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Comment by tptacek | Hacker News Reader

OT, but important: don't bill hourly. Do a day rate.

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.

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> your salary (backed out to hourly)

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.

the "quick maths" way is 2000 hours/year

50 weeks, 40 hours per week. Dividing/Multiplying by 2 in your head for quick estimates easy.

For more accuracy, do what you did.

The standard rule is 2080 hours, it's 52 weeks * 40 hours. You might say, but what about vacation, and that's fair when talking about an employee-employer relationship but you're contracting. So your rate calculations have to include all your costs, including your vacation/sick days/etc.

> So your rate calculations have to include all your costs, including your vacation/sick days/etc.

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?

Ultimately, your work has to be sold or monetized either by you or your employer. Rarely do we know exactly what benefits our employers get from our work. A helpful starting metric is to estimate what your employer's costs to employ you are. Employers pay for time off, benefits (health, retirement, professional development, etc), and employment taxes that you'll now be responsible for directly.

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.

The rule of thumb estimation number I've always heard for calculating a salaried job's hourly rate is 2080:

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

This is very convenient, but it seems to ignore (ergo lose) the value of the rest of the time off.

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?

By charging 200% per hour.

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