
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For those of you who are independent contractors out there... Do you have a good resource for determining what hourly rate you charge? Where's a good place to do some research? I know it is more art than science. I just had a fairly experienced business client reject a quote I sent him with him mentioning something about my rates being the reason all development work is going overseas. It was a unneccesary insult and I'm glad not to have received him as a client. However, it did make me wonder if my rates are too high. I personally thought I was on the low end of the hourly rate scale but I don't really know how my rates compare. So how do you determine your hourly rate?
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For those of you who are independent contractors out there... Do you have a good resource for determining what hourly rate you charge? Where's a good place to do some research? I know it is more art than science. I just had a fairly experienced business client reject a quote I sent him with him mentioning something about my rates being the reason all development work is going overseas. It was a unneccesary insult and I'm glad not to have received him as a client. However, it did make me wonder if my rates are too high. I personally thought I was on the low end of the hourly rate scale but I don't really know how my rates compare. So how do you determine your hourly rate?
Obviously it depends on what you bring to the table. I've heard it said $100/hour USD is a minimum if you're trying to making a living out of it, taking into account health insurance and all costs associated with being your own employer. I did a part time contracting gig outside my full-time job earlier this year and the client couldn't afford $100/hour. He offered half that, $50/hour, and I accepted since it wasn't my primary income and it was working on something I enjoyed.
Tech, life, family, faith: Give me a visit. I'm currently blogging about: No, Not I - A poem by Holocaust escapee, chief rabbi, and Messiah-follower Daniel Zion The apostle Paul, modernly speaking: Epistles of Paul Judah Himango
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For those of you who are independent contractors out there... Do you have a good resource for determining what hourly rate you charge? Where's a good place to do some research? I know it is more art than science. I just had a fairly experienced business client reject a quote I sent him with him mentioning something about my rates being the reason all development work is going overseas. It was a unneccesary insult and I'm glad not to have received him as a client. However, it did make me wonder if my rates are too high. I personally thought I was on the low end of the hourly rate scale but I don't really know how my rates compare. So how do you determine your hourly rate?
Hi Adam, This is a taff topic. I read an article a couple months ago and this guy explained how you can determine an hourly rate. First of all you have to come up with the number how much money you want to make annually. Then you have to figure out how many hours you want to work to make this kind of money. This sounds easier then it is, because you have to consider the hours your are not working productive (e. g. for marketing, accounting, ...) or you are out of work. You can roughly estimate this working hours by calculating the maximum hours per year, subtract your days of vacations you want to have and take something between 60% and 70% from this number. So for example You want to make $100,000 A year has 1,960 hours you could possibly work. You want 10 days of vacations means 1,960 - 80 = 1,880 1,880 - 40% = 1,128 = $88 / hour or 1,880 - 30% = 1,316 = $76 / hour This is just an example and the 1960 hours are not real numbers, but this is pretty much what I did to come up with my hourly rate (which is by the way a lot less then the numbers in this example). I usually give discounts for longer term projects. I came up with something I call a risk factor. As longer I am working on a project as higher the chances to get my annualy income. When I get hired for 12 months I am really competetive with my rates. Hope this helps. Cheers! Stephan
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Hi Adam, This is a taff topic. I read an article a couple months ago and this guy explained how you can determine an hourly rate. First of all you have to come up with the number how much money you want to make annually. Then you have to figure out how many hours you want to work to make this kind of money. This sounds easier then it is, because you have to consider the hours your are not working productive (e. g. for marketing, accounting, ...) or you are out of work. You can roughly estimate this working hours by calculating the maximum hours per year, subtract your days of vacations you want to have and take something between 60% and 70% from this number. So for example You want to make $100,000 A year has 1,960 hours you could possibly work. You want 10 days of vacations means 1,960 - 80 = 1,880 1,880 - 40% = 1,128 = $88 / hour or 1,880 - 30% = 1,316 = $76 / hour This is just an example and the 1960 hours are not real numbers, but this is pretty much what I did to come up with my hourly rate (which is by the way a lot less then the numbers in this example). I usually give discounts for longer term projects. I came up with something I call a risk factor. As longer I am working on a project as higher the chances to get my annualy income. When I get hired for 12 months I am really competetive with my rates. Hope this helps. Cheers! Stephan
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Hi Adam, This is a taff topic. I read an article a couple months ago and this guy explained how you can determine an hourly rate. First of all you have to come up with the number how much money you want to make annually. Then you have to figure out how many hours you want to work to make this kind of money. This sounds easier then it is, because you have to consider the hours your are not working productive (e. g. for marketing, accounting, ...) or you are out of work. You can roughly estimate this working hours by calculating the maximum hours per year, subtract your days of vacations you want to have and take something between 60% and 70% from this number. So for example You want to make $100,000 A year has 1,960 hours you could possibly work. You want 10 days of vacations means 1,960 - 80 = 1,880 1,880 - 40% = 1,128 = $88 / hour or 1,880 - 30% = 1,316 = $76 / hour This is just an example and the 1960 hours are not real numbers, but this is pretty much what I did to come up with my hourly rate (which is by the way a lot less then the numbers in this example). I usually give discounts for longer term projects. I came up with something I call a risk factor. As longer I am working on a project as higher the chances to get my annualy income. When I get hired for 12 months I am really competetive with my rates. Hope this helps. Cheers! Stephan
Stephan Hoppe wrote:
A year has 1,960 hours you could possibly work.
