5 ms·

Like anything else you can find all ranges offered and all ranges accepted. I thought the exact opposite was the norm, with higher rates in US companies than UK

by gt2 6y ago

Like anything else you can find all ranges offered and all ranges accepted. I thought the exact opposite was the norm, with higher rates in US companies than UK/europe. Senior level rates in US range from 100-300/hr. I know it's a big range, but it comes down to speed, creativity, references, portfolio, fit for the project, availability. As far as the half the money as a 9-5, it's actually the other way around-- as a freelancer, you need more money to compensate for things like insurance, taxes, risk that come with being an independent/freelancer. So they say to match a 75k salary, you need approximately 150/hr.

AzzieElbab 6y ago
150/hr sums up to 200k/year if you work 30 hours a week for 11 months. ----- Fixed typo
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- Adirael 6y ago
  15 * 30 * 4 * 12 = 21600
- pulse7 6y ago
  Mistake: it should be "150/hr" instead of "15/hr"
- deleted 6y ago
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- Arubis 6y ago
  Tl;dr: I charge a fair amount (effectively well into $three digits/hr) and making what I have previously at a w2 is a real fight. Presuming you meant $150/hr: indeed, and if you’re freelancing, you almost certainly don’t have that high a proportion of billable time. Prospecting, marketing, deliberate learning, and other overhead are all necessary parts of the deal and can easily take half your available time. I tend to do all that in downtime between contracts, so it’ll look like 25-35 billable hours per week but with maybe 25-30 weeks/year utilization. Others just overlap everything; works well with longer contracts.
  - K0SM0S 6y ago
    I'm wondering if it's also not heavily dependent on the business structure that you set up for yourself, as a freelancer. It's a one-man company (for the most successful), a self-employed job (for the majority, or so I hear). The former eventually makes "products", while the latter may entertain a permanent rat race, wheel spin. Difference in point: how much of what you do leads to higher value at fixed cost (notably in time, how long does it take you to deliver), or same value for lower cost (same idea). I'd wager that, for the one-man company mindset, you tend to think not task but process, automating progressively etc. (need-to-basis optimization, ad hoc 'frameworks' that speed up your particular niche projects, heck just taking work from client A and refactoring it for client B and building an informal "product" eventually from there, that's the story of all freelancers who've been at it for 5+ years as I see it) How much of the past work (self and tooling improvements) is factored in present value? Can we decorrelate X years of history of a company and estimate its cost/value production simply YOY? I think not. I think the greatest (companies, freelancers) incrementally raise the bar— making the threshold for competition much too high for a newcomer, hence commanding much higher value. [At the highest end of that spectrum, meet Apple. Even tech giants struggle to meet that bar, whatever goes in it (tech genius? marketing? craftsmanship? whatever. $ at the end of the day)] Doing the [work hours × $rate × utilization] equation only says so much about what actually goes into your rate (years of being more efficient at "it", those things you do). Say you begin at $75 in the US after a ramp up of 3-6 months to establish yourself on the market. You survive for 2 years like that, reach ~$100. You realize it's only $50 real, and your newfound expertise is priced higher in the salary job market. So you either raise your rates or go get that money elsewhere. That's why IMHO an "expert freelancer" market only makes sense north of $100-150 in the US (adapt numbers for any country, minus perhaps the "tech not sexy" effect e.g. in Europe where it's not better paid that other intellectual activities). Right now, you are worth much more than whatever you did this year, and presumably (hopefully for market sanity) it shows in how much you earn.
    - Arubis 6y ago
      I'm constitutionally incapable of not commenting on threads like this :) So, yes, your description is accurate, though putting scare-quotes around "products" is necessary here. As folks grow in this profession, as I see it, there's three paths to success without ending up back in a W2: * make _actual_ products (which is my own eventual goal), or * find a way to productize their service (re-usable code blocks or processes, customized per client at a very high effective rate), or * get really good at prospecting new contracts and end up hiring more individual contributors, eventually building an agency. Of course, you could potentially mix and match, and service productiziation is a good step on the way to building products. What's most in-common across those three options is that none of them reward you, the freelancer with aspirations towards growth, for billing by the hour. And I think that plays directly into your point of task vs. process: for a _task_ you'll need to consider _how long it will take, while for a _process_ your primary