Productivity and Price

Your freelance rate should generally be drastically higher than your salary rate expressed hourly even if you aren't especially productive. You're covering self-employment tax, you pay all your own benefits, and you offer scheduling flexibility full-timers don't and, in exchange, shoulder a huge amount of risk.

You don't need to be a technical person to understand why a former employee would charge 2x their salary freelance. Paying the original straight salary rate would be a total rip-off.

It's a somewhat controversial practice, but one solution many people use is to quote a lower hourly rate, but bill hours based more on a guess of what "normal" hours for the work would be (minus a percentage to make yourself look extra fast), instead of how long it actually took you.

So if the customer thinks some job will take 10 hours, but you can actually do it in 1 hour, instead of trying to convince them that $5X/hr is a great rate given your productivity, just bill them for 5 hours at $X/hr. They'll still feel like they got a great deal, because they were expecting to pay for 10 hrs for the job.

>I don’t blame non-technical managers for not knowing this stuff.

So if you hire an electrician, and he also doesn't know how to do his job and ends up starting a fire and burning your house down, do you not blame him either?

A manager's job is to manage programmers. If he doesn't understand important principles like, "there's so much variation in programmer productivity that, if you know this guy is really good, it might be worth it to pay him 5x as much as the other guy we're considering", he doesn't know how to do his job effectively. Blame him.

Not all freelancers are 2x better than employees. Most contractors we get can't cut code if their life depended on it, and usually make a mess of things and then leave. I've really yet to meet a good contractor.

Also this isn't to say all employees are better than the contractors/freelancers we get as obviously there are some duds that get through. But in general that's how it is. Maybe it's because they better understand how things work than a newer person coming in does, and perhaps overtime the freelancer/contractor might do better...

We do fixed fee work at my iPhone/embedded dev shop. One reason why is: Hourly rates tell you nothing about cost. Programmers vary unbelievably much per hour. We'll do hourly after the first contract, but in general, not for the first one.

I don't understand the whole "well known" idea of a 10x productivity difference between best and worst programmers. It gets even more confusing when he claims that some developers have negative productivity. Maybe the productivity difference is -10x. One really great programmer can overcome the damage done by 10 awful programmers. Or maybe we can just not pretend that programmer productivity can be described with numbers at all.