I think my rate is pretty good, but am wondering if I should charge more or if there is other tech I should specialize in that could get me a higher rate.
You are a charity, or other worthy cause, or someone I really want to work with - 50% - 100% discount.
You are a normal client - 100%.
You are either an arsehole or have asked for something very last minute - 150%-200% depending on the mood I'm in.
The last one, colloquially known as the fuck-off rate, is probably the best bit of contracting advice I ever got from a colleague. He hated the gig we were doing, utterly despised the boss, and walked away smiling every day because he was one week closer to retirement. It's only really sustainable for your mental health in short runs.
Oh, and never charge per hour. It isn't like you can do an hour for client X and then the next one on client Y. You're not a bloody lawyer - you're a professional!
I sometimes split jobs into half-days, if the client prefers it. Although that's more like 66% for each half.
Oh, and finally, you don't customise Salesforce. You help your clients solve a problem. That may usually involve Salesforce, but most of your potential clients probably don't know what SF can do. So what you're actually selling is a way to optimise the client funnel (or whatever).
I tell all my clients, you are not paying for my time spent on a specific task, you are paying for access to my 25+ years of experience, learnings, and contacts.
An email that just says "OK" might be the net result of a set of experiences and knowledge that would take the client 2 weeks and $2,000 to obtain on their own. $75 would therefore be a bargain.
“OK”
THE CONTENT OF THIS EMAIL IS CONFIDENTIAL AND INTENDED FOR THE RECIPIENT SPECIFIED IN MESSAGE ONLY. IT IS STRICTLY FORBIDDEN…
If you mention one of them, we can probably calculate the other two.
A plumber doesn't list the names of the industrial chemicals and tools. They say "we unblock your toilet quickly and safely" - because that's what the customer is buying.
You need to understand that as a contractor clients value more than just your time and the work you do. They value flexibility in staffing, getting an outsider’s opinion, their own time, working with a true expert, and making progress on projects which they can show off to their boss.
That’s why for all my work I scope project fees plus monthly retainers. The retainers are use it or lose it. Then I focus on delivering the best possible experience for my clients.
By switching to this model I do about 3x my previous earnings. And my clients are happy (I haven’t lost one yet).
It doesn’t make sense to become a contractor just to remain a wage slave.
(Before all the “I can’t do this because my situation is different”: You are full of it. Anyone can do this.)
I am new to the contractors game, could you elaborate a bit more on what that means?
Do you charge hourly + some monthly flat rate? Is it for short term contracts?
> You are full of it. Anyone can do this.
Your part to whole fallacy aside, in the real world, there are different constraints on people and family units other than trying to make the most amount of money all the time.
It may seem like contractor wages are greedy, but know that companies are willing to pay good money for domain expertise. Especially with all the friction of hiring a new full time employee.
Say you're comparing eg. a FTE with $115k salary, and 4 weeks vacation. Naively, a contractor working those hours is 115 / 48 weeks / 48 hours = $60/hr for the same salary.
But the employer is also paying out payroll taxes, insurance, office space/supply expenses, retirement plans (401k) - this typically adds up to 25-30% on top of the base salary.
Meanwhile, the contractor also isn't expecting their position to be a long-term gig, and (at least if you're not at an agency) also is managing a business so needs to account for business overhead (legal/accounting) and time spent lining up more business, which is un-billable. If they worked 4 days weekly at the contract gig and 1 day as overhead, already they need to bump salary expectation by 25% to keep even. And if you want to account for downtime between gigs, that number gets higher much quicker.
> When should I have a monthly retainer?
It provides you with a certain amount of income safety, allows you to schedule your time better ahead of time and also prevents you from trying to make time for too many clients at once. (Imagine if multiple clients suddenly have an emergency and ask for your help.)
Imo hourly rates are kind of bogus because not every hour is the same and hours can’t determine value. Generally I negotiate a weekly rate @ 35 hrs / week and try to deliver something valuable every week. The amount of hours I actually work in a week varies.
I always say the number 50 USD/hour, since I feel like recruiters/platforms expect for a LATAM based dev to charge a bit less..