concern is _what it will achieve_. So all this discussion of hourly rates is actually presupposing an arrangement that runs counter to the best interests of everyone involved--including, frankly, those of your client, because it incentivizes you to take as long as possible to deliver your work product. IMHO once you've crossed the line of "I am making enough money to not think about money when buying a non-special meal", it's time to think about your billing structure, even if you end up losing money short-term. Otherwise you really are signing up to use a very high-value skillset to live paycheck-to-paycheck. (My prior description of my hourly rate is hand-wavey for two reasons: first, this, that I tend not to charge hourly--and second, that no freelancer in the process of frequently hitting their rates with a multiplier benefits from making a hard rate commitment in public.) Another comment in this discussion described freelance senior software engineer rates as running $100-300/hr. I believe that, and higher--on an _effective_ basis. But I'd wager the higher end of that scale is day-, week-, or fixed-bid rates. On a personal note: a lot of the struggle/low utilization on my end owes to having a baby in the home. A W2 keeps paying you the same when you don't sleep for six months, but that has real consequences when you have to find your own customers!
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- davidmurdoch 6y ago
  Assuming you meant 150/hr... Freelancers have costs that W2 employees do not, like self employment taxes and the full cost of health insurance.
  - AzzieElbab 6y ago
    Fixed typo, thanks. A good percentage of those costs is tax deductible along with expenses you will not have the luxary to deduct as an employee.
  - vitaflo 6y ago
    They also have benefits that W2 employees do not, like deducting expenses, $50k+ in allowable retirement contributions per year, and the 20% QBI deduction.
    - fullStackOasis 6y ago
      You are certainly correct, and those are nice to have. It pays to keep in mind that in order to deduct an expense, you have to pay the expense. So as a freelancer, when I pay for my computer, that's $1500 out of pocket. Then I don't pay quite so much in taxes. But I've still got $1500 less at the end of the year than if I worked at a business and they were paying for my computer. $50K+ into your retirement is also great, but it's most useful for those who are making so much money that they can afford to put that money away and not touch it until they're 62. Some people can certainly do that, but I doubt that it's very common. Even FTE often don't max out their 401K. Here's a fool article that claims the average is rate is 7%: https://www.fool.com/retirement/2017/01/15/average-americans-401k-contributions-by-age-and-in.aspx https://www.fool.com/retirement/2017/01/15/average-americans...
      - vitaflo 6y ago
        You would also then have a $1500 asset that you could sell at a later date. When you're an employee you don't have that option. If you aren't able to max out your retirement account it means your QBI deduction is larger. As with most things business/tax related, there's a lot of grey area and nuance here.
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SamReidHughes 6y ago
What “they say” is 75/hr, salary divided by 1000. I’m guessing you doubly applied the 2x factor.
- mehrdadn 6y ago
  May I ask how the calculation works? For $75/hr (to take California as an example) you have ~$105k after tax; subtract ~$5k for insurance and you're left with $100k. Whereas for $75k/year you're left with $56k/year after tax. Meaning that when you're on salary, you're pocketing 56% of the money you would as a freelancer. The only way I can make sense of this is if it's freelancers expect to bill around 25h/week... is that normal? And what happens if you have a job where both sides actually expect you're going to bill the full 40h? Is it normal for people to lower their rates in that case, or do they still base it on the 25h?
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  - Gh0stRAT 6y ago
    Medical insurance is more like $1,600+/month for a married couple, even more if you have kids. That's ~$20k/year which brings you down to $85k after tax. And did you factor-in having to pay both halves of Social Security and Medicare? I believe that's another 15.3% [0] [0] https://www.google.com/amp/s/turbotax.intuit.com/tax-tips/self-employment-taxes/a-freelancers-guide-to-taxes/amp/L6ACNfKVW https://www.google.com/amp/s/turbotax.intuit.com/tax-tips/se...
    - mehrdadn 6y ago
      I just used this actually; I presume they included both halves of Medicare & Social Security: https://www.irscalculators.com/tax-calculator https://www.irscalculators.com/tax-calculator I was assuming single/young (so low-cost insurance), I wasn't really thinking of family/children but that's a good point!
  - fullStackOasis 6y ago
codegeek 6y ago
Here is a calculator I built a while ago when I was freelancing. It won't be perfect but will give you a close idea of what an equivalent day rate should be for freelancer compared to a full time salary. https://codegeek1001.github.io/salary2consultantcalc/ https://codegeek1001.github.io/salary2consultantcalc/

