4 ms·

Keep in mind as a freelancer you have to make about for $2.50 for every $1 a salaried person makes, as you're on the hook for 100% of taxes, health care, busine

by TylerE 3y ago

Keep in mind as a freelancer you have to make about for $2.50 for every $1 a salaried person makes, as you're on the hook for 100% of taxes, health care, business expenses, etc.

kccqzy 3y ago
That sounds about right. On the other hand it does mean that you are producing this kind of work for big FAANG companies you should expect to earn $80/hour. This is around the low end of a senior software engineer or the higher end of a junior software engineer.
- wmidwestranger 3y ago
  I have heard of a database "engineer" paid $250 an hour to spend weeks creating what is basically a connection string to a database in a corporate virtual lan. The people paying him were never concerned about the cost, just how long it was taking. This was in Nebraska.
  - chefandy 3y ago
    In the right locations, developers can benefit from a profound lack of competition, especially if they have some enterprise software bullshit on their resume and some less savvy company nearby refuses to hire someone to do it remotely.
EricMausler 3y ago
Is the 2.50:1 just a broad estimate or based on something? When I was doing pricing for service contracts it was usually around 1.50:1 burdened billing rate vs direct labor (income)
- bosie 3y ago
  how did you factor in when you can't work (sickness, holiday, increasing your skill, finding the next job etc)?
  - EricMausler 3y ago
    2088 potential work hours in a year Less 88 hours holiday Less 80 hours vacation Less 56 hours sick =1864 hours (these are federal guidelines under the Service Contract Act regs) 232/1864 is a base increase of 12.5% for PTO Payroll taxes, Medical, workers comp, etc add about 30% - though medical is flat so at higher wages like discussed here the % increase it represents goes down further I did not have to factor in increasing skill on the job or time between jobs - but I did have to account for overhead and g&a which would be similar to time between jobs since those would be for bills Big companies would have a lot of markup on OH/g&a/fee, but a software dev working remote for themselves on contract could competitively go down to 5-10% or less here to simply cover the minor added burden to bills. That totals up to about a 50% increase on the salary rate. You can't outright bill someone for time you spend looking for a new job or improving your skills. You may charge a premium that you use to do such things but that would have to go under fee which tends to top out at 15% with the government, not something that can be expected to be accounted for. In my experience at least. Again though, this was for service contracts - particularly with the US government, subject to certified cost and pricing data disclosures. I was genuinely curious about the 2.5 number though, as i have spent a lot of time dealing with market rates in various conditions I was interested to know the context. I could see a few ways that could happen, but I wouldn't want to speculate too much
    - chefandy 3y ago
      I think the number is pretty dependent on the flow of jobs. If you work in some kind of incident response, for example, it's going cost more than if you've got downtime between 6 month contracts.
selectodude 3y ago
Yeah, it's closer to 1.5x. Most companies budget total comp at 150% of salary.
- ww520 3y ago
  1.5x for long term contracts. 2~2.5x for short term gigs.
- kjs3 3y ago
  Most? I can't think of a gig beyond maybe a couple of folks in a coworking space where I wouldn't be laughed out of the room with "just make it 150% of salary and we'll figure out the real number whenever". Virtually every company I've ever worked with budget the actual number, because they know how much the overhead cost is. There's a huge difference between "a number I use when asked 'ballpark how much a new hire is gonna run us'" and "what is the amount of money I'm asking the CEO to allocate me in next years budget".
  - chefandy 3y ago
    Depends on the kind of work you do and the competition. A former employer was really desperate for pretty journeyman-level Django Dev help a few years ago and for some reason it was just super tight. Ended up paying more like 350% after looking a few weeks. We obviously weren't going to hire someone at that rate for a 6 month contract but for short term help? Sure.
    - kjs3 3y ago
      Well, sure...there's always a one-off where you have to throw out the rulebook on salary. But any HR team worthy of the name can still compute the actual overhead on that base pretty much to the dollar.
- deleted 3y ago
  [deleted]
- llimllib 3y ago
  many things are more expensive when you don't work at a company - for example the health care for a marginal employee at GE is a lot cheaper than you'll get for yourself. I always used 2x, but probably 2.5x is a sensible way to think about it in a patio11 "charge more than you think you should" mold.