Basically, find a niche industry (refrigerators, greenhouses, toy cars, whatever), find an audience, think about what they could use, and acquire the skills to give it to them. I used to be an actuary before I did software, I plan on going back to my old companies and contracting myself because I know they have data analytics needs I can meet.
If you want an excellent book on this topic, read "Soft Skills" by John Sonmez. Excellent book for shaping your career.
When my fridge stopped working, I didn’t think it was cool.
Right now I charge $1,000/day. I do precisely 8 hours. Zero travel. No out of normal work hours. No weekends. No unreasonable demands. No arseholes. No toxicity. No guilting me into delivering something. No awkward conversations about "well why isn't X done yet?" No high stress. No "we must deliver this by Tuesday at all costs." No "we need you to go hard on this problem." No "we need you to come in to the office for this."
I tend to work with young start-ups who have interesting problems to solve. The downside is that this frequently involves working with first-time founders who lack boundaries or start-ups who think because they paid "for a day" that a "day" involves 20 hours of work. I'm getting better about stating that "I start at 9AM local time and stop at 6PM local time."
I could get more if I worked for BigCorp, or even a regular job quite possibly, but this way I get to pick and choose what I work on, and when I want to work. If I want to shift my days or hours around to take an afternoon off, I do, and I don't have to explain myself to anyone.
https://news.ycombinator.com/item?id=4103417
You can benchmark day rates by your hourly rate, if that's easier for you to think or talk about. Your benchmark hourly rate should probably start at 150%-200% of your salary (backed out to hourly). It can reasonably go much higher. It can't reasonably go much lower.
Is there a standard rule of thumb for "hours worked in a year" at companies?
Off the top of my head I come up with ~ 1700 for my last salaried job:
365 - 104 (weekends) - 32 (vacation) - 10 (holidays) - 5 (sick) = 214 days or 1712 hours @8/d.
Also I think for "your salary" you should use your total compensation but maybe that's what you meant.
365 / 7 ≈ 52 (weeks) * 5 (work days per week) * 8 (hours per day) = 2080 hours per year
Given that very estimated number, vacation, holidays, and sick time all count as extra benefit.
One convenient aspect of this number is that if you go ahead and factor in 2 weeks of PTO/holidays/sick days, then the number of hours actually worked drops to 2000. That makes the mental math tremendously simple, albeit not 100% accurate: 100k salary / 2k ≈ 50 per hour
How do you account for the extra days, in my example it would be almost 300 hours' worth of value I get in addition to the salary?
If I understand you (and the other replies) correctly, the advice is to ignore the benefit value of PTO when estimating the hourly equivalent rate, then add it back in after the fact based on... something?
Is there a better formula than $TOTAL_COMP / $TIME_WORKED?
Folks get hung up on rule-of-thumb advice like hourly rate * 2.5 because they're thinking about their take-home pay and not the cost of employment. In many defense contracting roles, the "fully burdened rate" for contracts is 2.9-3.5x the employee's pre-tax pay. When switching to contracting you can compete by offering better services and by undercutting your (large company) competition -- and that's just where you start. Once you establish yourself as a better performer you can demand a higher price also.
50 weeks, 40 hours per week. Dividing/Multiplying by 2 in your head for quick estimates easy.
For more accuracy, do what you did.
An alternative is to consider what lifestyle you think is fair for society and work it out from that. We don't all have to perpetuate the worst of capitalism that I should be paid whatever people will pay me.
My dad was a house painter and charged a pretty low rate and had work coming out of his ears which meant more choice of what work he wanted/how far away it was. He could afford to live on it and that was OK for him.
Getting the biggest mortgage that your current income supports is the problem in that scenario. Being prudent and patient doesn't have to mean missing out on the good times.
That's actually why you should charge as much as you can. Build a buffer, have a way out of market drops. That kind of risk is precisely why contractors tend to charge a lot more than their salaried counterparts.
The solution is to not live above your means and assuming that your current income will always be there. It's important to have a buffer, especially if you are self employed. Just not raising your rates isn't really the solution to the problem.