by gt2 6y ago

AzzieElbab 6y ago

150/hr sums up to 200k/year if you work 30 hours a week for 11 months. ----- Fixed typo

deleted 6y ago
[deleted]
deleted 6y ago
[deleted]
Adirael 6y ago
15 * 30 * 4 * 12 = 21600
pulse7 6y ago
Mistake: it should be "150/hr" instead of "15/hr"
deleted 6y ago
[deleted]
Arubis 6y ago
Tl;dr: I charge a fair amount (effectively well into $three digits/hr) and making what I have previously at a w2 is a real fight. Presuming you meant $150/hr: indeed, and if you’re freelancing, you almost certainly don’t have that high a proportion of billable time. Prospecting, marketing, deliberate learning, and other overhead are all necessary parts of the deal and can easily take half your available time. I tend to do all that in downtime between contracts, so it’ll look like 25-35 billable hours per week but with maybe 25-30 weeks/year utilization. Others just overlap everything; works well with longer contracts.
- K0SM0S 6y ago
  I'm wondering if it's also not heavily dependent on the business structure that you set up for yourself, as a freelancer. It's a one-man company (for the most successful), a self-employed job (for the majority, or so I hear). The former eventually makes "products", while the latter may entertain a permanent rat race, wheel spin. Difference in point: how much of what you do leads to higher value at fixed cost (notably in time, how long does it take you to deliver), or same value for lower cost (same idea). I'd wager that, for the one-man company mindset, you tend to think not task but process, automating progressively etc. (need-to-basis optimization, ad hoc 'frameworks' that speed up your particular niche projects, heck just taking work from client A and refactoring it for client B and building an informal "product" eventually from there, that's the story of all freelancers who've been at it for 5+ years as I see it) How much of the past work (self and tooling improvements) is factored in present value? Can we decorrelate X years of history of a company and estimate its cost/value production simply YOY? I think not. I think the greatest (companies, freelancers) incrementally raise the bar— making the threshold for competition much too high for a newcomer, hence commanding much higher value. [At the highest end of that spectrum, meet Apple. Even tech giants struggle to meet that bar, whatever goes in it (tech genius? marketing? craftsmanship? whatever. $ at the end of the day)] Doing the [work hours × $rate × utilization] equation only says so much about what actually goes into your rate (years of being more efficient at "it", those things you do). Say you begin at $75 in the US after a ramp up of 3-6 months to establish yourself on the market. You survive for 2 years like that, reach ~$100. You realize it's only $50 real, and your newfound expertise is priced higher in the salary job market. So you either raise your rates or go get that money elsewhere. That's why IMHO an "expert freelancer" market only makes sense north of $100-150 in the US (adapt numbers for any country, minus perhaps the "tech not sexy" effect e.g. in Europe where it's not better paid that other intellectual activities). Right now, you are worth much more than whatever you did this year, and presumably (hopefully for market sanity) it shows in how much you earn.
  - Arubis 6y ago
    I'm constitutionally incapable of not commenting on threads like this :) So, yes, your description is accurate, though putting scare-quotes around "products" is necessary here. As folks grow in this profession, as I see it, there's three paths to success without ending up back in a W2: * make _actual_ products (which is my own eventual goal), or * find a way to productize their service (re-usable code blocks or processes, customized per client at a very high effective rate), or * get really good at prospecting new contracts and end up hiring more individual contributors, eventually building an agency. Of course, you could potentially mix and match, and service productiziation is a good step on the way to building products. What's most in-common across those three options is that none of them reward you, the freelancer with aspirations towards growth, for billing by the hour. And I think that plays directly into your point of task vs. process: for a _task_ you'll need to consider _how long it will take, while for a _process_ your primary concern is _what it will achieve_. So all this discussion of hourly rates is actually presupposing an arrangement that runs counter to the best interests of everyone involved--including, frankly, those of your client, because it incentivizes you to take as long as possible to deliver your work product. IMHO once you've crossed the line of "I am making enough money to not think about money when buying a non-special meal", it's time to think about your billing structure, even if you end up losing money short-term. Otherwise you really are signing up to use a very high-value skillset to live paycheck-to-paycheck. (My prior description of my hourly rate is hand-wavey for two reasons: first, this, that I tend not to charge hourly--and second, that no freelancer in the process of frequently hitting their rates with a multiplier benefits from making a hard rate commitment in public.) Another comment in this discussion described freelance senior software engineer rates as running $100-300/hr. I believe that, and higher--on an _effective_ basis. But I'd wager the higher end of that scale is day-, week-, or fixed-bid rates. On a personal note: a lot of the struggle/low utilization on my end owes to having a baby in the home. A W2 keeps paying you the same when you don't sleep for six months, but that has real consequences when you have to find your own customers!
deleted 6y ago
[deleted]
deleted 6y ago
[deleted]
deleted 6y ago
[deleted]
davidmurdoch 6y ago
Assuming you meant 150/hr... Freelancers have costs that W2 employees do not, like self employment taxes and the full cost of health insurance.
- AzzieElbab 6y ago
  Fixed typo, thanks. A good percentage of those costs is tax deductible along with expenses you will not have the luxary to deduct as an employee.
- vitaflo 6y ago
  They also have benefits that W2 employees do not, like deducting expenses, $50k+ in allowable retirement contributions per year, and the 20% QBI deduction.
  - fullStackOasis 6y ago
    You are certainly correct, and those are nice to have. It pays to keep in mind that in order to deduct an expense, you have to pay the expense. So as a freelancer, when I pay for my computer, that's $1500 out of pocket. Then I don't pay quite so much in taxes. But I've still got $1500 less at the end of the year than if I worked at a business and they were paying for my computer. $50K+ into your retirement is also great, but it's most useful for those who are making so much money that they can afford to put that money away and not touch it until they're 62. Some people can certainly do that, but I doubt that it's very common. Even FTE often don't max out their 401K. Here's a fool article that claims the average is rate is 7%: https://www.fool.com/retirement/2017/01/15/average-americans-401k-contributions-by-age-and-in.aspx https://www.fool.com/retirement/2017/01/15/average-americans...
    - vitaflo 6y ago
      You would also then have a $1500 asset that you could sell at a later date. When you're an employee you don't have that option. If you aren't able to max out your retirement account it means your QBI deduction is larger. As with most things business/tax related, there's a lot of grey area and nuance here.
deleted 6y ago
[deleted]