:confused: 52 x 40 = 2080. Or are you subtracting the standard holidays?
Best wishes, Hans
[CodeProject Forum Guidelines] [How To Ask A Question] [My Articles]
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Stephan Hoppe wrote:
A year has 1,960 hours you could possibly work.
:confused: 52 x 40 = 2080. Or are you subtracting the standard holidays?
Best wishes, Hans
[CodeProject Forum Guidelines] [How To Ask A Question] [My Articles]
This was just an example, but yes I subtracted the standard holidays as well. Stephan
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For those of you who are independent contractors out there... Do you have a good resource for determining what hourly rate you charge? Where's a good place to do some research? I know it is more art than science. I just had a fairly experienced business client reject a quote I sent him with him mentioning something about my rates being the reason all development work is going overseas. It was a unneccesary insult and I'm glad not to have received him as a client. However, it did make me wonder if my rates are too high. I personally thought I was on the low end of the hourly rate scale but I don't really know how my rates compare. So how do you determine your hourly rate?
I do independent contracting on the side, so I don't have overhead factored into my rate. My basic rate is $50-$75/hr, depending on who it is and the type of work. I've got some hardware engineer friends who I'll do software for at the cheaper rate, whereas cold contacts tend to get the higher rate. I charge travel distance at the IRS rate, and travel time is billable. I had one customer 150 miles away that required I show up on-site periodically. I don't do fixed-price jobs. Ever. My terms on invoices are net 30 days, and I invoice once a month. Based on a recent bad experience with a customer who took forever to pay their bill, I'm no longer delivering source code until after the invoice is paid and the check clears. I can get away with these constraints because I'm not using this to make a living. My 'day job' covers that. I do contract work to supplement my income and to do development outside the rut I'm in on my regular job.
Adam °Wimsatt wrote:
I just had a fairly experienced business client reject a quote I sent him with him mentioning something about my rates being the reason all development work is going overseas.
Sounds like a complete prick. I doubt you would have enjoyed working for him anyway. You should have pointed him to <evil_grin>RentaCoder</evil_grin>.
Software Zen:
delete this; -
For those of you who are independent contractors out there... Do you have a good resource for determining what hourly rate you charge? Where's a good place to do some research? I know it is more art than science. I just had a fairly experienced business client reject a quote I sent him with him mentioning something about my rates being the reason all development work is going overseas. It was a unneccesary insult and I'm glad not to have received him as a client. However, it did make me wonder if my rates are too high. I personally thought I was on the low end of the hourly rate scale but I don't really know how my rates compare. So how do you determine your hourly rate?
In the Los Angeles area, most consultants charge between $50 - $100 per hour. I quote a rate at the low end of this scale if 1) I can do most of the work from home (saving on gas and road rage); and 2) if I can work on a project in parallel with another one. Obviously, for your best (repeat) clients, you will also want to give them a discount rate. I also would like to comment about what you said about the "unnecessary insult". You are in a business relationship, and can't afford to be insulted, or to act unprofessionally. Call this person back in three months to follow up, and ask him how his offshoring work is going. And always be polite and honest.