This has nothing to do with your rate or the market but your inability to avoid crippling lifestyle creep.
My own lifestyle creep has become problematic, but thankfully not yet crippling, and I'm working to claw back some of that creep. But not in a creepy way.
When I started freelancing, I only took multi month projects that paid thousands of dollars. I never had to discuss money with any of these clients.
A friend of mine focused on per hour contracts, in the hopes they would be ongoing. His clients constantly haggled.
Business don’t spend money like frugal people.
High rates never hurt anyone, given that they actually deliver on it.
I'd like to have the 0USD surgery, but maybe that's just my inner European.
The money for health insurance is taken out of your salary before you even receive it.
> Free just means you pay with other peoples money while they pay with yours.
That doesn't make any sense to me, you contribute by paying your taxes and you benefit when you need it.
You've just described insurance
Does any country pay doctors per outcome?
"How do you discern quality?"
"I look at the price."
but in actuality, no, unless you have a social group where all your old clients get together and mingle. my clients do not know the other ones exist, for the most part.
For full time projects I charge 90-100€/h (+19% VAT) and I exclusively take on remote projects. When I started out at as a freelancer at the beginning of 2020 my rate was 80€/h.
If I was approached with short term projects(as in less than 160h of work) I would charge significantly more but that hasn't happened yet, usually I get booked 3-12 months.
As it turns out my yearly net income is significantly higher than that of my employed peers in every single project I have worked so far since the market is so starved for devs and I never had any downtime between projects. Sometimes I wonder if I could ask for even more given the market situation but I also feel somewhat overpaid tbh.
[1] I learned programming on the side during my bachelor's in physics. During my master's I started working for a consultancy at night doing webdev while researching quantum computing and machine learning for my master's thesis. After I got a job as a full stack engineer after I finished my degree but I quit that job after about a year to go freelance.
In fact, I'm quite sure you know, but for those reading: 80-100eur/h on a contract is roughly equivalent to 50-60eur/h salaried; due to social contributions, paid vacation (1.12th of your salary), pension contributions and other benefits relating to insurance in the even the business goes bankrupt. -- that doesn't include any other benefits you might get as a FTE.
It's very hard to compare, and it's the same awkward comparison you have to make when talking to US folks, since US folks have as much job security as contractors do in Europe and get paid in a relatively similar way with similar benefits in some cases.
Last year I worked for 210 days and I made 143.480€ (=85€/h) after deducting the 19% VAT. I paid 10.740€ for health insurance (which is capped) and 15.720€ for the pension fund (which I don't have to do but choose to do and this is the same rate an employer/employee would pay given that income) leaving me with 117.020€ taxable income. The income tax then is 117.020€ * 0.42 - 9.136€ = 40.012€ and 2.200€ Soli, leaving me with 74.808€ net income.
When you are employed then your employer has to pay half of your health insurance and pension fund so to have a net income of 74.808€ you "only" need to make 131.940€ per year or about 78€/h all things equal. So we are talking about a 10% difference. Now you could argue that an FTE would not work for 210 days but 200 or 190 days which would add another 5-10% difference but it would still be off from your original 33%.
To put this into perspective: I have been offered full time employment at almost every company I have worked for as a freelancer so far and the by far highest offer I got was 93.000€/year which is around 54.600€ net income - or about 20.000€ less net than I make right now. That is 2/3 of the average FTE income in germany.
If your username is the same as the one from the band, then great choice!
The locality of the customer matters a lot. Usually, I will factor what it would cost for them to hire a full-time engineer (not just salary, but also overhead). A $120k salary will cost the company $200k, or $90 per hour. Then I'll add a % on top since I'm not getting days off, paid vacation, long-term security, etc.
That kind of reasoning helps with stingy customers. Otherwise, I just give a flat rate to solve their problem.
For customers that need me long term, I also ask for a monthly retainer to keep availability for them, for meetings, emergency bug fixes, etc. Otherwise, you're giving them the perks of an employee without them properly compensating you.
