Contract vs Fulltime
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I've always used 2048 hours per year. It's not exact, but is close enough.
"One man's wage rise is another man's price increase." - Harold Wilson
"Fireproof doesn't mean the fire will never come. It means when the fire comes that you will be able to withstand it." - Michael Simmons
"You can easily judge the character of a man by how he treats those who can do nothing for him." - James D. Miles
wow man, where do you get that form? here in the uk, we get minimum 20 + 8 days off. hear is how I got it to 1635 hours per year... (7.5 hour working days, we don't get paid for lunch hour :( ) Days in year 365 Bank Holidays, xmass etc. 8 Weekend days (52*2) 104 Full Paid Holidays 31 Full Paid Sick Days 4 Days actually working 218 Hours working 1635
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I am returning to contract programming after a long time. Forgive my ignorance in this matter. Trying to Google the answer really confused me further. Is there a good rule of thumb to determine at what point does dollars per hour translate to an annual salary? For example, a 6 month job in California pays $90/hour. The same company is offering a salary of $115K/year with NO benefits (no health insurance nor retirement plan) That part comes out of the pay per year. I am thinking a simple linear chart where if I work a certain time (3.2 months) contracting I will earn more. But I am surely missing something: FICA is twice the amount, instability of hours, no vacation time, do I need workmen's comp in CA? I seriously doubt if the company will fold over tomorrow, but it could happen too. Could one of the contractor folks point me in the right direction? I would really appreciate the input. Sincerely
As someone who lives this way, the rule of thumb is 3x. Take the rough salary ($90K/yr -> $45/hr (dividing by 2,000 is easiest)). Charge Triple that -> $135/hr (Roughly. Could be $125 - $150). The 3x is explained as: 1 for the Developer 1 for the Overhead (Your PC, Dev Tools, Paid Leave, Extra Taxes, Insurance, Lunches/Dinners) 1 for the Profit (This is the more "elastic" of the 3, but sets a strict limit on how low you go) So, now that you see where the number is derived. You could easily accept $90/hr. And realize you will have no "profit" in your business. At least at $100/hr, you know you have a 10% profit. I also suggest you setup a company, and use ONE Specific Credit Card for all expenses (and only legitimate expenses) for your business. Pay yourself as an employee from day one. Do NOT live off of the money that comes in (you may find yourself with a $50K tax bill due next year). I use an AmEx. The best $75/yr I spend. My account grabs the year end summary and does NOT waste his time going through all of my little receipts. (The one downside to AmEx is that about 3-5 times a year, I end up having to use a Visa to charge something at some backwoods place that doesnt take AmEx, so your mileage may vary) == Start with that. Then, shorter term work requires a Higher Profit Margin... Longer term work justifies being more flexible. Over a decade at this, and I wish I would have done it this way, DAY 1... HTH, Kirk Out! PS: Also buy a mileage tracker for your vehicle. Another thing I did not do well my first year or two. Over 50% of my mileage is business, so it pays for itself quickly.
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I am returning to contract programming after a long time. Forgive my ignorance in this matter. Trying to Google the answer really confused me further. Is there a good rule of thumb to determine at what point does dollars per hour translate to an annual salary? For example, a 6 month job in California pays $90/hour. The same company is offering a salary of $115K/year with NO benefits (no health insurance nor retirement plan) That part comes out of the pay per year. I am thinking a simple linear chart where if I work a certain time (3.2 months) contracting I will earn more. But I am surely missing something: FICA is twice the amount, instability of hours, no vacation time, do I need workmen's comp in CA? I seriously doubt if the company will fold over tomorrow, but it could happen too. Could one of the contractor folks point me in the right direction? I would really appreciate the input. Sincerely
The one rule of thumb I know, is double your hourly rate = annual salary. so 180,000 compared to 115K, is a no brainer. Take the contract job, and get an accountant to make it work even better for you. For instance - you can probably write off your car, gas and a whole bunch of other things that will more than offset the extra you pay on FICA. The scenario you describe, is really not much of a debate.
Where there's smoke, there's a Blue Screen of death.
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The one rule of thumb I know, is double your hourly rate = annual salary. so 180,000 compared to 115K, is a no brainer. Take the contract job, and get an accountant to make it work even better for you. For instance - you can probably write off your car, gas and a whole bunch of other things that will more than offset the extra you pay on FICA. The scenario you describe, is really not much of a debate.
Where there's smoke, there's a Blue Screen of death.
For short-term contract, like 6 months, you have to count the gap cost between two contracts. You need to negotiate this cost; otherwise they put the money to their pocket.
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There is no rule of thumb answer to this question. You need to work that out for yourself. In my decades of contracting I have been asked variations of this question a number of times. I don't know about you specifically but it usually indicates the questioner is not cut out for contracting.
Peter Wasser "The whole problem with the world is that fools and fanatics are always so certain of themselves, and wiser people so full of doubts." - Bertrand Russell
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wow man, where do you get that form? here in the uk, we get minimum 20 + 8 days off. hear is how I got it to 1635 hours per year... (7.5 hour working days, we don't get paid for lunch hour :( ) Days in year 365 Bank Holidays, xmass etc. 8 Weekend days (52*2) 104 Full Paid Holidays 31 Full Paid Sick Days 4 Days actually working 218 Hours working 1635
40 hours per week * 52 weeks is 2080 hours per year. So I was 32 hours off; it's still close enough to be able to figure out a yearly salary based on a per-hour wage.