Best wishes, Hans
[CodeProject Forum Guidelines] [How To Ask A Question] [My Articles]
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I do independent contracting on the side, so I don't have overhead factored into my rate. My basic rate is $50-$75/hr, depending on who it is and the type of work. I've got some hardware engineer friends who I'll do software for at the cheaper rate, whereas cold contacts tend to get the higher rate. I charge travel distance at the IRS rate, and travel time is billable. I had one customer 150 miles away that required I show up on-site periodically. I don't do fixed-price jobs. Ever. My terms on invoices are net 30 days, and I invoice once a month. Based on a recent bad experience with a customer who took forever to pay their bill, I'm no longer delivering source code until after the invoice is paid and the check clears. I can get away with these constraints because I'm not using this to make a living. My 'day job' covers that. I do contract work to supplement my income and to do development outside the rut I'm in on my regular job.
Adam °Wimsatt wrote:
I just had a fairly experienced business client reject a quote I sent him with him mentioning something about my rates being the reason all development work is going overseas.
Sounds like a complete prick. I doubt you would have enjoyed working for him anyway. You should have pointed him to <evil_grin>RentaCoder</evil_grin>.
Software Zen:
delete this;Gary Wheeler wrote:
You should have pointed him to RentaCoder.
You Bastard[^]! :) I can hear the BOFH cackling in the background :)
¡El diablo está en mis pantalones! ¡Mire, mire! Real Mentats use only 100% pure, unfooled around with Sapho Juice(tm)! SELECT * FROM User WHERE Clue > 0 0 rows returned Save an Orange - Use the VCF! VCF Blog
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Gary Wheeler wrote:
You should have pointed him to RentaCoder.
You Bastard[^]! :) I can hear the BOFH cackling in the background :)
¡El diablo está en mis pantalones! ¡Mire, mire! Real Mentats use only 100% pure, unfooled around with Sapho Juice(tm)! SELECT * FROM User WHERE Clue > 0 0 rows returned Save an Orange - Use the VCF! VCF Blog
All part of the friendly service.
Software Zen:
delete this; -
In the Los Angeles area, most consultants charge between $50 - $100 per hour. I quote a rate at the low end of this scale if 1) I can do most of the work from home (saving on gas and road rage); and 2) if I can work on a project in parallel with another one. Obviously, for your best (repeat) clients, you will also want to give them a discount rate. I also would like to comment about what you said about the "unnecessary insult". You are in a business relationship, and can't afford to be insulted, or to act unprofessionally. Call this person back in three months to follow up, and ask him how his offshoring work is going. And always be polite and honest.
Best wishes, Hans
[CodeProject Forum Guidelines] [How To Ask A Question] [My Articles]
A polite response is always in order. That's doesn't mean you have to take work from an asshole.
Software Zen:
delete this; -
For those of you who are independent contractors out there... Do you have a good resource for determining what hourly rate you charge? Where's a good place to do some research? I know it is more art than science. I just had a fairly experienced business client reject a quote I sent him with him mentioning something about my rates being the reason all development work is going overseas. It was a unneccesary insult and I'm glad not to have received him as a client. However, it did make me wonder if my rates are too high. I personally thought I was on the low end of the hourly rate scale but I don't really know how my rates compare. So how do you determine your hourly rate?
Many of us "consultants" still unfortunately have to go through a third party. Ie, TekSystems, Technisource, and many of the same ilk. These companies allegedly do the marketing and such for you and demand a pretty cent of the total rate. If you are quoting directly, don't low ball yourself. Clients that don't want to pay for talent also, usually, have other hidden flaws. If you are direct $120/hr plus. Unless it is a guaranteed contract, with a reputable company, with an outstanding payment history. Remember, part of your rate is because some people just don't pay. Also, keep in mind, my mechanic charges 95/hr to repair my vehicle. Best Buy charges $250 to come to your house. Looking at those rates and then looking at your rate stop for a second and see if there is a disconnect. I am willing to be there is. As for myself, personally, I vary my rate based on the type of work and other incentives and I definitely prefer going direct! Also, I put market factors into consideration when considering what number to give.
Need a C# Consultant? I'm available.
Happiness in intelligent people is the rarest thing I know. -- Ernest Hemingway -
Many of us "consultants" still unfortunately have to go through a third party. Ie, TekSystems, Technisource, and many of the same ilk. These companies allegedly do the marketing and such for you and demand a pretty cent of the total rate. If you are quoting directly, don't low ball yourself. Clients that don't want to pay for talent also, usually, have other hidden flaws. If you are direct $120/hr plus. Unless it is a guaranteed contract, with a reputable company, with an outstanding payment history. Remember, part of your rate is because some people just don't pay. Also, keep in mind, my mechanic charges 95/hr to repair my vehicle. Best Buy charges $250 to come to your house. Looking at those rates and then looking at your rate stop for a second and see if there is a disconnect. I am willing to be there is. As for myself, personally, I vary my rate based on the type of work and other incentives and I definitely prefer going direct! Also, I put market factors into consideration when considering what number to give.