I’m tired of holding this idea in my head would love to see it out there so we can just get to the good part (knowing what to charge).
If you need more explanation: https://unvalidated-ideas.vadosware.io/editions/012
> Selling to companies on the other side of this equation is also obvious…
So basically an invoicing product that provides hourly rate suggestions based on collected data? Surely this must exist already.
You could just sell the dataset directly IMO, quarterly data is what people care about, and there’s a reason to buy every single year
Won’t anyone rid me of this priest^H idea?
Front end developers who know a JavaScript framework, Power BI developers and anyone with cloud experience are in demand at top rates.
Then there are the gold ring jobs that pay over $200/hour. An example might be a subject matter expert on deploying Splunk, CyberArc or Sailpoint at an enterprise level. Usually you are working for a name brand consulting firm.
The recruiters add 30% to your rate and pay you net 30. Direct contracts with the government are possible but tend to be more short term
The system runs on "vendors of record," where govt uses contracting agencies as a layer to keep people arms length and not employees - but also the vendors handle payments, insurance, recruiting, etc. If you want to make real money in Canada, you get out of the talent/delivery side and into scaling as a VoR where you run consultants and just handle the money. That's true everywhere, but this general contractor model defines most tech companies in the country. The only reason I don't do it it because I'm a nerd who likes to solve problems.
My rates aren't for the value of my time, it's for the value of my clients' time and how much of it I yield for them in short conversations that save entire teams weeks of burn sounding things out for themselves, or that provide the insight that moves much larger decisions. I'm not rich, but it gives me the freedom to manage my time to focus on my myriad other intense interests.
In terms of rate, learn negotiation to discover how to make the best quality deals you can independent of top line numbers, and having opinions about it without having read the foundational works is as naive as it sounds. I don't do hourly anything anymore unless I've been on the bench and have to take something (always say yes when you've been on the bench, just take the money).
Flat rate is great if you can get it (private sector only), but in between is a day rate that you bill at a minimum of 1 or a 1/2 day because when you have more than one client (e.g. not just a job) you need to price in the opportunity costs of working for one client over the other. Context switching is opportunity cost. It's not on you to get better at it for anyone, it's an economic factor you have to price in to generate positive yield on your time.
Also, there is a stupid-consultant pattern where they say, "I only do X" or "I only do day rates." and leave it hanging as a challenge to the recruiter, who very rationally will call your bluff. The correct way is, "I achieve these outcomes, and most of the time in orgs is spent waiting for things to happen, so yes the day rate is high, but not only is it worth it in the time you get back with the right outcomes and answers, but the value is you aren't paying me to wait around all week for your people either." And that's how you add clients.
I deliver so much value that my clients don't even see the money go, because there's pretty much nobody else available who is as interested in solving their problems as I am in my field. I do this because I love it.
Consulting costs in institutions are estimated around the unit of an FTE (full time equivalent), which is about 250k/year in total cost to the client. How much the person delivering the work gets is invisible to the client, and most contractors don't know what their vendor's deal with the client is. That's why it's a business. If you are talking to someone hiring contractors, they're likely measuring their costs using this figure as an anchor. Where you lose is that 4mo's of lost income from being on the bench is immensely costly, and reduces your average cash flow over a 5 year period, etc. If you don't have a plan for the cash flow to invest it in something, you're much better off as just a regular employee.
IMO your rates are too low, assuming that you are talking about US-based customers and you are US-based as well. $150-$175/hr would probably be palatable to your customers.
"I talk to a lot of consultants, freelancers, and small businesses who do web work, and I used to be a freelancer myself, so sometimes I get asked for advice on how to price one’s goods and services.
I think I came up with my best suggestion today, and it involves only two simple steps:
Slap the client in face.
Tell the client your hourly rate.
I just keep slowly increasing the rate until they stop hiring me.
Note, this is mostly for long in-house projects, where I'm part of a team working on a single project. I'm working roughly 32 hours a week.
Doubling that to 1/1000 accounts for downtime, unpaid pto, paying for facilities, paying for your own insurance, etc.
