4 ms·
Ask HN: How much should I ask for?
I'm posting this under a throwaway account in order to give details. From this thread - http://news.ycombinator.com/item?id=1591225 - it seems people like discussing money here so I wanted to ask for input.
I've been contacted by a place I've worked for before about hiring me on a contract. This would be the fourth time I have done work for them. The first two times I was working as an employee - I quit to go do something not software related, came back and then got laid off. The third time I was hired on contract.
As an employee, the first two times, I earned $23/hr (there would have been benefits on top of that but I never made it past the probation period).
For the contract, I asked for $36/hr and it was accepted.
Since then, I have been working on a contract at another place and earning $45/hr. This contract will end soon (or be reduced to just a few hours per week).
This company does client work which they bill at approximately $100/hr so I know there is a limit to what financially makes sense to them no matter how good my work is.
I was thinking of asking for $55/hr this time around but that seems like a huge jump from their point of view when I was earning $36/hr at my last contract with them - just six months ago.
I should note that not getting the contract wouldn't be a bad thing. I would be interested in having the free time for a while to work on my own projects.
I would be interested in hearing other people's viewpoints.
- jteo 16y agoAsk them to pay you what they think you are worth.
- garrettgillas 16y agoThis is the one thing that I WOULD NOT do. The must successful contractors that I've worked with always take charge of the negotiation and try to say things like "going rate" or "standard rate", essentially stating their prices authoritatively. If they're paying you to be an expert, than you should maintain that persona through to your billing and price negotiation as well.
- davidw 16y agoI've always heard the adage "the first guy who mentions a number loses".
- garrettgillas 16y agoThat's probably true in some cases, like trying to land a contract with new client. I am giving this advice based on the context that this person has a fairly good idea of what this company pays their employees & contractors, since he already has a relationship with them.
- DavidPP 16y agoI'm not sure if I got the exact word for it (english isn't my first language) so I'll call it the "anchor price" effect. Basically, if you are the one who mention the first number, you can set the "anchor" of the conversation. This mean that if you ask for 55$ first and they try to offer you 40$ You can focus on the fact that it's around 30% lower than your asking price. On the other hand, if they mention 40$ first, you are the one who has to convince them to give you 30% more. PS : I'm not saying you are wrong, just bringing another point of view on that.
- garrettgillas 16y agoOn that same note, I would recommend trying your best to avoid saying things like "whatever you think", "I don't know" or "..if that's ok with you guys".
- bottlerocket 16y agoAsk for $55, then agree to meet in the middle at your current $45 if they balk. Unless you're set on getting $55 out of them :)
- dstein 16y agoI disagree. Contractors should never waiver on their prices. Whatever your asking price is you should always be willing to walk if your price isn't met.
- phillytom 16y agoI disagree strongly. Changing your price isn't wavering, it's negotiating. Companies hiring consultants aren't that different than most parties you would negotiate with. For example they tend to respond to standard negotiating techniques, such as quoting them a higher standard rate then offering a discount in negotiation. Walking away is fine as long as your confident in your ability to immediately get work at your rate but it doesn't prove your rate out - people paying it does. There is a slightly dated, but highly relevant book I'd recommend - Janet Ruhl's Computer Consultant's Guide - http://www.amazon.com/Computer-Consultants-Guide-Strategies-Successful/dp/0471176494 http://www.amazon.com/Computer-Consultants-Guide-Strategies-...
- tptacek 16y agoSlip scope, never rate. Rates can only rarely be raised.
- brk 16y agoWhat region/location are you in? All those rates sound very low, especially when you look at what you actually net after taxes and all that. $75/hr would seem the be the floor, IMO, unless you're in a very low-tech area like the middle of Utah or something.
- webwright 16y ago$75/hr rebilled at $100/hr doesn't really make sense for the prime contractor. That's valuing the sales effort, client relationship, billing risk, etc., etc., at $25. Having been a prime contractor who hired subs for overflow work, we'd generally never go above 2/3 of the prime rate. If you want to make $100/hr, you generally have to go sell yourself to a customer, not act as a subcontractor.
