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> That's what an average consultant likely makes as a salary.

No, that is what a highly productive (100% utilized) consultant at $42/h makes as revenue. If you were to convert it into something comparable to a salary and account for realistic work schedule it would probably end up being in the 60-70k range.

There's also the self employment tax to consider for contractors working for themselves in the US.

Employers pay 7.65% and you pay 7.65%. If you're on your own in addition to the income tax you have to pay you also need to pay the whole 15.3% of it. To compare salaries between a person working for themself and someone working for a company it should be taken into account since it's a big chunk of the money you're making.

I was sort of spitball including that in there in my calculations, but yes. This is an important thing for people to understand when dealing with or becoming a contractor/freelancer.

I think that a lot of people don't realize things like this when they do their back of the napkin calculations for freelancers/contractors. $50/hour != $100k salary.

In addition to assumptions of napkin salaries, the numbers could work in a place with very low taxes (10% on profit under a few hundred thousand), or friendlier contractor taxation locales, like Canada where you can do some reasonable income splitting between personal and corporation expenses.

The 42/h could be something a contractor directly gets from an employer, with perhaps a headhunter keeping another $15-20/hr on top of it that the contractor does not see.

Focusing less on technology, and more on business strategy which uses technology as a tool

How does one go about doing this (other than spending a decade working in a particular domain)? Do you follow any plan, certification etc?

I started when I was about 16, and have worked about another 16 years:

- Certifications are generally worthless I've found. They get outdated, new software comes and goes.

My main plan has ended up being:

- be centered around being an extremely good problem solver across a more complete "full stack" (hardware, software and network), vs the front-end/back-end coders. I do this by solving problems all the time. I don't care how trivial they seem or how they may not fulfill my fantasy of feeling like a special and significant snowflake. Solving problems has lead me to the best problems to work on in my life.

Technologies come and go, the methedologies get additional experience. I started doing JIT manufacturing, into more lean stuff, and conveniently lean startup became popular at a time where I had a good 5-7 year head start in implementing lean software solutions in small, medium and large organizations. Convenient, it seems, but mostly happened to be around not having an opinion on what I was beneath, or above doing. I'm a problem solving junkie, after all.

Its part of the initial conversation you have clients. The goal with the initial meeting isn't to focus on how you can fix all their problems with technology, it's to focus on truly understanding the problems they have from their perspective. Once you completely understand and empathize with the issues their having only then can you formulate an appropriate business strategy (which may or may not use technology) to address their problems.

> A rule of thumb I've found that can be accurate is you should/can charge about $10/hr for every year of experience you have, and should be working for clients or employers that see value in paying for that kind of experience.

This seems REALLY conservative IMO. If I went with this model when I started consulting I would have quickly gone out of business. Have you had clients that ever said your rates were too high?

Some clarifications:

We're talking about consulting, technology consulting, and not neccesarily programming type consulting.

I should have said charged at least $10 for every year of expertise you have. In the first few years it may very well be higher.

My first client was about $50/hr in the late 90's. I had about 5 years of experience when I made the switch from employee to contractor.

It's really about a mutual conversation of value. If you're fast and good at what you do, you should be able to go in fixed price. Hourly rates are never in anyone's best interests long term. The better you get the quicker you are and the less you can make at any high rate.

Clients say my rate is too high all the time. Then they hire someone to do it cheaper, take 3 times as long, and end up with something they can't grow in the direction they wanted, at which point they realize it wasn't programming they were hiring, but rather a process and a guide for the process.

A bigger thing here is to pay attention to gaining consulting clients who have a budget that does not consist of their own personal money, or money they have directly earned in their own small business as it gets the type of comments that rates are high. Businesses who are making money understand value and need it done well, right, for a fair price.

I count 2080 work hours... where are your other 100 going?

52x5x8 = 2080

Holidays (Christmas, New Years, July 4, etc.) Vacations take even more time out.

From the 2080, I'd take out 80 hours for vacation, and the rest for sick/stat holidays.. Of course, this is all relative to how the work arrangement is setup.

If you're not getting paid for these days, there's something wrong...