If you take 12 weeks off instead of 2, you get 1600 hours.
I offer a blended rate for companies that are in need of both legal and software services; these are usually early stage startups, non-profits, and small family offices.
interesting, hat kind of work they request? some investment , data feed, etc.. automation?
--
https://sv4ie.com/tech-due-diligence-4e6d868f4754
https://sv4ie.com/what-exactly-is-technical-due-diligence-fo...
i charge around 100€-125€/h (+19% VAT) depending if onsite or remote. i have seen people go for 150€ but these are the ones kicked out first if there is an issue or company needs to save money.
I'm on fence about going freelance (Mobile/backend+DevOps) and would love to know your thoughts.
Mostly intertia and post-covid fatigue.
Thank you for kicking me in the butt and providing the valuable information :-)
I see no email in your profile, can you please share it?
I charge fixed prices only for project work.
For advisory retainers, I charge a flat rate per month.
All upfront (or 50% up front and 50% in X number of days).
Billing by the hour misaligns incentives.
(Obligatory link to Hourly Billing is Nuts: https://jonathanstark.com/hbin )
(I'm particularly experienced (15 years) in Python/Django, JS/Vue, UI/UX)
At this rate, I was slightly outside of the normal range at lots of places. It helps if there is a Managing Director that knows you're decent as they can help to sign-off on higher rates. Unfortunately I found this almost impossible to regularly achieve because it takes time to build your network and show your worth. Having to constantly start again with zero reputation at every workplace I go to was one of the reasons I decided to stop contracting. The other reason was the downturn in the contractor market caused by the possibility of IR35 enforcement and the reaction to this by big risk-adverse companies.
You are right though, that it was getting more and more difficult around then. At the first firm they stopped granting outside IR35 contracts during 2020, but were able to grant extensions if one was requested by somebody in leadership however eventually the extensions themselves were only allowed to be one week at a time so I left.
I've actually stopped billing myself as a fullstack developer for contract work. Increasingly the companies which use contractors will be looking for front end or backend roles only.
The market has been taking a hit recently with all the uncertainty combined with the usual slowdown over the summer season so if you're looking today and you want a quick start then you might have to settle for less. But schools go back next week and everyone is back to work after holidays so then we'll find out how much of the drag has just been the usual seasonal slowness and how much might be with us for longer.
My experience matches everyone else in this sub-thread, £650/day for years and finally reached £700/day. But as these are short term projects it averages to less. For 15 years experience it's not great.
I don't have the option to move to the US but I'd like to pick up US clients remotely. It's the only way I see to earn more.
We've (small UK development/consultancy shop) occasionally had US-based clients approach us about small projects. It's not something we'd actively explored until recently because of the potential legal and accounting complications. When we did finally look it turns out it's probably not so difficult after all though we haven't actually tried it for real yet.
The rates that small outsourcing firms or individual contractors charge in the US are so much higher than the UK that a US client could get a bargain working with us while we could be charging much higher rates than we get from UK or European clients. Financially it's a situation where everyone could do well.
I'm a bit surprised that we don't see more trans-Atlantic deals. Maybe a lack of awareness or concern around time zones means people don't really consider it an option? But even California is only an 8 hour gap so with almost everything being primarily remote and async today it should be possible to communicate effectively.
You can obviously expect more premium £700-£1,000 day rates if you're working for banks or big four accounting firms, or if you have very specific or highly demanded skills (e.g. React)
Probably very varied by geo / industry as well - from my experience as a permie 50 miles distance or working for one type of bank instead of another can do multiples on your salary.
The tech doesn't matter, you need to solve your client's problem. If it is painful and you have the right clients you can get a lot of money.
Your work is much more complex though, your rate should therefore be higher, I think, especially if this is your main job.
Would it make sense for you to switch to another billing model, like "per module" or does billing per hour work fine for you?
edit: Based in Germany
Small S-Corp of consultants/contractors. Software development team augmentation mostly but we often have multiple people in each client--often working together. We actually do consulting work in addition to contracting.