"One man's wage rise is another man's price increase." - Harold Wilson
"Fireproof doesn't mean the fire will never come. It means when the fire comes that you will be able to withstand it." - Michael Simmons
"You can easily judge the character of a man by how he treats those who can do nothing for him." - James D. Miles
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I am returning to contract programming after a long time. Forgive my ignorance in this matter. Trying to Google the answer really confused me further. Is there a good rule of thumb to determine at what point does dollars per hour translate to an annual salary? For example, a 6 month job in California pays $90/hour. The same company is offering a salary of $115K/year with NO benefits (no health insurance nor retirement plan) That part comes out of the pay per year. I am thinking a simple linear chart where if I work a certain time (3.2 months) contracting I will earn more. But I am surely missing something: FICA is twice the amount, instability of hours, no vacation time, do I need workmen's comp in CA? I seriously doubt if the company will fold over tomorrow, but it could happen too. Could one of the contractor folks point me in the right direction? I would really appreciate the input. Sincerely
You're going to have to do the math yourself. Heck, you're a programmer - that's a breeze. It's not really that tough but the RISK and salary parts depend on you and where you live. For me, I'll always prefer an employee position if the pay is decent. During the early 2000s though, there were only contract positions available to me. So I took them and learned they are a GREAT way to get your pay rate up. ESPECIALLY if your wife gets benefits through her work. You don't have the security of having the same job next year. But you get paid for that. Then when you finally find a decent employee position, you're now in a good place to go "hey - I WAS making this and I want to keep doing that or I'll walk". You can do the same thing by just CHANGING companies as an employee. It takes some serious work to do it. But it's well worth it. Companies could CARE LESS about their employees these days. Changing companies repeatedly is the only way to get the upper hand. Well, I'm sure there ARE companies who care about their employees/workers. But they're small and risky ones and are few and far between.
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For short-term contract, like 6 months, you have to count the gap cost between two contracts. You need to negotiate this cost; otherwise they put the money to their pocket.
I think the best negotiation in this scenario, is agreeing to an early notice for any layoff. This puts you in a better position to avoid the gap. Of course this is a matter of trust, but I think you can tell, if you pay attention, when the Life rafts are opening. I don't think long term you can completely avoid all gaps. However, the salary differential should put you in a position to weather that storm, when it hits you about once every 3 years. 190k to 115K leaves quite a delta as insurance. Also consider that contract work pays overtime, rather than working for free. IMHO - Looking for job security, rather than "career security", is a mistake in this flat world.
Where there's smoke, there's a Blue Screen of death.
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Rude. I would bet you were lucky enough to find a special niche, decades ago. For a lot of us, it's hard to be a marketer, salesperson and expert software developer all at the same time. But we try.
How is stating a fact being rude? No I never found that niche and I saw many enter the contracting world and leave again for secure jobs. I can speak as someone who worked their whole working life without that secure job. You have touched on some of the issues a contractor needs to address but as I said in my reply it is pretty easy to pick those who are cut out for it.
Peter Wasser "The whole problem with the world is that fools and fanatics are always so certain of themselves, and wiser people so full of doubts." - Bertrand Russell
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I am returning to contract programming after a long time. Forgive my ignorance in this matter. Trying to Google the answer really confused me further. Is there a good rule of thumb to determine at what point does dollars per hour translate to an annual salary? For example, a 6 month job in California pays $90/hour. The same company is offering a salary of $115K/year with NO benefits (no health insurance nor retirement plan) That part comes out of the pay per year. I am thinking a simple linear chart where if I work a certain time (3.2 months) contracting I will earn more. But I am surely missing something: FICA is twice the amount, instability of hours, no vacation time, do I need workmen's comp in CA? I seriously doubt if the company will fold over tomorrow, but it could happen too. Could one of the contractor folks point me in the right direction? I would really appreciate the input. Sincerely
I do both. I have a day job that pays pretty well and I work on the side to pay for my toys. Before I took my current "full-time" position, I did consulting/contract work for over a decade, including owning a staffing company. For me, if I want to make $100K, I bill around $100/hr. If I like the project or I've been working on it for years, then the rate tends to be lower because I rarely raise my rate once a project is rolling. Why the $100K to $100/hr ratio? When you are consulting there is a lot of extra overhead that you can't directly bill for. Generating invoices, unbilled travel (when you normally tele-commute), hardware, office space, broadband, E&O insurance, advertising, etc. And that's just doing the work, not living. You have to include vacation time, sick days, other personal time, retirement, insurance, etc. No one honestly works every possible day. If you want an apples to apples comparison then you have to throw in everything that takes place as part of "working." If you're good at what you do you client list will grow. If you suck, then you'd better take a perm job and hide as long as you can until they figure it out. I tend to turn down work because I don't want or need more work to fill my imaginary "free time." The ratio works for me. Your experience may vary.
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I am returning to contract programming after a long time. Forgive my ignorance in this matter. Trying to Google the answer really confused me further. Is there a good rule of thumb to determine at what point does dollars per hour translate to an annual salary? For example, a 6 month job in California pays $90/hour. The same company is offering a salary of $115K/year with NO benefits (no health insurance nor retirement plan) That part comes out of the pay per year. I am thinking a simple linear chart where if I work a certain time (3.2 months) contracting I will earn more. But I am surely missing something: FICA is twice the amount, instability of hours, no vacation time, do I need workmen's comp in CA? I seriously doubt if the company will fold over tomorrow, but it could happen too. Could one of the contractor folks point me in the right direction? I would really appreciate the input. Sincerely
Only thing good about a full time job is the benefits and vacation, if your not getting those things than it's not worth it. Also depends on how many hours a week the full time position will require, if they expect you to work a long day then contracting is always better. $90 hr x 50 hr work week = $4,500 a week. $4,500 a week x 24 weeks (6 month project) = $108,000 $115,00 per year / 2 (6 month project) = $57,500 How much will benefits cost for 6 months? $108,000 - cost of benefits = true earnings