[Baypiggies] How do you calculate your hourly wage?

[Dylan Reinhardt]

Some quick tips from a former Python contractor:

1. Charge at least twice as much as you want to make.  You're responsible
for paying ~40% of your gross income as tax.  If you're used to thinking as
an employee, you REALLY want to make sure you are planning for this
adequately.

2. Get an accountant (see #1).  Do not wait until tax time to form this
relationship.

3. Don't under-charge.  While anyone might balk at a $200/hr contractor in
these times, they might be equally worried about doing business with a
$25/hr contractor.  Programming involves taking a lot of responsibility for
serious things and you want to communicate that you're up to it.

4. Be sure to get paid.  The best way to do this is to invoice regularly and
always work on a time & materials basis (e.g., by the hour).  Do not take on
project-priced work unless you *really* know what you're doing.
Additionally, avoid "incentive" payment structures that push substantial
amounts of your compensation until after delivery.  There are a lot of
reasons why software projects don't get delivered and you don't want to be
the only one taking on any risk.

5. Forget benefits.  Worry about this in year 5 or 6 when you're able to pay
your other bills.

Hope that's helpful,

Dylan


On Mon, Feb 9, 2009 at 2:22 PM, Stephen Cattaneo <stephen.cattaneo at gmail.com
> wrote:

> Hi friends,
>
> I've only had one professional position since college.  I was paid salary.
> My company recently downsized 40% of the company (myself included).  I'm
> looking for new work.
>
> I'm open to contract jobs, but they want to know how much I charge hourly.
> I'd assume they do not cover things like 401k/dental/medical for such a
> position;  I'd like to take these things into consideration when talking
> wages.
>
> Do you guys use this formula (or something similar) and if so, what value
> do you use for your modifier?
>
> hourlySalary = yearlySalary /  52 * 40  # 52 weeks in a year, 40 hours in a
> week
> benefits = hourlySalary * benefitsModifier
> totalHourlyWage = hourlySalary + benefits
>
> I was thinking something between 5% and 15% -- Does this seem reasonable in
> your experience?
>
> Cheers,
>
> S
>
> --
> ---
> Failures are finger posts on the road to achievement.
>
> -- C.S. Lewis
>
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