A few people have higher rates...which is client dependent. The big clients have asked for every person we can throw at them but we purposefully do not go all-in like that.
At my gig, a startup in Dayton, I work with two other developers from my company and we are responsible for a new product--soup to nuts. We handle project management, requirements definition (experts in finance/banking/payments), DevOps, and coding and meeting with a wide array of business ops people and management.
Honestly, we are working for a low rate in this instance but there are zero micromanagement or bullshit or dumbasses to deal with. We have outrun the business and spend our time on nice to have stuff while they catch up. We choose the tech stack.
$275/hr, hours stated upfront per app/project. Change order issued if we have to go over. Nondelivery of access prior to testing period eats away at your time. We do a kickoff call 3d prior to make sure that this doesn't happen.
I'll work with them to deliver results in a format that you can import. I'll do an in-person kickoff & readout, otherwise fully remote. I'll deliver abstracts for you to give to your clients. I've been doing this for 7y now and turn down a lot of work based on scheduling.
It goes without saying that there are times when I don’t have any projects in the pipeline, so I have to spend some time on finding another set of clients. The longest such interval has been about 6 months.
I am bit confused on how to establish a solid rate as it seems I had zero negotiation options. Thanks for your advice.
I do 35€/hr in central/southern Europe, working for a local fintech company (2-3x what I'd get as wage). I plan on rising my rates later this year. I was in talks with a US company, and they balked when I requested 42$/hr as that was what they paid their employees from the US.
That being said, I know the rate is low comparatively for the wider market, but it's still high locally.
Nobody charges when they have no customers, but some spend way more time finding them.
If they were to work for 2 hours and then find another customer they'd be broke.
> that it is not a good strategy
?
Consider this... Let's say you make $100k as salary, with decent benefits, etc. I calculated it once and I would need $60k to replace my benefits (I make more than $100k). To make consulting worthwhile financially you would then need $100k+60k+??k. For salaries under $120k doubling to get your target income as a consultant seems to be a good rule of thumb. For salaries over $120k, maybe somewhere between 150-200%.
As other have said, never charge by the hour. Charge costs + weekly retainer, or monthly retainer. When I was a freelance consultant I did costs + hourly, and it was a mistake, but I was young.
to make it easier to vote and see a summary of responses.
$300 an hour
Don't have much free time these days unfortunately to grow it out further.
DevOps admin/Microsoft stack -SharePoint -CRM -DotNet
80% of my time is spent automating with PowerShell
My observation having gone through this several times over 15+ years of contracting: perhaps counter-intuitively, the clients you retain and the new ones you acquire at your increased rate will treat you and your time with more respect. I don’t have a solid unifying theory on why this is beyond that your rate as compared to expectations is directly correlated with clients’ impression of your value.
You might be interested in reading "Influence: The Psychology of Persuasion" by Cialdini. In the first chapter, he describes a souvenir shop in New Mexico that had trouble selling inventory. The owner just couldn't sell her jewel necklaces. The owner went on vacation, and told the clerk to cut all the prices in half (far below their value). When she came back, she learned the clerk misheard her and doubled all the prices... and all of them sold out! Tourists at the stop didn't know how to recognize necklace quality on their own, so they used the price as the next most reliable indicator of quality.
I imagine it's similar with companies that see software as beyond their expertise.
EDIT: Ok, must be an extension. Works fine in private window.
EDIT 2: the culprit appears to be the Hacker News Enhancement Suite extension on FF. Once disabled, the poll works. https://github.com/etcet/HNES
Fullstack RoR at a small startup.
1. Do you do it full time? 2. Do you get more clients than you can work for? 3. Are you comfortable financially?
2. if all works out, I'm booked for the next 24 month straight - if I do not have clients' projects I have more than enough own projects to work on (I actually wish for some time off for years, but it never happened)
3. I do not live in the us, but in a rich economy and I am comfortable financially; compared to many people I know I live a simple life, why is probably why I do not need to charge $100+ or more - I'm in the top 10% wealth bracket already and looking forward to three more productive decades.
I know people with way less experience charging more, but I'm in no rush.