Need a C# Consultant? I'm available.
Happiness in intelligent people is the rarest thing I know. -- Ernest HemingwayEnnis Ray Lynch, Jr. wrote:
Many of us "consultants" still unfortunately have to go through a third party. Ie, TekSystems...
Does TEKsystems charge the contractor or the employer?
"Normal is getting dressed in clothes that you buy for work and driving through traffic in a car that you are still paying for, in order to get to the job you need to pay for the clothes and the car and the house you leave vacant all day so you can afford to live in it." - Ellen Goodman
"To have a respect for ourselves guides our morals; to have deference for others governs our manners." - Laurence Sterne
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Ennis Ray Lynch, Jr. wrote:
Many of us "consultants" still unfortunately have to go through a third party. Ie, TekSystems...
Does TEKsystems charge the contractor or the employer?
"Normal is getting dressed in clothes that you buy for work and driving through traffic in a car that you are still paying for, in order to get to the job you need to pay for the clothes and the car and the house you leave vacant all day so you can afford to live in it." - Ellen Goodman
"To have a respect for ourselves guides our morals; to have deference for others governs our manners." - Laurence Sterne
You bill Tek, Tek bills client, client pays tek, tek takes out portion, you get paid. Pretty standard. And of course, they get a big portion.
Need a C# Consultant? I'm available.
Happiness in intelligent people is the rarest thing I know. -- Ernest Hemingway -
You bill Tek, Tek bills client, client pays tek, tek takes out portion, you get paid. Pretty standard. And of course, they get a big portion.
Need a C# Consultant? I'm available.
Happiness in intelligent people is the rarest thing I know. -- Ernest HemingwayWhat about if they find you a non-contract job. Is there a "finder's fee" paid to the employer?
"Normal is getting dressed in clothes that you buy for work and driving through traffic in a car that you are still paying for, in order to get to the job you need to pay for the clothes and the car and the house you leave vacant all day so you can afford to live in it." - Ellen Goodman
"To have a respect for ourselves guides our morals; to have deference for others governs our manners." - Laurence Sterne
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What about if they find you a non-contract job. Is there a "finder's fee" paid to the employer?
"Normal is getting dressed in clothes that you buy for work and driving through traffic in a car that you are still paying for, in order to get to the job you need to pay for the clothes and the car and the house you leave vacant all day so you can afford to live in it." - Ellen Goodman
"To have a respect for ourselves guides our morals; to have deference for others governs our manners." - Laurence Sterne
paid by the employer. Typically 25% of the annual salary I believe. Depends on how good the local office is.
Need a C# Consultant? I'm available.
Happiness in intelligent people is the rarest thing I know. -- Ernest Hemingway -
For those of you who are independent contractors out there... Do you have a good resource for determining what hourly rate you charge? Where's a good place to do some research? I know it is more art than science. I just had a fairly experienced business client reject a quote I sent him with him mentioning something about my rates being the reason all development work is going overseas. It was a unneccesary insult and I'm glad not to have received him as a client. However, it did make me wonder if my rates are too high. I personally thought I was on the low end of the hourly rate scale but I don't really know how my rates compare. So how do you determine your hourly rate?
Adam °Wimsatt wrote:
I know it is more art than science.
Not really, maybe a bit of art coming up with your base, but if you don't do the rest by pure math/science, you are up the creek without a paddle. Start with a base rate, that rate you can peek at what other employers are offering to pay programmers in your area, or if you have other friends working, or you are already working you can ask. After that, start with the mark up, your overhead. Cost of doing business will include your office costs (may be a % of home rent for one room dedicated to work, utilities, phone, etc.) add the taxes the employer pays. add benefits costs, health vacations, sick leave, etc. average out those total costs on an desired work week. If you only want to work 30 hours, average the costs over those 30 hours. If you want to work 50 hours, your rate is lower by averaging those costs over 50 hours. Or you can go for the business standard of 40 hours.
_________________________ Asu no koto o ieba, tenjo de nezumi ga warau. Talk about things of tomorrow and the mice in the ceiling laugh. (Japanese Proverb)