I have sent this before but will share again as it is relevant: I have been asked a number of times recently by people moving from being an FTE to new Contracting gigs how I come up with a Contracting Rate.
I decided to write down my process. This has been fine tuned over 20 year of contracting, and works pretty well. Feel free to use or forward as you see fit. I figure there are 2080 working hours in a normal year (2088 in a Leap year but I just use 2080) exclude 320 hours a year for "vacations, sick leave, holidays, and other days you are not working due to kid stuff and mental health days" exclude 320 hours a year for "training, education, testing new stuff in the home lab, etc" exclude 320 hours a year for "job hunting, interview time, networking, etc" exclude 320 hours a year for "just plain I can't find any kind of work time" Now you have 1000 hours left in the year that you will actually "work". I normally worked as a W2 worker so that the contracting agency took care of paying my taxes, worker's comp, and other stuff that can impact you later (like unemployment insurance). This is a VERY good thing!! Figure out how much you need to make in a year to pay your bills as your low end number. I usually started with a Gross Income number because I knew what my previous income was and I could figure a percentage of what I needed to pay bills. So... Gross income of 60,000/yr equals $60/hr W2 Takehome income of 60,000/yr equals $85-90/hr W2 because the agency will take about 25-30% for taxes etc. The good thing about doing it this way is that if you work more than 1000 hours in a calendar year, you are good to go. You have figured out what you NEED to pay the bills, and anything else I think of as a Bonus. In the Bay Area, I usually could get between 60-65/hour W2 as a PM, and about the same for an Exchange Geek. Always quote a higher rate for a shorter contract and you can go lower on a longer contract. If they offer you a 12 month contract, and you dont have to worry about these two time blocks, you can ask for a slightly lower rate: exclude 320 hours a year for "job hunting, interview time, networking, etc" exclude 320 hours a year for "just plain I can't find any kind of work time" In this case, I might ask for 65 and drop to a 59 rate as a "goodwill gesture" to the agency. They can sometimes give you an idea of what the client is willing to pay, and I usually know up front if it is a rate I could work with. If you are going 1099, all this changes... I then usually tack on 40% onto the W2 rate, so if it was a 60/W2, it would be $100 on a 1099 contract. You are then responsible for paying all your taxes and you HAVE to make sure you are working with an accountant to make sure you are holding enough $ aside during the year. I didnt like 1099 because with all that $ coming in, I paid off a lot of bills and had to come up with the tax money the following April. I will never do that again without an accountant telling me what to make payments on during the year. This is why I now go only W2 for contracts. On Wed, Oct 19, 2011 at 10:56 AM, Michael B. Smith <mich...@smithcons.com>wrote: > Don't know your rate structure, but when I was starting out I used > guru.com quite a bit, and a little later, crossloop.com. > > Regards, > > Michael B. Smith > Consultant and Exchange MVP > http://TheEssentialExchange.com > > -----Original Message----- > From: kz2...@googlemail.com [mailto:kz2...@googlemail.com] > Sent: Wednesday, October 19, 2011 9:06 AM > To: NT System Admin Issues > Subject: OT: Resources for consultants > > Been getting a few bits of consultancy work recently, and am getting a bit > keen to develop this a bit more. Are there any online resources or groups > where you can get more leads or openings for bits of consultancy work? > Obviously I am in contact with former workplaces and colleagues, using > LinkedIn and similar resources, just wondering if there are any more useful > sites or groups that might help me develop this side of things a bit? I know > most of you out there are US-based but any tips or hints would all be > appreciated. Just done an AppSense cert this morning so I am most interested > in work around that and citrix, but I am pretty wide in the scope of stuff I > will have a look at. > > Cheers, > > > JR > > Sent from my POS BlackBerry wireless device, which may wipe itself at any > moment > > ~ Finally, powerful endpoint security that ISN'T a resource hog! ~ > ~ <http://www.sunbeltsoftware.com/Business/VIPRE-Enterprise/> ~ > > --- > To manage subscriptions click here: > http://lyris.sunbelt-software.com/read/my_forums/ > or send an email to listmana...@lyris.sunbeltsoftware.com > with the body: unsubscribe ntsysadmin > > ~ Finally, powerful endpoint security that ISN'T a resource hog! ~ > ~ <http://www.sunbeltsoftware.com/Business/VIPRE-Enterprise/> ~ > > --- > To manage subscriptions click here: > http://lyris.sunbelt-software.com/read/my_forums/ > or send an email to listmana...@lyris.sunbeltsoftware.com > with the body: unsubscribe ntsysadmin > > -- Kat Aylward Langan ~ Finally, powerful endpoint security that ISN'T a resource hog! ~ ~ <http://www.sunbeltsoftware.com/Business/VIPRE-Enterprise/> ~ --- To manage subscriptions click here: http://lyris.sunbelt-software.com/read/my_forums/ or send an email to listmana...@lyris.sunbeltsoftware.com with the body: unsubscribe ntsysadmin
