4 ms·

You can't compare contractor pay with salaried pay like that due to lack of benefits, etc. You'd have to lop off like $10k for extra taxes and a bunch for heal

by dmoy 9y ago

You can't compare contractor pay with salaried pay like that due to lack of benefits, etc. You'd have to lop off like $10k for extra taxes and a bunch for healthcare as well (could easily be $10k+). Maybe you know this, but it wasn't immediately clear since you didn't provide your own salary $.

j_s 9y ago
The very very rough conversion for normal 1099 contracting is adding the K's worth of zeros to the hourly rate, eg. $85/hr ~= $85K salary. Apparently with a W2 this number is net whatever the agency skims while covering some things; not sure how that stacks up.
- scarface74 9y ago
  Let me clarify. The hourly rate I was referring to was what the contractor gets. Not what the agency gets. I tell the recruiter and my manager the offer I think we should make the person and let the higher ups negotiate the bill rates the agency will charge the company. I haven't been second guessed yet.
- Terretta 9y ago
  No, double the hourly rate plus zeros. 40 hours x 50 weeks = 2000 hours So just 2x and thousands.
  - j_s 9y ago
    Here's examples on HN of others using the rule of thumb I shared, which is definitely conservative: https://news.ycombinator.com/item?id=2185782 https://news.ycombinator.com/item?id=2185782 (Feb 2011) > zipdog: $40/hr contract is about $40k/yr permanent https://news.ycombinator.com/item?id=2438980 https://news.ycombinator.com/item?id=2438980 (Apr 2011) > techiferous: But remember that there is non-billable work (accounting, etc.) and a 15.3% self-employment tax. [...] Working as a consultant for $175/hour is similar to being employed at $175K/year. > danssig: Calling that pay rate $175K/yr is beyond conservative. NOTE: two users here also recommended your equation > slashcom: $x/hour * 40 hr/wk * 50 wk/yr = 2n1000 The general rule is always "times 2, add 3 zeros" > jurjenh: yes, this is generally the rule I use as well, take the hourly rate and double it and add a K (eg $30/hr = $60K) [...] Personally I use an estimate of about 75% efficiency > rapind: For 75% efficiency I assume you mean 3/4 * 2 * $175 * 1000 = $262,500 / year. https://news.ycombinator.com/item?id=5299009 https://news.ycombinator.com/item?id=5299009 (May 2013) > artumi-richard: The rule of thumb I was told is 1000 billed hours per year. -- To try to be genuinely helpful: a discussion documenting that hourly rates are a bad idea vs. charging per day: https://news.ycombinator.com/item?id=5714930 https://news.ycombinator.com/item?id=5714930 (May 2013) > gknoy: If you're doing freelance, you also have to cover downtime, business development, benefits Here's the article since the discussion's link 404's: https://web.archive.org/web/20161210162901/https://alanhollis.com/my-first-year-freelancing/ https://web.archive.org/web/20161210162901/https://alanholli... > Charge More: > · Take the salary you’d want to earn as a full time employee. > · Double it. > · Divide your doubled salary by the amount of days you’d work as a regular employee. > · This is the minimum rate you should charge per day. And this seemed helpful too (mostly connecting for my own future reference at this point): Poll: long-term contractors, what is your hourly rate? | https://news.ycombinator.com/item?id=5769348 https://news.ycombinator.com/item?id=5769348 (May 2013)
    - deleted 9y ago
      [deleted]
    - Terretta 9y ago
      Depends what you’re trying to calculate. If the idea is that independent small job (less than a year) contracting results in a 50% loss to overhead, then yes, just take hourly rate in thousands. This helps convince people to stop messing about with self-employment and just work for the man. If you mean how much money is in your bank account after a year of work for one company, contrasting a 1099 to FTE for a regular company, it’s the 2x + 000s formula. Unlike comments above, if you have your own LLC consulting business and run the 1099 payments through that, you can pay less tax as self-employed taking care of your own insurance and benefits.
scarface74 9y ago
That's why I specified "W2 contractor". As a W2 contractor (as opposed to a 1099 contractor) you work for an agency and they pay the employment side of SS and Medicare. Of course if you need to pay for family benefits, that's an extra cost, a lot of the contractors I know are either married and get benefits under their spouse or are single and have a relatively cheap high deductible plan. When you work for an agency, you can buy insurance as their employee.
- dmoy 9y ago
  Ah gotcha. As for finding a lot of seemingly qualified programmers who can't pass fizz buzz, yea idk how you get around that. Fortunately for me I work at a big company and can just not do the first round of interviews if I get fed up with it... but as the only person hiring, ugh.