- sandal 16y agoI would say that depends entirely on the subcontractor and your relationship with him/her. Someone you're bringing on just to meet availability demands, maybe. Someone who is already well known and respected for what they do, you should be prepared to offer a better deal for. In fact, you may end up being able to raise your own outgoing rate if you find folks willing to work for you who are really great. But of course, the risk does end up in the hands of who owns the contract. And if there isn't sufficient trust with between you and your subs, a premium helps protect you from that. But this practice may be keeping you locked into a cycle of only getting help from low to mid skill level developers, who end up going elsewhere once they've grown a bit more.
- petervandijck 16y agoIt does make sense if they can't handle the load, and know and like your work.
- throwaway23 16y agoIt's near Vancouver. For whatever reason, software salaries are just not that high here. Seeing people discuss rates in the SV area just blows me away sometimes.
- sen 16y agoSince they came after you, tell them to make you an offer and you'll consider it.
- aggelosmp 16y agoI suppose you could draw your line at around 50, but check out what they have to say at first from their point of view.
- maukdaddy 16y agoDon't let your previous salaries anchor you. Think about what you are currently worth and what you want to make now. Ask for more. Compromise with other benefits or a lower salary as appropriate.
- minus1 16y agoI think the problem will be that the previous salaries have anchored the company's idea of his/her worth. Regardless, I agree that it's best to ask for what you feel you are worth.
- jsulak 16y agoI would suggest reading this: http://stackoverflow.com/questions/197139/fair-contract-salary-compared-to-permanent-salary http://stackoverflow.com/questions/197139/fair-contract-sala... Obviously, I can't speak for your situation, but there's a good chance you're undercharging.
- petercooper 16y agoIf they really bill at ~$100/hr, they should certainly be comfortable with paying $50/hr to subcontractors, maybe more. (It's common to double a subcontractor's rate and bill that to the client.) So definitely don't take anything under $50. Asking for $55 and being ready to take $50 doesn't seem crazy at all to me, but since you don't care too much whether you get it but also don't want to burn a bridge, ask for a daring "wow, it makes it worth it!" but inoffensive figure. Given their margins, I'd say that's $65-75/hr.
- jasonkester 16y agoA standard multiple for consulting shops is 3.15. As in, bill your contractors out at 3.15X what you pay them. Anything lower and you won't be able to keep up with overhead. It sounds like they're doing that with this guy, so he probably won't be able to get much more out of them.
- exline 16y agoI haven't seen 3.15 before. That seems pretty high to me. 2x is closer to what I have experienced before, some times less if the overhead is low. If a company needs 3.15x, then they have some pretty serious overhead issues. Perhaps this is true for large consulting shops, I've only dealt with smaller ones.
- petervandijck 16y agoThat's not standard.
- phillytom 16y agoAfter many years billing as a consultant I found that I was happiest when I ignored bill-thru rates and just focused on getting a fair rate commensurate with my market value. Unless the gig you are ending is unusual, or short term, it would appear that your market value is at least 45/hr. I would either offer that, or if you want to test your value, increase it to 50. If the company does not value your time at that rate, they won't pay it. As a consultant it's important to remember when you're discussing rates with a client, it's not a reflection of your personal worth, just your economic value. You can test your market value by either offering them a lower rate, or trying to find other work at 45-50 hr. Over time I learned that when I felt I was getting too busy it was time to rate limit the work I was getting by raising my rates. Or vice-versa.
- tptacek 16y agoPurely based on your own cost structure, in an apples-apples comparison to the FT job you had before, anything less than $50/hr is a giveaway. As a subcontractor for a $100/hr project, you have wiggle room between $50-$75/hr. It's probably not a huge amount of wiggle room, because as someone making $46,000/yr FT, you're not doing anything super hard to replace. You are a maze of twisty little passages, all alike. (a) You need more contracts, because your current BATNA ($45/hr via contract quite possibly being worth less than $23/hr FT) sucks. (b) You need to eat, and so you may need to take an unnecessarily low rate from your original employer. If I was them, and I was all business, I'd refuse anything more than $36/hr. In this economy, procurements not letting us raise any rates, have to be equitable to other workers, yadda yadda.
- petervandijck 16y agoGo for 65, then lower to 55. If they bill 100, they want some profit, but they mostly don't want to loose their client if they can't handle the work themselves. Really, ask 65 with a straight face.