by TylerE 3y ago

Keep in mind as a freelancer you have to make about for $2.50 for every $1 a salaried person makes, as you're on the hook for 100% of taxes, health care, business expenses, etc.

kccqzy 3y ago

That sounds about right. On the other hand it does mean that you are producing this kind of work for big FAANG companies you should expect to earn $80/hour. This is around the low end of a senior software engineer or the higher end of a junior software engineer.

wmidwestranger 3y ago
I have heard of a database "engineer" paid $250 an hour to spend weeks creating what is basically a connection string to a database in a corporate virtual lan. The people paying him were never concerned about the cost, just how long it was taking. This was in Nebraska.
- chefandy 3y ago
  In the right locations, developers can benefit from a profound lack of competition, especially if they have some enterprise software bullshit on their resume and some less savvy company nearby refuses to hire someone to do it remotely.

EricMausler 3y ago

Is the 2.50:1 just a broad estimate or based on something? When I was doing pricing for service contracts it was usually around 1.50:1 burdened billing rate vs direct labor (income)

bosie 3y ago
how did you factor in when you can't work (sickness, holiday, increasing your skill, finding the next job etc)?
- EricMausler 3y ago
  2088 potential work hours in a year Less 88 hours holiday Less 80 hours vacation Less 56 hours sick =1864 hours (these are federal guidelines under the Service Contract Act regs) 232/1864 is a base increase of 12.5% for PTO Payroll taxes, Medical, workers comp, etc add about 30% - though medical is flat so at higher wages like discussed here the % increase it represents goes down further I did not have to factor in increasing skill on the job or time between jobs - but I did have to account for overhead and g&a which would be similar to time between jobs since those would be for bills Big companies would have a lot of markup on OH/g&a/fee, but a software dev working remote for themselves on contract could competitively go down to 5-10% or less here to simply cover the minor added burden to bills. That totals up to about a 50% increase on the salary rate. You can't outright bill someone for time you spend looking for a new job or improving your skills. You may charge a premium that you use to do such things but that would have to go under fee which tends to top out at 15% with the government, not something that can be expected to be accounted for. In my experience at least. Again though, this was for service contracts - particularly with the US government, subject to certified cost and pricing data disclosures. I was genuinely curious about the 2.5 number though, as i have spent a lot of time dealing with market rates in various conditions I was interested to know the context. I could see a few ways that could happen, but I wouldn't want to speculate too much
  - chefandy 3y ago
    I think the number is pretty dependent on the flow of jobs. If you work in some kind of incident response, for example, it's going cost more than if you've got downtime between 6 month contracts.

selectodude 3y ago

Yeah, it's closer to 1.5x. Most companies budget total comp at 150% of salary.

ww520 3y ago
1.5x for long term contracts. 2~2.5x for short term gigs.
kjs3 3y ago
Most? I can't think of a gig beyond maybe a couple of folks in a coworking space where I wouldn't be laughed out of the room with "just make it 150% of salary and we'll figure out the real number whenever". Virtually every company I've ever worked with budget the actual number, because they know how much the overhead cost is. There's a huge difference between "a number I use when asked 'ballpark how much a new hire is gonna run us'" and "what is the amount of money I'm asking the CEO to allocate me in next years budget".
- chefandy 3y ago
  Depends on the kind of work you do and the competition. A former employer was really desperate for pretty journeyman-level Django Dev help a few years ago and for some reason it was just super tight. Ended up paying more like 350% after looking a few weeks. We obviously weren't going to hire someone at that rate for a 6 month contract but for short term help? Sure.
  - kjs3 3y ago
    Well, sure...there's always a one-off where you have to throw out the rulebook on salary. But any HR team worthy of the name can still compute the actual overhead on that base pretty much to the dollar.
deleted 3y ago
[deleted]
llimllib 3y ago
many things are more expensive when you don't work at a company - for example the health care for a marginal employee at GE is a lot cheaper than you'll get for yourself. I always used 2x, but probably 2.5x is a sensible way to think about it in a patio11 "charge more than you think you should" mold.