by dmoy 9y ago

j_s 9y ago

The very very rough conversion for normal 1099 contracting is adding the K's worth of zeros to the hourly rate, eg. $85/hr ~= $85K salary. Apparently with a W2 this number is net whatever the agency skims while covering some things; not sure how that stacks up.

scarface74 9y ago
Let me clarify. The hourly rate I was referring to was what the contractor gets. Not what the agency gets. I tell the recruiter and my manager the offer I think we should make the person and let the higher ups negotiate the bill rates the agency will charge the company. I haven't been second guessed yet.
Terretta 9y ago
No, double the hourly rate plus zeros. 40 hours x 50 weeks = 2000 hours So just 2x and thousands.
- j_s 9y ago
  Here's examples on HN of others using the rule of thumb I shared, which is definitely conservative: https://news.ycombinator.com/item?id=2185782 https://news.ycombinator.com/item?id=2185782 (Feb 2011) > zipdog: $40/hr contract is about $40k/yr permanent https://news.ycombinator.com/item?id=2438980 https://news.ycombinator.com/item?id=2438980 (Apr 2011) > techiferous: But remember that there is non-billable work (accounting, etc.) and a 15.3% self-employment tax. [...] Working as a consultant for $175/hour is similar to being employed at $175K/year. > danssig: Calling that pay rate $175K/yr is beyond conservative. NOTE: two users here also recommended your equation > slashcom: $x/hour * 40 hr/wk * 50 wk/yr = 2n1000 The general rule is always "times 2, add 3 zeros" > jurjenh: yes, this is generally the rule I use as well, take the hourly rate and double it and add a K (eg $30/hr = $60K) [...] Personally I use an estimate of about 75% efficiency > rapind: For 75% efficiency I assume you mean 3/4 * 2 * $175 * 1000 = $262,500 / year. https://news.ycombinator.com/item?id=5299009 https://news.ycombinator.com/item?id=5299009 (May 2013) > artumi-richard: The rule of thumb I was told is 1000 billed hours per year. -- To try to be genuinely helpful: a discussion documenting that hourly rates are a bad idea vs. charging per day: https://news.ycombinator.com/item?id=5714930 https://news.ycombinator.com/item?id=5714930 (May 2013) > gknoy: If you're doing freelance, you also have to cover downtime, business development, benefits Here's the article since the discussion's link 404's: https://web.archive.org/web/20161210162901/https://alanhollis.com/my-first-year-freelancing/ https://web.archive.org/web/20161210162901/https://alanholli... > Charge More: > · Take the salary you’d want to earn as a full time employee. > · Double it. > · Divide your doubled salary by the amount of days you’d work as a regular employee. > · This is the minimum rate you should charge per day. And this seemed helpful too (mostly connecting for my own future reference at this point): Poll: long-term contractors, what is your hourly rate? | https://news.ycombinator.com/item?id=5769348 https://news.ycombinator.com/item?id=5769348 (May 2013)
  - deleted 9y ago
    [deleted]
  - Terretta 9y ago
    Depends what you’re trying to calculate. If the idea is that independent small job (less than a year) contracting results in a 50% loss to overhead, then yes, just take hourly rate in thousands. This helps convince people to stop messing about with self-employment and just work for the man. If you mean how much money is in your bank account after a year of work for one company, contrasting a 1099 to FTE for a regular company, it’s the 2x + 000s formula. Unlike comments above, if you have your own LLC consulting business and run the 1099 payments through that, you can pay less tax as self-employed taking care of your own insurance and benefits.

scarface74 9y ago

That's why I specified "W2 contractor". As a W2 contractor (as opposed to a 1099 contractor) you work for an agency and they pay the employment side of SS and Medicare. Of course if you need to pay for family benefits, that's an extra cost, a lot of the contractors I know are either married and get benefits under their spouse or are single and have a relatively cheap high deductible plan. When you work for an agency, you can buy insurance as their employee.

dmoy 9y ago
Ah gotcha. As for finding a lot of seemingly qualified programmers who can't pass fizz buzz, yea idk how you get around that. Fortunately for me I work at a big company and can just not do the first round of interviews if I get fed up with it... but as the only person hiring, ugh.