SamReidHughes 6y ago

What “they say” is 75/hr, salary divided by 1000. I’m guessing you doubly applied the 2x factor.

mehrdadn 6y ago
May I ask how the calculation works? For $75/hr (to take California as an example) you have ~$105k after tax; subtract ~$5k for insurance and you're left with $100k. Whereas for $75k/year you're left with $56k/year after tax. Meaning that when you're on salary, you're pocketing 56% of the money you would as a freelancer. The only way I can make sense of this is if it's freelancers expect to bill around 25h/week... is that normal? And what happens if you have a job where both sides actually expect you're going to bill the full 40h? Is it normal for people to lower their rates in that case, or do they still base it on the 25h?
- deleted 6y ago
  [deleted]
- Gh0stRAT 6y ago
  Medical insurance is more like $1,600+/month for a married couple, even more if you have kids. That's ~$20k/year which brings you down to $85k after tax. And did you factor-in having to pay both halves of Social Security and Medicare? I believe that's another 15.3% [0] [0] https://www.google.com/amp/s/turbotax.intuit.com/tax-tips/self-employment-taxes/a-freelancers-guide-to-taxes/amp/L6ACNfKVW https://www.google.com/amp/s/turbotax.intuit.com/tax-tips/se...
  - mehrdadn 6y ago
    I just used this actually; I presume they included both halves of Medicare & Social Security: https://www.irscalculators.com/tax-calculator https://www.irscalculators.com/tax-calculator I was assuming single/young (so low-cost insurance), I wasn't really thinking of family/children but that's a good point!
- fullStackOasis 6y ago

codegeek 6y ago

Here is a calculator I built a while ago when I was freelancing. It won't be perfect but will give you a close idea of what an equivalent day rate should be for freelancer compared to a full time salary. https://codegeek1001.github.io/salary2consultantcalc/ https://codegeek1001.github.io/salary2consultantcalc/